YIT (Hold, TP: EUR2.60) - Short- and long-term consensus risk
Given weakening consumer and investor sentiment for real estate, we believe Vara consensus may be too high. For Q4 (results due at c07:00 CET on 10 February), we are concerned about an increase in unsold completed apartments and believe the Housing Finland & CEE segment may lead to a shortfall to consensus. Long-term we are also concerned about fewer project completions and below-consensus EBIT, as well as downside potential in Property Development profits. We 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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