Peab (Sell, TP: SEK60.00) - Q1 beat, but still needs to divest
Despite the low season, Q1 beat our estimates, driven by a commercial asset sale in Property Development (PD), while the deviations to our forecasts were less for the other segments. However, with a high level of capital employed in PD and an IFRS net debt/EBIT of c8x, we believe more focus is needed on capital releases and deleveraging. We have raised our 2024e EPS by c16% (transaction-driven) on the strong Q1, but marginally revised 2025–2026e. We reiterate our SELL on the still-high leverage and EV/EBIT, but have raised our target price to SEK60 (58) on our revised estimates.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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