YIT (Buy, TP: EUR5.50) - Overruns cause Q2 miss
YIT reported Q2 revenues in line with our forecast, and 4% above Vara consensus. However, due to “financial settlements†of EUR17m in the business premises segment, EBIT adjusted was only EUR5m, 76% below our forecast and 72% below consensus. We have cut our 2020e EPS adjusted by 19.8% on the Q2 miss, while we have reduced our 2021e EPS by 6% on underlying margin, KPI and revenue tweaks. Despite this, we believe the valuation remains attractive, and reiterate our BUY and EUR5.5 target price.YIT provides services for the construction sector. Co. has two segments: Housing and Business Premises and Infrastructure. The Housing segment is engaged in the development and construction of housing, holiday homes and entire residential areas, with a focus on its own developments. This segment is also engaged in property maintenance in Russia. The Business Premises and Infrastructure segment is engaged in the development and construction of offices, shopping malls, public facilities, assisted living facilities and other business premises; renovation projects; construction of roads, bridges, tunnels, rail and metro stations, ports and power plants; as well as road and street 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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