Peab (Hold, TP: SEK105.00) - Floating values
Q4 was broadly in line with our estimates and consensus. Peab’s plan to spin off SEK4.4bn of Property Development (PD) commercial development assets into a new listing has removed the discount at which the stock was trading as a result of the significant investment in PD assets but limited ROCE. We have made only small EPS changes. However, as Peab has shown it will seek to crystallise the value created in its commercial property developments, we have moved from an EV/EBIT valuation of PD in our SOTP to capital employed. Thus, we have raised our target price to SEK105 (98) but reiterate our HOLD.Peab AB is a construction and civil engineering company. Co. has four business areas: Construction, which performs contract work for external customers and the other units and includes construction of homes and premises to renovation and construction maintenance; Civil Engineering, which engages in the local civil engineering market and in infrastructure projects such as bridges, roads and railways and the management and maintenance of streets and roads; Industry, which delivers asphalt, cement, foundations, electricity, transportation, machine and crane services and prefab to external customers and the other units; and Project Development, which develops 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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