Lundbergs (Sell, TP: SEK530.00) - Hard to justify the premium to NAV
Lundbergs’ 22% YTD NAV growth has underperformed the SIXRX by c13%-points, while the total shareholder return has been in line with the SIXRX. We attribute this expansion in the premium to NAV to Lundberg’s correlation to the OMXS Real Estate Index and the fact that funds such as Spiltan now own 8% of its free float. From a fundamental perspective, we forecast 4% 12-month forward NAV growth but are concerned that this could be more than offset by a reversal of the 9% premium to reported to NAV towards our expectation of a 5% discount. Hence, we expect the shares to underperform and see 10% downside potential. We have downgraded to SELL (HOLD) based on our raised target price of SEK530 (485).L E Lundbergforetagen AB is an investment company that manages and develops a number of companies. The asset portfolio includes the wholly owned real estate company, Fastighets AB L E Lundberg, the publicly traded subsidiaries, Hufvudstaden and Holmen and the associated companies, Indutrade and Husqvarna. Co. also has major shareholdings in Industrivarden, Handelsbanken, Sandvik and Skanska. Co.'s subsidiary, L E Lundberg Kapitalforvaltning, is engages in securities trading. Operations consist of real estate operations, the manufacture and sale of printing paper, paperboard and sawn timber products, forest and power operations, and equity management (including securities trading).
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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