Steady and strong performance

Veidekke (Buy, TP: NOK140.00) - Q3 revenues below, EPS above

While Q3 revenues missed expectations, higher order intake than expected left the order backlog 10% above our estimate. Despite lower volumes, the EBIT margin beat our forecast, led by the Norwegian Infrastructure division, particularly its portfolio of large civil engineering orders and the asphalt operations. We reiterate our BUY and have raised our SOTP-based target price to NOK140 (135).

Sound performance, small beat, outlook better

Margins holding up despite lower production

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 ...

Veidekke (Buy, TP: NOK135.00) - Mixed Q2, 2024–2026e EPS raised

The Q2 results were mixed, with revenues and order intake below our forecasts, EBITDA in line, and EBIT and EPS above. We have reduced our 2024–2026e revenue, but raised EPS by c2–3% on strong EBIT margins. We reiterate our BUY and NOK135 target price.

Only Building Sweden left to turn

Asphalt profitability back to normal levels

Veidekke (Buy, TP: NOK135.00) - M&A and market boost for EPS

We have raised our 2024–2026e revenue and EPS to reflect the pending Euromining acquisition (2023 revenues of SEK750m according to Veidekke), as well as our increased Norwegian civil engineering forecasts and updated estimates for the Danish market. We are 6% above Infront consensus on Q2e EBIT, but just 2% above on EPS (results due at 07:00 CET on 15 August). We reiterate our BUY and have raised our target price to NOK135 (125).

Too solid for P/E 10x

Q2e: PTP NOK 440m vs. consensus at NOK 425m. '25e-'26e PTP estimates up ~4%. DPS = EPS = 8-9% dividend yield.

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...

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

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...

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.

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...

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 ...

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

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.