Veidekke (Hold, TP: NOK115.00) - Good Q4, but M&A likely needed for EPS growth
Q4 revenues beat our estimate and consensus, but order backlog was reduced more than expected. In our view, EBIT margins were the biggest positive, exceeding expectations for most divisions. However, with the order backlog down 2% YOY at end-2023, we see limited growth for 2024–2025e. While the EV/EBIT and dividend yield remain attractive, we consider the P/E fair. In our view, the main potential catalyst is a return of EPS growth, driven by M&A. Near-term, we find the valuation fair, and reiterate our HOLD, but have raised our target price to NOK115 (105).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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