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.

Bonava (Hold, TP: SEK16.00) - New equity considered

With large impairment charges, and an underlying miss in operational figures, Q3 missed expectations. On the webcast, Bonava indicated new equity as one of the options being considered in its ongoing strategic review. With weak sales in Q3, we have made deep cuts to our 2025e EPS, but with a 2023e P/B of 0.26x, most of the negatives already seem priced into the stock. We reiterate our HOLD and have cut our target price to SEK16 (19).

Bonava (Hold, TP: SEK19.00) - Testing times

We have edged up our 2023–2025 unit sales estimates, and are 4% above consensus on Q3e revenues (results due at c07:00 CET on 15 November). Like other Nordic residential developers, we believe Bonava is facing a few tough quarters, prompting it to announce a restructuring initiative and c400 job cuts (with the related costs to be booked in Q3). While we acknowledge weak housing sales, we believe Bonava has the balance sheet to see it through the tough times we expect ahead; hence, we reiterate o...

Bright spots few and far between

With only three BUYs, we consider bright spots in the sector – just as residential newbuild and commercial development sales in today’s market – few and far between. New housing sales and commercial property markets have been hit by rising interest rates, and the EU’s Energy Performance of Buildings Directive (EPBD) – which holds potential upside – has been delayed. We still prefer stocks with no (or limited) pure residential exposure; our top picks in construction are Skanska and NCC, but, desp...

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Bonava (Hold, TP: SEK19.00) - Weak Q2 – more to come

The Q2 results missed our expectations and consensus, which, combined with fewer units sold and started, and soft 2024 unit completion guidance given the weak residential markets, has led us to once again cut our forecasts. The stock is already trading at a significant discount on P/B. On the positive side, the company does not seem at risk of breaching covenants near-term after the sales of the Norwegian and Russian operations. However, we also see no near-term improvements. We reiterate our HO...

Building trouble in the private sector

The building outlook remains grim, with very weak new private housing sales and a tough commercial property market. However, the overall picture is eased slightly by support from the public sector and civil engineering, and a likely renovation wave from the Energy Performance of Buildings Directive (EPBD). However, we still prefer stocks with no (or limited) pure residential exposure, and retain our neutral sector stance. Veidekke and Skanska are our preferred picks in construction, but we expec...

Bonava (Hold, TP: SEK20.00) - Room to manoeuvre

With the sale of the Norwegian operations (SEK1.5bn), and the planned sale of the Russian operations (SEK440m) in Q3e, we expect Bonava to have enough liquidity to deal with its 2024 bond maturity. While these sales have eased the financial risk, weak markets and operational challenges remain. The Q2 results, due at c07:30 CET on 20 July, will be significantly affected by these transactions. We see no near-term market rebound and reiterate our HOLD, but have raised our target price to SEK20 (19)...

Bonava (Hold, TP: SEK19.00) - Risk of not covering fixed costs due to ...

Bonava guided for 1,970 completions in 2024 – which we are concerned might not even cover its fixed costs. Furthermore, we have similar concerns for 2025, given current weak starts and sales in the sector slowdown. We believe a disposal of the Norwegian operations could raise the liquidity to deal with these costs and the 2024 bond maturity, but see a risk a sale might have to be done at a discount to BVs. The stock is already trading at a significant discount on P/B; we reiterate our HOLD, but ...

Bonava (Hold, TP: SEK23.00) - Weak Q1 guided

Bonava issued a Q1 profit warning on 20 April, due to building delays and a weak residential market. It now guides for Q1 revenues of SEK2.4bn and EBIT of SEK45m, with only 700 of the previously guided 940 units to be completed having been delivered to clients. We have cut our Q1 forecasts on the delays and build-up of unsold completed homes. We see a risk that balance sheet improvements might be needed if it does not sell the Norwegian operations (strategic review ongoing), which we believe cou...

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