Mixed Q3s and soft datapoint for Stockholm office market

This week, Hufvudstaden, Veidekke, Selvaag Bolig and Skanska reported Q3 results. Furthermore, Vasakronan (unlisted) reported soft vacancies and net lettings, which we consider a negative datapoint for peers such as Fabege and Hufuvdstaden. The weighted-average implied EBITDA yields on the stocks we cover are 4.33% for 2024e and 4.88% for 2025e.

Hufvudstaden (Hold, TP: SEK132.00) - Neutral Q3, but better vacancy rate

Overall, Q3 results were in line with consensus and our expectations, resulting in limited estimate changes. In contrast to Stockholm office peers, such as Fabege and Vasakronan (unlisted), Hufvudstaden reported a somewhat improved vacancy rate for a second consecutive quarter, from 7.9% in Q2 to 7.6%. We reiterate our HOLD and SEK132 target price.

Solid NOI growth

Oncopeptides (Buy, TP: SEK2.50) - Germany leads Q3 sales miss

Q3 sales were roughly half the level we expected – admittedly from a small base, but still a concern for us, since the miss was led by Germany, with much slower growth than recently. However, operating expenses were also less than we forecast, leaving an operating loss of SEK61m, a fraction better than our cSEK-63m. End-Q3 cash was SEK250m, which the company said would see it to positive cash flow in 2026e. We reiterate our BUY but have cut our target price to SEK2.5 (4.5) on increased uncertainty about the sales ramp up.

Norske Skog (Buy, TP: NOK32.00) - Unfounded concerns

Since the Q3 report that showed that Norske Skog is in good shape in difficult markets, the share price is down c40% on apparent concerns that Norske Skog will become financially distressed. However, after scrutinising the balance sheet and the debt payment structure, we believe the situation is under control. With our earnings forecasts largely intact, we have upgraded to BUY (HOLD) and reiterate our NOK32 target price following the recent share price weakness, in our view based on unfounded concerns and misunderstanding.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.