Q1 trends, estimates, valuation and top picks

The Q1 reports proved that sector companies could maintain record-high margins despite volume declines.

ODDO BHF Small & MIDCAP MORNING NEWS - 30/04/2024 Date Performance dep...

L’offre de BHP sur Anglo American a confirmé l’intérêt des minières pour le cuivre dans un contexte de tensions croissantes sur la production et de difficultés à faire aboutir les projets. Les perspectives d’Anglo (Neutre) dans le cuivre sont désormais mieux valorisées, c’est aussi le cas de BHP (Neutre vs Sous-performance) mais pas encore assez, selon nous, sur Rio Tinto (Surperformance vs Neutre). En aval, Nexans et Montana Aerospace sont nos valeurs préférées (Surperformance) vs Au...

ODDO BHF Small & MIDCAP MORNING NEWS - 04/30/2024

BHP's bid for Anglo American has confirmed interest from miners in copper in the context of increasingly challenged production and difficulties in fully completing projects. Anglo’s (Neutral) prospects in copper are now better valued and this is also the case for BHP (Neutral vs Underperform) although not so for Rio Tinto (Outperform vs Neutral). Downstream, Nexans and Montana Aerospace are our Top Picks (Outperform) vs Aurubis, Rexel and Prysmian (Neutral). - ...

Nokian Renkaat Oyj : Début d’année plus difficile que prévu

>Résultats inférieurs aux attentes mais guidance confirmée - Nokian Tyres a publié des résultats T1 2024 nettement inférieurs à nos attentes et celles du consensus avec un CA seulement stable à 237 M€ (consensus 265 M€) et un EBIT ajusté de -15 M€ (consensus +4 M€, ODDO BHF -3 M€), notamment pénalisé par des facteurs externes (grèves en Finlande, impacts Mer Rouge) qui ont davantage impacté sa production que ce que nous anticipions (impact CA de ~25 M€ au T1) et qui ...

Nokian Renkaat Oyj : A tougher start to the year than expected

>Earnings short of estimates but guidance confirmed - Nokian Tyres reported Q1 2024 earnings far below our estimates and those of the consensus with sales merely stable at € 237m (consensus € 265m and adjusted EBIT of -€ 15m (consensus +€ 4m, ODDO BHF -€ 3m), notably penalised by external factors (strikes in Finland, disruptions in the Red Sea) which have hit the group’s production harder than we expected (sales impact of ~€ 25m in Q1), and which should continue to af...

Nokian Tyres (Hold, TP: EUR9.00) - Soft Q1, with or without setbacks

The Q1 results were below our expectations, even after adjusting for the negatives on the group profit from the political strikes in Finland and the Red Sea conflict. On a positive note, the PCT price/mix was guided to hold up well, partly offsetting our revised lower sales expectations, while the Romanian factory appears to be ramping up on schedule. We reiterate our HOLD but have cut our target price to EUR9.0 (9.5), after lowering our 2024–2026e clean EBIT by c6% on average.

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%.

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

Strong orders, resilient margin despite lower sales

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...

Citycon OYJ: Regular update

Our credit view of this issuer reflects its significant exposure towards necessity shopping and high leverage.

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.

Atrium Ljungberg (Hold, TP: SEK200.00) - Cost control behind PFPM beat

Strong cost control and an energy-cost tailwind gave a 5% PFPM beat, while the uptick in vacancy rate and negative net letting (second consecutive quarter) were key negatives. We have cut our 2025–2026e EPS by 2–3%, mainly on market interest-rate changes. We reiterate our HOLD and have lowered our target price to SEK200 (220) on a tweaked valuation yield. Benefiting from a strong hedging portfolio in 2023 (FFOPS +16% YOY, among the best in the sector), we expect muted FFOPS growth in our forecas...

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...

Nokian Tyres (Hold, TP: EUR9.50) - Directionally better

For 2024, Nokian Tyres is set to see a boost in capacity, but most of the increase should stem from less-profitable contract manufacturing, leaving limited upside potential to consensus, in our view. For Q1, we expect reiterated 2024 guidance on slightly improved sell-in trends and an update on capacity expansion. We reiterate our HOLD but have nudged up our target price to EUR9.5 (9.0).

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.

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...

Moody's announces completion of a periodic review of ratings of Cityco...

Moody's Ratings has completed a periodic review of the ratings of Citycon OYJ and other ratings that are associated with this issuer. The review was conducted through a rating committee held on 21 March 2024 in which Moody's reassessed the appropriateness of the ratings in the context of the releva...