Balder (Sell, TP: SEK285.00) - FFO growth set to slow
In the past Balder has traded at premium P/FFOs due to aggressive transaction-based investments and falling interest rates. However, as funding costs no longer seem to be contributing to FFO growth, we expect it to slow significantly. Given Balder’s current size, such rapid asset growth no longer seems likely, thus we find its valuation versus peers demanding. The Q1 results were in line with our forecasts, and we reiterate our SELL, while we have raised our target price to SEK285 (275) to take into account our 2021e NAV.Fastighets AB Balder is a Sweden-based company engaged in the acquisition, development and management of residential and commercial real estate. The Company's real estate portfolio is comprised primarily of residential real estate and is located in such cities, as Stockholm, Gothenburg, Lund, Malmo, Norrkoping, as well as in regions outside metropolitan areas of Sweden and in the Copenhagen region in Denmark. The Company's subsidiaries include Balder Storstad AB, Balder Mellanstad AB, Din Bostad Sverige AB, Egby Vindkraftverk AB and Serena Properties AB.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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