Mixed upside potential, despite market recovery expectations

Pent-up demand and falling interest rates remain the backbone for newbuild recovery expectations. However, as the recovery has not yet started, property developers screen as the most attractive long-term, but visibility remains mixed. Diversified construction companies are more attractive on near-term P/Es, although many seem to be fully valued on solid share-price performance over the past six months. We maintain a neutral sector view; NCC and Skanska are our top picks.

Selvaag Bolig (Sell, TP: NOK32.00) - Unit sales in line, EPS still trailing

Today’s Q1 trading update showed a unit sales recovery broadly in line with our forecast. However, while starts were above our forecast, our 2025e is unchanged at 700 units. Despite KPIs seemingly recovering as expected, we still see downside risk for the stock given the long lead time to profit and dividends and as the valuation looks high relative to peers. Ahead of the Q1 results (due at 07:00 CET on 21 May), we forecast marginally negative Q1 EPS on few deliveries. We reiterate our SELL and NOK32 target price.

Sales as expected, deliveries above

Flerie (Buy, TP: SEK57.00) - Entering tougher times with care

Entering tougher times with care Q1 saw a 6% decline QOQ in Flerie’s NAV, as FX movements and valuation overshadowed progress across its portfolio (e.g. positive results for Lipum and AnaCardio). We have lowered our target price to SEK57 (68) to reflect a more challenging environment for early-stage life science assets, but reiterate our BUY as we continue to like the diversified, conservatively valued portfolio and the share redemption scheme at NAV (set for end-Q2). Flerie is set to take listed holding Toleranzia private subject to AGM approval, which should improve funding conditions agains...

VEF (Buy, TP: SEK2.50) - Executing on exits and buybacks

Q1 saw 1% NAV growth QOQ in USD terms, as operational progress and FX effects (mostly relating to the BRL) offset multiples contraction. We are encouraged by the recent partial exit of Juspay at a 37% IRR, 4x CoC and valuation in line with NAV, and see further near-term upside potential in this name. We have cut our target price to SEK2.5 (2.9), mainly on the USD headwind versus the SEK, but reiterate our BUY, as we still see scope for a re-rating from continued exits, deleveraging and the recently announced buyback programme.

Nordea (Buy, TP: SEK155.00) - Resilient returns at a discount

Nordea’s Q1 was a robust quarter, with a resilient >15% ROE on a strong capital position (200bp management buffer) underpinning Nordea’s widening ROE lead versus its peers. We have raised our 2025–2027e EPS by 3–4% and our target price to SEK155 (148). Nordea is trading at a c15% P/E discount to its Swedish large bank peers, which we find unjustified given its superior ROE versus the peer group. We reiterate our BUY.