Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 26 April 2024.

Q1 reporting season kicks off

Q1 reporting season kicked off this week, with results from Nyfosa, Entra, Wallenstam, Fabege, KMC Properties, Pandox, and Catena. In other news, Public Property Invest is to be listed on the Oslo stock exchange on 29 April. The weighted-average implied EBITDA yields on the stocks we cover are 4.75% for 2024e and 5.04% for 2025e.

Alfa Laval (Buy, TP: SEK540.00) - Sit back, relax and enjoy the ride

Q1 confirmed that demand remains strong for Alfa Laval and strengthened our view that investors and consensus are exaggerating concerns about the heat pump demand slowdown and underestimating the strength of the Marine market. Alfa Laval remains our sector top pick, being an enabler of the energy transition with promising long-term growth prospects. We reiterate our BUY and have raised our target price to SEK540 (495), having increased our 2025–2026e adj. EBITA by 6–7%.

Norwegian Air Shuttle (Buy, TP: NOK21.00) - Weak Q1 due to higher cost...

Norwegian Air Shuttle traded down c7% on Wednesday on weaker than expected Q1 results hit by higher costs, which made the market question the reiterated 2024 CASK guidance. We reiterate our BUY but have lowered our target price to NOK21 (23) on negative estimate revisions, reflecting slightly revised cost assumptions.

Pandox (Hold, TP: SEK175.00) - Q1 in line, fairly valued

Q1 FFOps was in line with our estimate but below Infront consensus. While we have made only minor forecast changes, following the recent share performance and as the stock is trading close to our target price, we have downgraded to HOLD (BUY) but reiterate our SEK175 target price.

Easily brushing HVAC weakness aside

Orders 11% higher, with Marine and Energy jumping. Sales lagged, but no major concern; adj EBITA +4%. Great exposure, visibility, financials - keep BUY

ATH profits next

Weak Q1 in a seasonally small quarter, upbeat outlook kept. Unit costs need to improve - key for confidence. '24e EPS down 2.5%. BUY, TP NOK 21.

Strong orders, resilient margin despite lower sales

Miss even incl. one-off items

EPBD the big story this week

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. In other news, KMC Properties bought a new asset and appointed an interim CEO, JM got a new CEO, while Castellum announced a divestment and new leases, and Atrium Ljungberg kicked off Q1 reporting season. The weighted-average implied EBITDA yields on the stocks we cover are 4.74% for 2024e and 5.01% for 2...

Alfa Laval (Buy, TP: SEK495.00) - Alfa Lavalicious

We are 4% above consensus on Q1e orders but roughly in line on sales and adj. EBITA, and expect the company to guide for unchanged demand in Q2 versus Q1. We reiterate our BUY and have raised our target price to SEK495 (430) after raising our 2024–2026e adj. EBITA by 5% on average. We are 4–10% above consensus on 2024–2026e adj. EBITA and continue to view Alfa Laval as one of the sector’s most exciting long-term growth stories, driven by the energy transitions.

Fully valued near-term

We maintain a neutral sector stance, but see near-term setbacks and consider risks tilted to the downside near-term due to strong sector performance in the past month, while market interest rates have risen. We expect two years of zero NAV growth, on average, due to yield expansion, and the sector theme to be deleveraging, with limited capex. We see few potential company-specific catalysts, leaving share prices largely driven by macro factors. We consider the sector fully valued near-term, at an...

Norwegian Air Shuttle (Buy, TP: NOK23.00) - Widerøe set for take-off

Norwegian Air Shuttle (NAS NO, Buy) - Widerøe set for take-off (34 pages)

Vacancy uptick in Stockholm

This week, Citymark announced vacancies in the Stockholm office market are now higher than during the 2007–2008 financial crisis. Selvaag Bolig (SELL, TP NOK25) released KPIs for Q1, where unsold inventory was at an all-time high. Norwegian house prices rose 0.9% in March and 5.9% YTD. Entra announced leases. Corem announced that it aims to issue bonds. The weighted-average implied EBITDA yields on the stocks we cover are 4.62% for 2024e and 4.88% for 2025e.

Norwegian Air Shuttle (Buy, TP: NOK20.00) - March traffic statistics

We consider this a slightly positive report for Norwegian Air Shuttle, including strong figures for Norwegian Air, slightly weak figures from Widerøe, and a cautious outlook for April. We expect 1–2% positive revisions to consensus 2024e EBITDA and believe a slightly positive share price reaction is warranted.

Norwegian Air Shuttle (Buy, TP: NOK20.00) - March traffic statistics p...

The March traffic statistics are due at 08:00 CET on 5 April. We are positive ahead of the report, expecting a continued positive trend for yield and load. We reiterate our BUY and NOK20 target price.

Transactions, debt repurchase, and National Transport Plan

This week, Corem, Catena and Vasakronan (which re-entered the M&A arena after a more than 5-year absence) announced property transactions, SBB saw its share price rise by 29% on the week after retiring long-term debt, and the Norwegian government unveiled a somewhat smaller budget in its latest National Transport Plan (NTP), with a weak read-across to the local construction and consultancy sector, in our view The weighted-average implied EBITDA yields on the stocks we cover are 4.54% for 2024e a...

Pandox AB: 1 director

A director at Pandox AB sold 2,000,000 shares at 170.000SEK and the significance rating of the trade was 74/100. 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 clearly s...

Insider transactions, SBB rating lowered and lease contracts

There were several insider transactions this week. Also, SBB offered to buy back certain hybrid and senior bonds, and credit agencies lowered their ratings in response. Corem announced new leases, and a large Norwegian real estate syndicate was taken over by one of its bondholders. The weighted-average implied EBITDA yields on the stocks we cover are 4.60% for 2024e and 4.86% for 2025e.

Modest 2024–2026 growth outlook

We expect flattish 2024–2025 NAVps growth for our Swedish coverage, due to too-low asset writedowns in 2023, but 7% in 2026e assuming stabilised yields. We forecast a 2024–2025 FFOps CAGR of 5%, held back by: 1) maturing interest rate hedges; 2) expected rental growth slow-down; and 3) deleveraging hurting investment capacity. However, we consider this priced in at a sector NAV median discount of 27%. We maintain a neutral sector stance, and our top picks are Catena, Castellum, Nyfosa and Pandox...