Kojamo (Hold, TP: EUR19.00) - Near-term gain, but long-term pain
While Kojamo’s focus is on the regions in Finland continuing to benefit from urbanisation, we see a risk to the long-term supply/demand housing balance nationally given prospects of a declining population and significant new housing starts. In addition, we believe investors are focusing on low near-term risk and interest rates remaining at historical lows for the foreseeable future, while underestimating the structural and long-term challenges in the Finnish housing market. The valuation looks unwarranted to us, and we initiate coverage with a HOLD and EUR19 target price.Kojamo Oyj is a Finland-based private residential real estate company. It offers rental apartments and housing services for tenants primarily in the Helsinki region, the Tampere, Turku, Kuopio and Lahti regions, as well as in the cities of Oulu and Jyvaskyla. The Company's portfolio comprises over 35 000 rental apartments. The Company operates within two segments: Lumo and VVO. The Lumo segment includes commercial housing services and apartments primarily are free from restrictions under state-subsidized housing loans (ARAVA) and/or interest subsidy legislation. The VVO segment includes the rental apartments subject to restrictions on rent levels under ARAVA and/or interest subsidy legislation.
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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