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Martin Arnell ... (+3)
  • Martin Arnell
  • Ole-Andreas Krohn
  • Simen Mortensen
Simen Mortensen
  • Simen Mortensen

Citycon (Hold, TP: EUR11.00) - Change in general direction

At its CMD, Citycon stated it wants to develop from a shopping-centre company into a mixed-use asset company, and it has identified 4,500 residential building permits in its assets it is looking to develop. Given the lack of detail regarding investment volumes, time horizons, and rental/consumer sales product mix, the CMD raised more questions than it answered, in our view. Following the recent share price rally, Citycon is one of the most highly valued retail REITs in Europe, prompting us to do...

Simen Mortensen
  • Simen Mortensen

Valuation rally

In this minor sector note we take a look at Nordic real estate valuations, post the latest rally in share prices in the sector, which we believe has been fuelled by falling market interest rates. Implied yields have correlated closely with market interest rate trends, but with P/FFOs at record-highs and P/NAVs well above norms, we continue to have an overweight of SELL recommendations in the sector. We also note that changes to consensus EPS/FFO adjusting for lower funding costs are marginal com...

Simen Mortensen
  • Simen Mortensen

Trade, bonds and leases

NPRO’s main shareholder flagged a 72.5% ownership, having bought another 67.4m shares. Wihlborgs announced several leases in Denmark; Kungsleden also provided a lease update. Wallenstam, Castellum and SBB Norden all issued new bonds. The average implied EBITDA yields on the stocks in our sector coverage are 3.80% for 2019e and 3.97% for 2020e.

Alexander Aukner ... (+10)
  • Alexander Aukner
  • Frank Maaø
  • Jesper Ingildsen
  • Jon Masdal
  • Martin Hoang Nguyen
  • Nicolay Dyvik
  • Ole-Andreas Krohn
  • Patrik Ling
  • Rune Majlund Dahl
  • Simen Mortensen
Simen Mortensen
  • Simen Mortensen

AF Gruppen (Sell, TP: NOK120.00) - Q2 below, but M&A raises EPS

Adjusted for the IFRS accounting effect, Q2 revenues and EBIT were slightly below our forecasts and consensus. However, following the NOK2.1bn Betonmast takeover announced earlier this week, we have raised our 2019–2021 EPS forecasts. Combined with updated peer valuations, this has led us to raise our target price to NOK120 (111), while we retain our SELL.

Simen Mortensen
  • Simen Mortensen

Q2 results, bonds and projects

This week’s news highlights: Hufvudstaden (SELL, TP SEK148) and Kojamo’s Q2 (no rec) results, several bonds were issued, Kungsleden started a new project in Malmö and Johanna Skogestig was appointed as new CEO of Vasakronan. The average implied EBITDA yields on the stocks in our sector coverage are 3.85% for 2019e and 4.02% for 2020e.

Alexander Aukner ... (+10)
  • Alexander Aukner
  • Joachim Gunell
  • Karl-Johan Bonnevier
  • Mats Bye
  • Nicolay Dyvik
  • Ole Martin Westgaard
  • Ole-Andreas Krohn
  • Patrik Ling
  • Rune Majlund Dahl
  • Simen Mortensen
Simen Mortensen
  • Simen Mortensen

NRC Group (Buy, TP: NOK75.00) - On the right track

The underlying Q2 results exceeded our expectations, with better order bookings and higher EBIT margins, but an EPS miss due to M&A charges. Following the sale of the Design division to Sweco, we have cut our earnings forecasts, but also our NIBD estimates. With leverage a significantly reduced risk factor, we no longer fear an equity issue and expect the company to focus on dividends, and have thus raised our 2020–2022e DPS. We reiterate our BUY with a raised target price of NOK75 (73).

Håkon Astrup ... (+8)
  • Håkon Astrup
  • Jesper Ingildsen
  • Karl-Johan Bonnevier
  • Ole-Andreas Krohn
  • Olof Larshammar
  • Patrik Ling
  • Rune Majlund Dahl
  • Simen Mortensen
Simen Mortensen
  • Simen Mortensen

Transactions/leases and Q2 results

Länsförsäkringar Skåne purchased a property from Wihlborgs, Kungsleden started an office project in Malmö, and Hufvudstaden signed lease agreements in Gothenburg. Olav Thon’s Q2 results were in line with our estimates. The average implied EBITDA yields on the stocks in our sector coverage are 3.92% for 2019e and 4.09% for 2020e.

