YIT (Hold, TP: EUR2.60) - Better risk/reward elsewhere
While Q4 EBIT beat our forecast and consensus, driven by high sales ratios in completed high-margin projects in Finland and CEE, we do not expect this to recur, based on the weak new housing sales. The order intake was also 20% below our estimate. Although we have raised our EPS for 2023e by c5%, 2024e by 15% and 2025e by 12%, we find the valuations of other Nordic construction peers under our coverage more attractive and reiterate our HOLD and EUR2.6 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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