Jm Ab (Sell, TP: SEK208.00) - One-offs set to mask underlying risk
Our 2019e EPS is above consensus, due to an expected lack of tax on gains from selling rentals in Sweden, and gains from divesting construction in Norway. JM’s lower selling prices in Sweden mean lower margins, while SEK/unit asking prices are -16% since 2017, SEK/sqm -10.2% in Sweden and -17.7% in Stockholm. While asset gains put us above consensus for Q3 (results due 24 October at 08:00 CET), underlying margin trends lead us to reiterate our SELL and SEK208 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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