Rebound will take a few years

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

Improving market - BUY the leader

EBIT down 4-1%. Uptick in sold units to continue in Q2'24e. Housing market rebound in the making - BUY

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).

JM AB: 2 directors

Two Directors at JM AB bought/maiden bought 1,550 shares at between 183.170SEK and 184.000SEK. The significance rating of the trade was 68/100. 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 ov...

All starts in the Baltics and Germany

Jm Ab (Sell, TP: SEK155.00) - Q1 EPS miss

Higher tax costs than forecast meant Q1 EPS missed expectations. Sales of new homes were broadly in line with our estimate – but starts were below, prompting us to cut our 2024e EPS by c19% and 2025e by c5%. However, expecting a catch-up effect, we have raised our 2026e EPS by c16%. In our view, the valuation is already pricing in a market recovery, while we still see a risk of setbacks, mainly from fewer and slower interest rate cuts, and we see a better risk/reward elsewhere in the sector. We ...

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...

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.

Jm Ab (Sell, TP: SEK155.00) - Hockey-stick recovery unlikely

The share price has rallied on the peak interest rate narrative, improved consumer sentiment and short covering, but new housing sales remain weak QTD. We expect Q1 profit to miss Infront consensus on price cuts, but starts to be above (results due at 08:00 CET on 23 April). Overall, we believe the share price has run too far ahead of the recovery and profit lead times are much longer than reflected in market expectations. We reiterate our SELL, but have raised our target price to SEK155 (130).

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...

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.

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.

Jm Ab (Sell, TP: SEK130.00) - KPI boost, but weak margins

Driven by investor package sales, JM started and sold more units than expected in Q4. However, even without property writedowns of SEK245m, profit was weaker than expected. Unlike peers, JM reports profit based on a percentage of completion accounting (meaning project starts and units under production). Given the weak Q4 EBIT margin run rate in the ongoing portfolio, we have reduced our 2024–2026e EBIT margins. We reiterate our SELL and have reduced our target price to SEK130 (140) on our lowere...

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 ...

Jm Ab (Sell, TP: SEK140.00) - Downturn was deep, effects are long

Despite having raised our unit sales and starts forecasts to reflect a faster market recovery, expecting sales to reach the 2019 level by 2026, we believe EPS is unlikely to recover to ‘pre-slowdown’ levels until after our forecast period. With the share price up on falling interest rates, we believe the market underestimates the profit time lag and magnitude of the 2023–2024 sales drop. We reiterate our SELL, but have raised our target price to SEK140 (100) due to an improved market outlook on ...

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...

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).

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).