Simen Mortensen
  • Simen Mortensen

Olav Thon (Buy, TP: NOK215.00) - Q2 confirms growth

The Q2 results were broadly in line with our forecasts. With a 9% increase in EBIT and 10% rise in profits from rental operations YOY, the current P/NAV discount is not justified in our view. The vacancy rate is only 2.6% and with the recent 3.4% hike in tenant revenues in its shopping centres, we believe the fundamentals remain strong. We reiterate our BUY recommendation NOK215 NAV-based price target.

Simen Mortensen
  • Simen Mortensen

Self Storage Group ASA (Buy, TP: NOK22.50) - Supportive KPIs and pipel...

While Q2 reported revenue and EBITDA were weaker than we expected, the underlying results and KPIs were in line (adj. EBIT was 3% below). We continue to expect SSG to focus on growth after management presented plans to increase the current lettable area (CLA) of the property portfolio by 44,500sqm (or 36.5%). We reiterate our BUY, but have trimmed our target price to NOK22.5 (23) after updating our estimates.

Christoffer Wang Bjørnsen ... (+6)
  • Christoffer Wang Bjørnsen
  • Eivind Sars Veddeng
  • Joachim Gunell
  • Nicolay Dyvik
  • Ole-Andreas Krohn
  • Simen Mortensen
Simen Mortensen
  • Simen Mortensen

Veidekke (Buy, TP: NOK95.00) - Q2 beat where it counts

The Q2 results were above our forecasts and consensus due to better than expected EBIT margins in Industry and Construction. The order backlog was also higher than expected. With margins recovering faster than expected and a strong book-to-build ratio, we have raised our 2019–2021 forecasts. With an attractive valuation and solid dividend yield, we have upgraded to BUY (HOLD) and raised our target price to NOK95 (88).

Simen Mortensen
  • Simen Mortensen

Solon Eiendom (Hold, TP: NOK38.00) - Q2 beat, but sales still lacking

The Q2 results were above our forecasts on a favourable project mix and high unit prices (NOK9.25m/unit versus the rolling 12-month average of NOK5.5m/unit). We have updated our forecasts for the new divisional reporting, and marginally revised our 2019–2021e EPS. We reiterate our HOLD with a lowered target price of NOK38 (39).

Christer Magnergård ... (+15)
  • Christer Magnergård
  • Eivind Sars Veddeng
  • Joachim Gunell
  • Jon Masdal
  • Karl-Johan Bonnevier
  • Marius Knudssøn
  • Martin Arnell
  • Martin Hoang Nguyen
  • Martin Huseby Karlsen
  • Mattias Holmberg
  • Ole Martin Westgaard
  • Ole-Andreas Krohn
  • Simen Mortensen
  • Stefan Gauffin
  • Tomi Railo
Simen Mortensen
  • Simen Mortensen

Peab (Buy, TP: SEK93.00) - Upgraded on raised forecasts

Q2 results exceeded our forecasts due to asset sales in a Property Development JV, but were a little softer than we expected in Civil Engineering. Lower than expected order backlog has made us trim our 2019-22e revenue forecasts, but we have raised our EPS on stabilising prices in the Swedish housing market. Following our updated forecasts we have raised our target price to SEK93 (92). Given the potential upside to our target price we have upgraded to BUY (HOLD).

Simen Mortensen
  • Simen Mortensen

Ncc (Hold, TP: SEK170.00) - Q2 misses for ‘Other’ reasons

The Q2 miss versus our estimates and consensus was largely down to the new conservative accounting policy, IFRS16 effects and restructuring charges in the ‘Other’ segment, and legal settlements in two divisions. The underlying figures were broadly in line, and the order backlog at a record-high. However, following the recent share price recovery and our lower forecasts, we have downgraded NCC to HOLD (BUY), but reiterate our SEK170 target price.

Simen Mortensen
  • Simen Mortensen

Peak Q2 reporting season

This was peak Q2 results week, with eight companies we cover reporting, summarised below. The average implied EBITDA yields on the stocks in our sector coverage are 3.95% for 2019e and 4.13% for 2020e.

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