Veidekke (Buy, TP: NOK130.00) - To remain event-driven short-term
Following the profit warning, the Q4 results were in line with our segment bottom-line forecasts. Veidekke proposed a 2019 of NOK5 and stated a fair value on net invested capital of NOK8.4bn for Property Development (PD) asset values, in line with our forecasts. With the ongoing separation process of PD, we expect the stock to be event-driven short-term. If PD is sold, we see the potential for high extraordinary dividends, but a need to strengthen the balance sheet if listed. In our view, the risk is binary. We reiterate our BUY and NOK130 target price.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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