Veidekke (Hold, TP: NOK105.00) - HOLD reiterated on weak outlook
We see Q3 downside risk, as we are 8% below consensus on EBIT and 7% below on EPS, but in line on revenue ahead of the results (due at 07:00 CET on 8 November). Veidekke faces a weak outlook for private building markets, especially new housing sales. While we view its cash position and balance sheet as strong, we find the valuation fair versus peers based on 2023–2024e adj. P/E and adj. EV/EBIT and see limited upside potential. We reiterate our HOLD but have lowered our target price to NOK105 (120), given the downside risk into the Q3 results.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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