Skanska AB: 1 director

A director at Skanska AB maiden bought 5,000 shares at 218.800SEK and the significance rating of the trade was 73/100. 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 cle...

Earnings growth continuing into 2025e

Skanska (Buy, TP: SEK260.00) - Asset sales remain key catalyst

Q3 headline EBIT was below our forecast due to SEK362m in impairments in Residential Development (RD) and Commercial Development (CD). Adjusted for this, underlying EBIT was 6% above our estimate and broadly in line with consensus. With SEK12bn in completed CD projects on the balance sheet, in our view divestments remain one of the biggest potential catalysts to close the gap to the SOTP. We reiterate our BUY and SEK260 target price.

US election trumps Q3 report

Rebound potential in development streams

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 ...

Skanska (Buy, TP: SEK260.00) - Set for Q3 order intake beat versus con...

Our Q3 order intake forecast of SEK54.9bn is 71% above post-Q2 Infront consensus (results due at c07:30 CET on 6th November) after Skanska announced orders of SEK32.5bn during the quarter. However, with just one divestment in Commercial Development (CD), our EBIT is below consensus. Given the discount to our SOTP, and our raised growth expectations on the strong order intake, we reiterate our BUY and have raised our target price to SEK260 (250).

Skanska (Buy, TP: SEK250.00) - Solid where it counts

Q2 EPS (segment reporting) was 10% above Infront consensus and in line with our forecast. With two large US orders announced last week and included in Q2, order intake of SEK60.7bn beat our estimate by 45% and consensus by 41%. The Construction EBIT margin also beat our forecast. Following the beat, we have raised our 2024–2026e revenues by c1% and EPS (segment) by c3%-c4%. We reiterate our BUY and have increased our target price to SEK250 (230) on our raised SOTP.

Order intake 41% above consensus

Skanska (Buy, TP: SEK230.00) - 2024e EPS raised on divestments

With five commercial real estate sales, one internal transaction, and SEK20.7bn in orders announced in Q2, we have raised our Commercial Development (CD) EBIT forecast for 2024 and Construction revenues for 2024–2026e. Ahead of the Q2 results (due c07:30 CET on 19 July), we are c50% above the most recent (post-Q1) Infront consensus for Q2 EBIT. We reiterate our BUY and target price of SEK230.

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...

Skanska (Buy, TP: SEK230.00) - Q1 miss, but underlying solid

Q1 EBIT missed Infront consensus and our forecast, mainly due to a couple of one-off charges. Order intake was broadly as we expected, but sales and starts in Residential Development (RD) beat our forecasts despite Boklok still struggling with profitability. However, given market expectations of falling interest rates, we expect divestments of commercial assets to increase. We have cut our 2024e EPS by c5% on the Q1 writedowns, but raised our 2024–2026e EPS on an improved residential outlook. Wi...

In line adjusted for EO

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...

Skanska (Buy, TP: SEK225.00) - Solid Q1 order intake expected

With no asset divestments of Commercial Development (CD) projects, we expect Q1 group EBIT to be below Infront consensus (results due at c07:30 CET on 8 May). However, with the strong announced orders, we expect a beat on order intake. KPIs in Residential Development (RD) are likely to be weak, we believe, but up from the all-time lows last year. We reiterate our BUY and SOTP-based target price of SEK225.

Skanska (Buy, TP: SEK225.00) - Q4 raises our SOTP

The Q4 cash release of working capital and divestments raised Skanska’s adjusted cash position more than we expected, and in turn our SOTP and target price. As warned, the Q4 results were affected by asset writedowns in Residential Development (RD), Commercial Development (CD) and Investment Properties (IP), but the underlying construction operations did better than we expected. We reiterate our BUY and have raised our target price to SEK225 (215).

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 ...

Skanska (Buy, TP: SEK215.00) - Q4 set to be a mixed quarter

Q4 was an eventful quarter, with 23 announced orders, one order termination, five asset sales, and a SEK2bn profit warning on its development assets. We still expect good volumes in construction, but low new housing sales in RD. However, we forecast a new housing recovery by 2026 with lower interest rates. We continue to use a discount on Residential and Commercial Development (CD, RD) and Investment Properties (IP), assuming falling asset’ values, but our SOTP still suggests upside potential in...

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.

Skanska (Buy, TP: SEK205.00) - Set to remain selective

Skanska repeated its financial targets at its CMD on 21 November, but noted the weakened transaction market given rising interest rates reducing ROCE contributions from Residential Development (RD) and Commercial Development (CD), with growth here paused. However, Skanska said it would still develop commercial real estate and residential projects, aiming “to be there” when the transaction market recovers. We have made no forecast changes and reiterate our BUY and SEK205 target price.