Selvaag Bolig (Sell, TP: NOK57.00) - Taking profits; down to SELL
Selvaag Bolig is selling much of its landbank to newly formed Urban Property (UP) for NOK3.4bn. It will have a pre-emptive right and option to buy back the land, and in future will use UP to fund new plots paying NIBOR +375bp. It plans a NOK22 one-off DPS on the capital release. As started developments are not affected, we have lowered our 2019–2021e EPS only for ‘other’, but we have cut our EBIT margins for 2022e onwards significantly on higher plot prices. We have downgraded the stock to SELL (HOLD), but we reiterate our NOK57 target price.Selvaag Bolig ASA. Selvaag Bolig ASA, formerly Selvaag Bolig AS, is a Norway-based company engaged in the development of residential properties. The Company manages the entire process, from the purchase of land to the sale of finished homes. The Company operates through such subsidiaries, as Selvaag Bolig Modulbygg, which develops flats and terrace houses with the aid of modules; Meglerhuset Selvaag, which is an estate agency responsible for the sale of the Company's new homes, and Selvaag Pluss Service, which is engaged in the operation of the Company's Pluss Homes that offer security and services, such as cleaning and booking of tickets, among others. The Company's projects are located in Oslo, Stavanger and Bergen, Norway, as well as in Stockholm, Sweden, and include Lorenskog Stasjonby, Nyhavn Brygge, Lervig Brygge Pluss, Bjornasen Start and Utsikten-Mortensrudhoyden, among others. In the second quarter of 2013, the Company sold 200 homes.
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