reports
- Simen Mortensen
Multiconsult (Buy, TP: NOK160.00) - On course for Q1e consensus beat
While Easter falling in Q1 is set to lead to a YOY EBIT drop on fewer working days, we expect a consensus beat, assuming a continuation of Q4’s high billing ratio. With property markets still weak, the recent EPBD revision is likely to represent a long-term boost for the company. We reiterate our BUY and NOK160 target price.
- Simen Mortensen
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...
- Simen Mortensen
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...
- Simen Mortensen
Selvaag Bolig (Sell, TP: NOK25.00) - Inventory spike set to delay prof...
In its Q1 KPI update, sold homes were marginally above our forecast, helped by sales to its main owner. However, of the 236 completed units, only 179 were delivered to clients. Unsold inventory climbed to an all-time high of 126 units at end-Q1 (ATH), and 56 completed sold homes are pending delivery. Due to the inventory build-up, we have cut our 2024e EPS by c29%, but have raised 2025e EPS by c42.5%. We reiterate our SELL and NOK25 target price.
- Simen Mortensen
Veidekke (Hold, TP: NOK120.00) - Low season ahead
Due to Nordic winter effects, Q1 typically marks low season for Veidekke. We are below consensus on Q1e EBIT, forecasting a low-season nominal loss. We expect reduced long-term civil engineering spending in Norway following publication of the new National Transport Plan (NTP), but with a weaker NOK, our 2024–2026e EPS are broadly unchanged. We have raised our target price to NOK120 (115) to reflect higher peer multiples, but reiterate our HOLD.
- Simen Mortensen
AF Gruppen (Sell, TP: NOK100.00) - Expectations look too high
We continue to see downside risk to consensus, both short-term ahead of the Q1 results (due at 07:00 CET on 15 May) and longer-term (2024–2026e). After a 2023 EBIT margin of 2.5%, consensus is for 4.8% in 2024 and 5.2% in 2025. We believe this is too optimistic, and reiterate our SELL. However, we have raised our target price to NOK100 (95) on increased peer valuation.
NRC Group ASA: 2 directors
A director at NRC Group ASA maiden bought 9,430 shares at 10.800NOK and the significance rating of the trade was 67/100. 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 c...
- Simen Mortensen
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–...
- Simen Mortensen
AF Gruppen (Sell, TP: NOK95.00) - Q4 disappoints
Following the disappointing Q4 results, explained by lower Betonmast, Sweden, and Offshore margins than we forecast on project writedowns in all three, we have lowered our 2024e Sweden and Betonmast EBIT margins, and in turn cut our group 2024–2026e EPS by c3–4% and our target price to NOK95 (100). We reiterate our SELL.
- Simen Mortensen
Selvaag Bolig (Sell, TP: NOK25.00) - Q4 miss
Q4 earnings (IFRS and POC) missed our forecasts, and the proposed H2 2023 DPS of NOK1 was below our expectation. While we expect sales to gradually recover in 2024–2026 on lower mortgage interest rates, we do not see the company returning to historical profitability levels in our forecast period due to lagging profit recognition (IFRS – IFRIC15) and accumulated capitalised interest rate expenses raising land bank costs. We reiterate our SELL and NOK25 target price.
- Simen Mortensen
Veidekke (Hold, TP: NOK115.00) - Good Q4, but M&A likely needed for EP...
Q4 revenues beat our estimate and consensus, but order backlog was reduced more than expected. In our view, EBIT margins were the biggest positive, exceeding expectations for most divisions. However, with the order backlog down 2% YOY at end-2023, we see limited growth for 2024–2025e. While the EV/EBIT and dividend yield remain attractive, we consider the P/E fair. In our view, the main potential catalyst is a return of EPS growth, driven by M&A. Near-term, we find the valuation fair, and reiter...
- Simen Mortensen
Multiconsult (Buy, TP: NOK160.00) - Operationally leveraged Q4 beat
With a Q4 billing ratio of 71.8%, its highest ever in a Q4, Multiconsult beat our forecast and consensus. In addition, FTEs rose by more than we expected. EPS was far above our forecast, due to a financial one-off. We have increased our 2024–2026e revenues’ and EPS on the solid KPIs (FTEs and billing ratio). We reiterate our BUY and have raised our target price to NOK160 (155).
