Hufvudstaden (Sell, TP: SEK138.00) - In-line Q4, still-high valuations
Hufvudstaden reported a Q4 in line with our forecast and consensus on rental operations, but boosted NAV on yet another property asset uplift. Capex in the last four years totalled SEK4bn, or between 1.5% and 1.7% p.a. of asset values. With an EBIT-implied yield of only 3.7% for 2019e, we believe the valuation and capex in the company are risks. We reiterate our SELL, but have raised our target price to SEK138 (136) on minor estimate revisions.Hufvudstaden AB is a property company that owns and manages 30 properties, located in the central parts of Stockholm and Gothenburg, Sweden. Co.'s principal area of business is the ownership, development and management of commercial properties. The holdings comprise commercial properties with office and retail tenants, divided between three business areas: Stockholm City East, Stockholm City West and Gothenburg. The office tenants are to be found in sectors such as banking, finance, law, information technology, media and recruitment. Store tenants include international brands as well as Swedish retailing chains. Co. also carries on its own parking operations through Parkaden AB subsidiary.
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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