Jm Ab (Sell, TP: SEK155.00) - Normalisation likely to take time
Q3 EPS was 62% below consensus and our forecast. Units sold were slightly more than we expected, but we believe discounts were used. JM stated it had issued redundancy notices to 150 workers, on rising costs on started projects, and lower EBIT margins than its long-term target. It also said it would take time for the market to normalise, despite falling interest rates. The inventory of unsold homes climbed to an all-time high, a trend that appears to have continued in Q4. We believe consensus reflects over-optimism on the timing of a recovery, and we reiterate our SELL and SEK155 target price.JM is a developer of housing and residential areas in the Nordic region. Co. focuses its operations on new production of homes, with the main focus on metropolitan areas and university towns in Sweden, Norway, Denmark, Finland and Belgium. Co. is also involved in project development of commercial premises and contract work, primarily in the Greater Stockholm area. Co. is divided into five business units: JM Residential Stockholm, JM Residential Sweden, JM International, JM Property Development and JM Production.
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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