- Simen Mortensen
Renovation regulation approaching
The ‘trilogue’ process regarding the Energy Performance of Buildings Directive (EPBD) that aims to double renovation rates of commercial and residential properties has been concluded, and the new legislative text is due to be published in spring 2024. Also, the recent pivot in market interest rates has improved the sector outlook, but with long profit lead times. Names with high short interest (JM and SBO) have rallied the recently, but we believe the current valuation underestimates the profit ...
- Simen Mortensen
Multiconsult (Buy, TP: NOK155.00) - Bolting on
Since the Q3 results and our last update, Multiconsult has announced four minor bolt-on M&A deals. While all small, in sum they add c1.1% to the FTEs at end-Q3, and with higher estimates on key KPIs, we have raised our 2024–2025e revenues by c1%. We are in line with the thin Bloomberg consensus ahead of the results, due at c07:00 CET on 6 February. We continue to find the growth and valuation attractive, and reiterate our BUY and NOK155 target price based on minor estimate revisions and an updat...
- Simen Mortensen
Veidekke (Hold, TP: NOK105.00) - Shy of Q4e consensus on EBIT
While we are in line with Infront consensus on revenues, we are 5% below on EBIT, as we believe the Q4 2022 divestment gain of NOK130m may have raised Q4 2023 consensus despite being a one-off. Announced orders have held up well despite weak markets, and look set to reach an all-time high in 2023. A reduced market forecast has led us to trim our
- Simen Mortensen
AF Gruppen (Sell, TP: NOK100.00) - Valuation still too high
Our Q4 forecasts are broadly in line with consensus, but we find consensus too bullish long-term. The company has already guided that no dividend will be paid for H2 2023. We find the valuation premium versus peers too high based on P/E, despite the share price decline over the past 12 months. We reiterate our SELL but have raised our target price to NOK100 (95) on updated estimates and peer valuations.
- Simen Mortensen
NRC Group (Buy, TP: NOK16.00) - No big news expected before CMD
New CEO Anders Gustafsson said NRC would host a CMD in May 2024, so we do not envisage much news with the Q4 results (due at c07:00 CET on 27 February) while he eases into the role. Long-term, we believe Mr Gustafsson will recycle some of his strategies from his time at Svevia, but not comment before the CMD. Having lowered the 2023 guidance in Q3, we do not expect the Q4 results to surprise. NRC remains a high-risk EBIT margin recovery case in our view, but with new bond financing in place, we ...
- Simen Mortensen
Selvaag Bolig (Sell, TP: NOK25.00) - Long-tail impact
The Q4 trading update revealed weaker sales and starts than we forecast; however, we continue to expect sales to recover in 2024–2025, and almost get back to pre-pandemic levels by 2026, but earnings to only normalise beyond 2026 given weak 2022–2023 markets and long profit lead times. The valuation still looks stretched to us and consensus too bullish; we reiterate our SELL, but have edged up our target price to NOK25 (24).
- Simen Mortensen
Political agreement for EPBD
Yesterday evening saw a political agreement and the conclusion of the final trilogue meeting on EPBD revisions. There are some revisions to earlier drafts, but EU member states will now prepare requirements for lower energy building stocks. We believe that once in place this regulation should be a positive for construction companies, but CAPEX for real estate companies.
- Simen Mortensen
NRC Group (Buy, TP: NOK16.00) - A reset by the new CEO
The Q3 results were weaker than we expected. Also, the first quarterly report presented by new CEO Anders Gustafsson saw the 2023 guidance and 2024 growth outlook lowered. NRC indicated it would present a new strategy at a CMD in May 2024; we expect NRC could be planning to branch out into more civil projects. Given the more cautious outlook, more prudent profit recognition and weak market in Finland, we have cut our 2023–2025e EPS by c70–c30%. We reiterate our BUY, but have cut our target price...
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