Veidekke (Hold, TP: NOK110.00) - Revenue and margins trending strongly
Q2 EBIT was broadly in line with consensus, but beat our forecast as Norwegian Infrastructure performed better than we expected. Margins continue to improve, while the order backlog is also increasing, supporting our revenue growth forecasts. Using its NOK2.5bn cash position, M&A remains a potential earnings growth catalyst, but Veidekke seems to be in no rush to use its strong balance sheet. With the share price falling to our target price (unchanged at NOK110), we have upgraded to HOLD.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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