Ncc (Hold, TP: SEK170.00) - Q2 misses for ‘Other’ reasons
The Q2 miss versus our estimates and consensus was largely down to the new conservative accounting policy, IFRS16 effects and restructuring charges in the ‘Other’ segment, and legal settlements in two divisions. The underlying figures were broadly in line, and the order backlog at a record-high. However, following the recent share price recovery and our lower forecasts, we have downgraded NCC to HOLD (BUY), but reiterate our SEK170 target price.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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