Veidekke (Buy, TP: NOK125.00) - One-off miss, but high ambitions
The Q1 results fell short of expectations due to the late announcement of a NOK110m dispute settlement relating to the E39 Svegatjørn-Rådal project in Bergen. Excluding this charge, the result was marginally below our forecast for low-season Q1. Despite weak new housing sales in Sweden and Norway, and the bleak commercial property outlook, Veidekke repeated its ambition of a 5% pre-tax profit margin by 2025. While we think this might be too bullish, we still see upside potential and reiterate our BUY. However, a reduced peer-group valuation has led us to lower our target price to NOK125 (130).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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