Metsa Board (Buy, TP: EUR11.00) - Scope for a revaluation

With ample evidence of improved demand for paper board and a better price outlook for market pulp, we believe earnings headwind has now turned into a tailwind. We also expect earnings to be driven by incremental volumes after capacity expansions at existing mills. After ambitious investments over the past three years, the company’s paper board capacity is up c25%, while its net long pulp position has increased by close to 30%. We have upgraded to BUY (HOLD) and raised our target price to EUR11 (...

March: Pulp shipments +8% y-o-y

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 10 May 2024.

Swedish policy rate cut, an upgrade and a downgrade

Sweden’s Riksbank cut the policy rate this week to 3.75% (4.0%); our estimates are based on another four cuts by end-2025. During the week we upgraded Veidekke to BUY, downgraded Castellum to HOLD, and reiterated our HOLD on Kojamo and SELL on Hufvudstaden and Sagax. The average implied EBITDA yields on the stocks we cover are 4.40% for 2024e and 4.79% for 2025e.

Millicom (Buy, TP: SEK310.00) - EFCF falling into place

After years of EFCF disappointing, we are even more confident that Millicom can beat its target of USD550m in 2024. On our estimates, the stock is trading at a 15% FCF yield. We reiterate our BUY and have raised our target price to SEK310 (290).

Sparebanken Øst (Hold, TP: NOK53.00) - Strong Q1 and capital position

Boosted by a NOK31m gain from Eksportfinans, further NII expansion and still-modest loan losses, SPOG reported a strong Q1 ROE of ~13% (9% target), despite sustained cost pressure. With lower deposit margins and one fewer interest day more than offset by improved lending margins and solid lending growth, NII rose another 3.8% QOQ. Moreover, given its ample buffer to capital requirements, we see scope for payout ratios to remain near 100% in 2024–2026e. That said, with the stock trading at a 2025...

Veidekke (Buy, TP: NOK125.00) - Low-season beat, and raised EPS

Veidekke avoided the usual Q1 seasonal loss, reporting EBIT of zero, beating our estimate and Infront consensus. Order intake was also strong, and broadly in line with expectations. Following the results, we have increased our 2024–2026e revenue by c2% and EBIT by c3.5–4%, but raised our EPS by c8–9% after also increasing our financial income estimates. In turn, we have raised our target price to NOK125 (120), and upgraded Veidekke to BUY (HOLD).

Operational quality not reflected in the share

Q1: PTP NOK 25m vs. consensus NOK -14m. Loss-making revenue in the backlog the lowest in 9 years. DPS = EPS = 8-9% dividend yield. BUY.

Better than expected and improvement y-o-y

Bravida (Buy, TP: SEK97.00) - Quality discount an opportunity

Bravida’s Q1 was mixed, with EBIT down 21% YOY, but still-solid order intake and FCF generation. While the Region Skåne governance failure seems to have been handled properly, we believe Bravida needs to rebuild its quality brand name. We still see a normalisation of the current valuation discount, and reiterate our BUY and SEK97 target price.

Sparebanken Sør (Buy, TP: NOK162.00) - Robust Q1 profitability

Boosted by the tax benefit of customer dividends, strong trading income and low loan losses, SOR reported a Q1 ROE of 14.4%. Despite some pressure on deposit margins from high levels, NII rose 1.1% QOQ, helped by improved lending margins and solid corporate growth. Driven by the latter and a raised ownership share in Brage, the CET1 ratio fell by ~20bp QOQ to 16.6% (requirement including P2G reduced to 15.9%). At a 2025e P/E of ~8.6x, we find the valuation undemanding and reiterate our BUY and N...

Millicom (Buy, TP: SEK290.00) - Time to reap the benefits

In 2023, Millicom implemented significant measures to take out costs of USD250m, which is set to boost EBITDA growth in 2024. If we adjust for the restructuring charges, we calculate 13% underlying EBITDA growth in 2024. We reiterate our BUY, and have raised our target price to SEK290 (275).

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 3 May 2024.

Q1 reporting continues

This week, Castellum and Balder reported Q1 results, Wihlborgs announced a new lease, and SBB corrected 2023 profits and dissolved Unobo. Norges Bank has signalled interest rates might stay higher for longer. K2A has halted preference dividend payments. The weighted-average implied EBITDA yields on the stocks we cover are 4.69% for 2024e and 4.97% for 2025e.

Schibsted ASA: 1 director

A director at Schibsted ASA sold 14,850 shares at 315.000NOK and the significance rating of the trade was 80/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly ...

Vermilion Compass: Weekly Equity Strategy

Are the Lows "In" for this Pullback? While we are not yet out of the woods, we continue to see evidence that suggests the lows may be "in" for this pullback. Last week (4/23/24 Compass) we discussed the possibility that further downside was limited on the S&P 500 due to a multitude of reasons (SPX had simply filled 2/22/24 gap support that we had been discussing since late-February, Russell 2000 and Equal-Weighted S&P 500 were holding above key supports, short-term oversold conditions, subdued ...