NRC Group (Hold, TP: NOK4.00) - No signs of margin recovery

As expected, Q3 EPS was close to zero, with still-weak EBIT margins following the ETM project write-downs in Q2. The 2024 guidance was unchanged, for a negative adj. EBIT margin of 0.9–1.5%, but positive in 2025 (at least 2%) and 5%+ longer-term. While we see significant upside potential if NRC reaches the 5% target, its poor track record means we are still cautious about Q4–Q1, for which we expect EPS to again be close to zero. We reiterate our HOLD, but have raised our target price to NOK4 (3....

Significant upside - uncertainty remains

Operations in line, uncertainty persists

Refinanced – time to deliver

KPIs and profits reflect cycle-lows

While the sector has rallied on expectations of a recovery in Nordic CRE and residential starts, there are no signs of an actual recovery yet. With our base case still for a gradual sales recovery in 2026, our longer-term estimates remain below consensus, reflecting slow profit-recognition under IFRS – the latter also underlies our expectation of declining revenues and EBIT YOY in Q3 for several names we cover. Our sector top picks are still Skanska, NCC and Veidekke, while we see downside risk ...

NRC Group (Hold, TP: NOK3.20) - No EBIT margin catalysts in sight

We believe NRC remains a high-risk EBIT margin recovery case (with potentially high returns). However, based on the 2024 guidance and its Q1s being low season from winter effects, we expect no signs of an EBIT margin recovery until Q2 2025 at the earliest. Also, given NRC’s track record, numerous quarters of profit recovery may be needed for the share to reprice. In an M&A scenario, due to its low EV/sales, we could see upside potential, but this is not our base case. On our updated forecasts (n...

Building a stronger organisation

Potential equity issue as Meråkerbanen hampers liquidity. FY'25e target: Adj. EBIT >NOK 140m. Long-term targets reiterated: NOK 10bn in revenues and 5% margin.

NRC Group (Hold, TP: NOK6.00) - High-risk assessment proved right

After highlighting the high risk in NRC for the past few years, this stance was supported by the Q2 report. The underlying results were broadly in line with July’s profit warning, but the company also made some additional goodwill writedowns and indicated a weaker 2024 outlook. Moreover, it announced an equity issue but not the terms, prompting us to be concerned about the dilution risk. We have thus downgraded to HOLD (BUY) and cut our target price to NOK6 (14) – awaiting more clarity on the te...

Meråkerbanen hampering liquidity

NRC Group (Buy, TP: NOK14.00) - Clean slate

NRC issued a Q2 and 2024 profit warning; about half a year into the new CEO’s tenure, it has decided to write down some old projects, reducing uncertainty, and seeks to ensure a prudent accounting regime. NRC remains a high-risk turnaround case, in our view, but in the event of a successful turnaround, we see ample upside potential. While NRC looks set for more weak results, we reiterate our BUY on the low valuation, but have cut our target price to NOK14 (15) and continue to highlight the high ...

Massive PW for 2024

Awaiting clarification at Meråkerbanen

Q2e: Adj. EBIT NOK 58m vs. consensus at NOK 65m. Financial targets ('28): NOK 10bn revenues and +5% EBIT margin. Reiterate BUY and TP of NOK 16.

Expectations running ahead

We continue to see upside potential for diversified construction (Skanska, NCC and Veidekke), but downside risk for residential developers (YIT, JM, Peab and Selvaag Bolig) that have rallied on improving market expectations while new housing sales remains lacklustre. We await the adaptation of the recently EU-approved Energy Performance of Buildings Directive (EPBD). We see a mixed picture for EPS ahead of the Q2 reporting season. We keep a neutral sector view, and still recommend a stock-pickin...

NRC Group ASA: 1 director

A director at NRC Group ASA bought 17,000 shares at 12.000NOK and the significance rating of the trade was 68/100. 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...

Lots to like from the CMD

Q1: Adj. EBIT NOK -43m vs. consensus NOK -58m. Financial targets ('28): NOK 10bn revenues and +5% EBIT margin. BUY, TP NOK 16 (14), implying 10x '25 earnings.

NRC Group (Buy, TP: NOK15.00) - Ambition remains high

The Q1 underlying results were slightly better than forecast, given the low season due to winter effects, but reorganisation costs hit reported EPS. NRC hosted a CMU in conjunction with the results, now aiming for 2028 revenues of NOK10bn and a >5% adj. EBIT margin. While we find these targets high, in our view, lifting EBIT margins from current levels are needed for an improved share price. We reiterate our BUY and NOK15 target price.

Uncertainty increased, positive growth outlook

Renovation rules now a reality

The Energy Performance of Buildings Directive (EPBD) was approved on 12 April, requiring the modernisation of existing real estate in the EU, and will soon enter the Official Journal of the EU. Member states will have two years to incorporate the provisions into their national legislation. While Q1 is Nordic construction’s low season due to winter effects, we see some downside risk to Q1e consensus and longer-term to 2024–2026e EBIT on lower development gains. We recommend a stock-picking approa...

NRC Group (Buy, TP: NOK15.00) - New CEO’s plan in focus

NRC’s Q1s tend to be its low season, due to the Nordic winter effects, and we expect a seasonal loss in EBIT (results due at c07:00 CET on 25 May). However, announced order intake has been strong, including the order termination and excluding the EUR344m light rail alliance contract in Finland. In conjunction with the Q1 results, NRC is due to host a CMD, where the new CEO will present the new group strategy. We continue to see strong upside potential on an EBIT margin recovery and reiterate our...

NRC Group (Buy, TP: NOK15.00) - Q4 volume but not EBIT beat

Q4 was the first full quarter under new CEO Anders Gustafsson. Revenue, order intake, and order backlog beat our forecasts, but EBIT did not. The company is set to present a strategy update at a CMD in May (date to be announced), where we will look for further comments on how it intends to reach its long-term 5%+ EBIT margin target. We still see a high-risk margin recovery case, with ample upside potential if successful. We have pushed our recovery expectations back by one year and cut our 2024–...