Skanska (Hold, TP: SEK230.00) - Development volatility
All the business segments roundly beat our EBIT estimates – reflecting solid margins in Commercial Development (CD) and Residential Development (RD), while Construction’s hit a 10-year high. However, while trends were positive in the volatile CD segment, on the results call management guided for a declining pipeline of CD project completions, prompting us to cut our 2021–2022e CD EBIT and effectively cutting EPS22e by -16,8%. Following the Q1 beat, we have raised our 2021e EPS by 4.3% and our 2021-23e Construction and RD margin estimates, but have cut our EPS22e after lowering our CD forecasts. We reiterate our HOLD and SEK230 target price.Skanska is a project development and construction group, concentrated on selected home markets in the Nordic region, European countries and in the Americas. Co.'s business streams are: construction, which includes building and civil construction; residential development, which develops residential projects for immediate sale; commercial property development, which initiates, develops, leases and divests commercial property projects, with project development focusing on office buildings, retail and logistics properties; and infrastructure development, engaged in identifying, developing and investing in privately financed infrastructure projects, such as highways, hospitals and schools.
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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