Improvement from a low base

Strong cash flow

Time to sell the inventory

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 ...

Bonava (Hold, TP: SEK8.50) - Q3 likely to be weak

We expect a KPI recovery for housing starts and sales from a low base; however, with few completions, we forecast a weak Q3 EPS of SEK-0.42 (results due at c07:00 CET on 24 October). We have cut our 2024e EPS after Bonava announced a SEK60m impairment in a deal with OBOS in Gothenburg, and we see scope for more impairments with a potential Finnish operation divestment. We reiterate our HOLD on the low valuation but few near-term catalysts, but have reduced our target price to SEK8.5 (9).

Bonava (Hold, TP: SEK9.00) - Delayed earnings recovery

While Q2 nominal EBIT was low, as expected, rising financial costs resulted in EPS well below our forecast and Infront consensus. Moreover, KPIs (started and sold units) were significantly below our expectations, which in turn delayed our expectation of an earnings recovery. This and our updated financial cost estimates mean we have cut our 2024–2026e EPS. Given the low P/B of 0.4x, we believe many of the negatives and low expected profits in the coming years are reflected in the current share p...

Enough for a positive reaction

Bonava (Hold, TP: SEK9.00) - Q2e EPS near zero

For the upcoming Q2 results (due at c07:30 CET on 19 July), we expect a close to zero EPS for Bonava, and are concerned about per-share losses for 2024–2026e, given the weak housing market in 2022–2024e and few new development starts. Bonava has a trailing reporting based on completions. While we do not expect profits in the forecast period, the current low P/B of 0.35x reflects this, in our view. We reiterate our HOLD and have cut our target price to SEK9.0 (9.5).

Too aggressive targets

Q2e: Starts up q-o-q and y-o-y, but not by enough. 2026 targets too aggressive. HOLD, TP SEK 10 (unchanged).

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...

Rebound will take a few years

Minor changes to underlying estimates. Sold units lagging peers. Downside risk to consensus in 2025/2026.

Bonava (Hold, TP: SEK9.50) - No KPI recovery in Q1

As expected, Bonava reported close to zero EBIT and EPS. Moreover, the leading KPIs for starts and sales were weaker than expected, and we have cut our 2026e EPS. We continue to expect close to zero EPS in 2024–2026e, but with a P/B of c0.4x and refinancing in place with the Q1 equity issue, we believe the negatives are reflected in the share price. We reiterate our HOLD, but have raised our target price to SEK9.5 (8.5).

All starts in the Baltics and Germany

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...

Bonava (Hold, TP: SEK8.50) - Adjusting EPS for dilution

Following Bonava raising cSEK1,050m and issuing 213m new shares (a c197% increase) in an underwritten rights issue, we have updated our 2024–2026e EPS for the new share count and lowered our net debt. We have made no changes to our revenue or EBIT forecasts. We do to not see the company returning to positive EPS territory in our forecast period. However, we note a low 2024e P/B valuation of 0.34x. We reiterate our HOLD, with a new target price of SEK8.5 (previously SEK14, or SEK7.98 adjusted for...

Bonava AB: 2 directors

A director at Bonava AB subscribed to 20,000 shares at 4.900SEK and the significance rating of the trade was 51/100. 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 clear...

Bonava (Hold, TP: SEK14.00) - Decent Q4, mixed KPIs

The Q4 results were broadly in line with our forecasts, excluding SEK37m in impairments. Unit sales were slightly better, but new starts weaker. With fewer units set to be completed in 2025, we have cut our 2025e EPS by -162%% to SEK-2.25. We find the revised financial targets fair long-term, but consider them being reached by 2026 too optimistic. We reiterate our HOLD and SEK14 target price. Note that the terms of the announced rights issue are expected on or around 2 February.

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 ...

Bonava (Hold, TP: SEK14.00) - The value is in the rights

With the weak housing market resulting in a rising inventory of unsold homes and ongoing developments still draining Bonava’s liquidity, on 20 December, the company announced a cSEK1bn fully underwritten rights issue, which we believe will be in focus with the Q4 results. With a P/B of c0.2x, we believe much of the negatives are already priced in, but most of the current value is likely to be transferred in the upcoming rights issue, in our view. We reiterate our HOLD but have reduced our target...

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.