Strong Q2 but still a market risk
Q2 beat our forecasts and consensus, with a NOK265m plot sale and a strong underlying EBIT margin. The company expects prices and volumes to recover within a few quarters, and is positioning its developments accordingly, but we believe it is being overly optimistic. Given the time lag in earnings, the stock screens attractively on 2017–2019e multiples, but we fear new sales in the slowing market Norwegian housing market will influence the share price, in our view. We reiterate our HOLD recommendation but have raised our target price to NOK38 (NOK35).
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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