Jm Ab (Sell, TP: SEK230.00) - Solid Q4, but IFRS risk materialising
JM beat our Q4 forecasts and consensus, on better sales in JM Stockholm. While the market is recovering, the short-covering rally seen in the past year has in our view valued the shares too high. We also fear the potential change from POC to IFRS accounting, as FI has written to JM asking it to change accounting basis. IFRS would make JM’s income significantly volatile, in line with peers like Bonava, SBO and Solon, and potentially increase its 20e net debt to SEKc15bn. We reiterate our SELL, but have raised our target price to SEK230 (210) on updated forecasts.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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