YIT (Hold, TP: EUR7.00) - Set for record EBIT, but fairly valued
While we expect YIT to report record-high quarterly EBIT for Q4 2019 (results due at 07:00 CET on 7 February), we believe the stock is fairly valued on a short- to mid-term basis following the recent strong share price performance, and have downgraded to HOLD (BUY). However, on our updated estimates and peer multiples, we have raised our target price to EUR7 (6.4). We forecast Q4 EBIT of EUR124m after several large successful commercial developments, putting YIT on course to meet its 2019 adj. EBIT guidance (EUR160m–185m). Our focus in the Q4 results though will be on the 2020 guidance, as we are 10% below consensus on full-year EBIT.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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