Veidekke (Hold, TP: NOK95.00) - Housing gives flattish EPS outlook
Q4 operating EBIT(POC) missed our forecast by 11% and Bloomberg consensus by 13%, despite a NOK70m Industry development gain. While the IFRIC figures were stronger, they included a NOK84m accounting effect. Management guided falling returns on residential developments in the coming years, but did not want to quantify. With weakening newbuild markets, we expect flattish EPS growth between 2018 and 2020, as strong civil engineering markets offset weakness in residential. We reiterate our HOLD and NOK95 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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