Veidekke (Buy, TP: NOK125.00) - Eyes on the road
Given soaring energy and oil prices, we have cut our forecasts for Veidekke’s Norwegian civil engineering segment, which includes its asphalt operations. Peer NCC issued a Q3 profit warning for its asphalt operations in Norway on 26 September, and we believe Veidekke is facing similar headwinds. Ahead of the Q3 results (due at 07:00 CET on 9 November), we have lowered our 2022e EPS by 14%. However, with a NOK3bn+ cash position at end-2022e, the stock still looks attractively valued on EV/EBIT. We reiterate our BUY but have lowered our target price to NOK125 (130) on our updated forecasts and peer valuations.Veidekke is a Scandinavian construction and property development company. Co.'s segments are grouped according to activity. The construction segment comprises mainly the construction of buildings and infrastructure. The property segment comprises the development of sites, property development and the sale of property (primarily residential). The industry segment comprises the production of aggregates (crushed stone and gravel) and asphalt, the laying of asphalt and road maintenance.
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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