Weak Q3; consensus risk
YIT’s Q3 fell shy of consensus in all operating segments, and EBIT was 6% below consensus and 8% below our forecast. We continue to find consensus margins too optimistic given that we assume lower plot gains in its developments EBIT margin. We have also included Lemminkäinen Bloomberg consensus and the updated share count from 2018, which puts us below consensus 2018 EPS, as it has yet to incorporate the merger. We reiterate our SELL recommendation and have cut our target price to EUR6.0 (6.6).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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