Nordic residential focus in Q3
While we expect Q3 EBIT to beat consensus based on stronger Nordic construction margins, we see US margins remaining low on unprofitable revenue (results due at 07:30 CET on 27 October). Longer-term, however, we are concerned about weakening Norwegian and Swedish housing markets, prompting us to lower our Residential Development estimates and our Nordic Construction forecasts. In turn we have reduced our 2018–2019e EPS by 3–5%, and our target price to SEK190 (195); our recommendation remains HOLD.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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