Lundbergs (Sell, TP: SEK590.00) - Discount valuation ahead
In its Q3 report, Fastighets AB Lundberg’s results were slightly below our expectations while it raised the reported value of its unlisted properties by 2%. To reflect that listed peers have experienced narrowing implied yields for 2018, continued solid momentum in Swedish rental markets, and low vacancy rates, we have raised our estimated market value of its properties by 1%, currently at SEK22.5bn (15% ahead of Lundbergs’ reported value. We reiterate our SELL recommendation but have raised our target price to SEK590 (575), as we expect the current premium valuation of 2% to reported values to shift to a ~5% discount on our 12-month forward NAV.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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