Strong orders, but margin setback

Veidekke beat our forecasts on order intake, but fell short on our and consensus EBIT with weaker than expected profitability in the construction segment. The outlook remains strong in civil engineering, but we fear the Norwegian market will remain slow (as seen in Q2) and the peaking Swedish housing markets might slow down. We have cut our EPS forecast on lower margins and have cut our price target to NOK108 (110); we repeat our HOLD recommendation.