Skanska (Sell, TP: SEK200.00) - Low dividend
Due to writedowns in construction and residential developments, Skanska fell short of our Q4 EPS forecasts. The proposed 2019 DPS of SEK6.25 was also lower than expected, and in our view Skanska’s dividend returns remain low compared to peers, prompting us to reiterate our SELL. However, having seen Nordic peers crystallise their invested capital in both residential and commercial developments in recent months, we have moved the basis of our Residential Development (RD) valuation from EV/EBIT to its assets (despite low ROCE). Based on this, we have raised our target price to SEK200 (174).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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