Ncc (Buy, TP: SEK125.00) - Q3e EPS cut on profit warning
In a profit warning issued on 26 September NCC said that it has not been able to pass on spiking energy costs in its asphalt segment, that it expects the Industry division to end 2022 at a close to a zero bottom line, and that it had some execution-linked project cost overruns on residential developments in Stockholm. We have cut our Q3e EPS by 74% and 2022e EPS by 36% ahead of the Q3 report (due at c07:00 CET on 1 November) and our target price to SEK125 (155), but still view the valuation as attractive and reiterate our BUY.NCC AB is a construction and property development company. Co. develops and builds residential and commercial properties, and constructs industrial facilities and public buildings, roads, civil engineering structures and other infrastructure. Co. also provides input materials used in construction and paving and road services. Co. operates three businesses: Industrial, which are based on stone materials and asphalt production, as well as asphalt paving and road services; Construction and Civil Engineering, which consists of NCC Construction Sweden, NCC Construction Denmark, NCC Construction Finland and NCC Construction Norway; and Development, which encompass housing and commercial property.
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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