Peab (Buy, TP: SEK120.00) - Still attractive risk/reward
With 19 orders announced in Q4 totalling SEK4bn, we expect Peab to beat consensus on order intake. However, we find the consensus EBIT margin a bit too bullish, and our Q4e EBIT is 6% below consensus (results due at 08:00 CET on 4 February). Following the EC’s White Paper aimed at boosting the renovation and modernisation of existing buildings, we have raised our long-term growth forecasts (terminal growth) and lifted our target price to SEK120 (115). We reiterate our BUY.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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