Case intact after neutral Q1

Q1 EBITA in line with consensus. Minor revisions, '24e EBITA down marginally. Reiterate BUY, unchanged TP of SEK 125.

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 10 May 2024.

Swedish policy rate cut, an upgrade and a downgrade

Sweden’s Riksbank cut the policy rate this week to 3.75% (4.0%); our estimates are based on another four cuts by end-2025. During the week we upgraded Veidekke to BUY, downgraded Castellum to HOLD, and reiterated our HOLD on Kojamo and SELL on Hufvudstaden and Sagax. The average implied EBITDA yields on the stocks we cover are 4.40% for 2024e and 4.79% for 2025e.

Securitas (Buy, TP: SEK158.00) - North America showing the way

The North American operation continued to shine in Q1, growing with strong earnings leverage, while Europe remained in transformation mode. We have raised our 2024–2026e EPS by 3–5% on the results, mainly due to FX. We still see a strong transformation case, as the journey towards the 8% profit margin target by end-2025 (LTM 6.6%) continues, with the riskier early part of the Stanley Security integration now largely finalised. We reiterate our BUY and SEK158 target price.

Struggle in Europe main issue in Q1

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 3 May 2024.

Q1 reporting continues

This week, Castellum and Balder reported Q1 results, Wihlborgs announced a new lease, and SBB corrected 2023 profits and dissolved Unobo. Norges Bank has signalled interest rates might stay higher for longer. K2A has halted preference dividend payments. The weighted-average implied EBITDA yields on the stocks we cover are 4.69% for 2024e and 4.97% for 2025e.

Weekly Real Estate Matrix

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

Enjoy the ride

We trim estimates somewhat. Reassuring outlook for new construction. Potential for >15% share price CAGR until 2026. BUY.

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.

Catena (Buy, TP: SEK515.00) - Time to put the money to work

The Q1 results were solid in our view; although the vacancy rate rose, it was from a very low level, and was therefore of limited concern. We reiterate our BUY and have raised our target price to SEK515 (500). In our view, Catena has (too much) firepower following its last equity raise and we would like to see more M&A, project activity, or speedy reinvestment. Following the equity raise the stock looks highly valued on a 2025–2026e P/FFO of 21–19x, but that drops to 15–14x adjusted for earnings...

Like clockwork

Bilia AB (Buy, TP: SEK148.00) - Inflection point for new car orders

While management had flagged that Q1 was likely to be soft, operating earnings just beat our estimate. The key positive in the report was underlying order intake (after seven consecutive quarterly declines), helped by a recovery in Norway. We expect high campaign activity to extend the trend in Q2, along with still stable demand for service operations. We reiterate our BUY and have raised our target price to SEK148 (145).

Bilia AB (Buy, TP: SEK145.00) - A turning point in new car orders

We consider this a positive report for Bilia, including operating earnings slightly above consensus, strong organic growth for its service business and positive order intake for new cars (after seven quarters of decline) as Norway looks to be recovering. We expect consensus 2024e operating earnings to come up c1–3% on the back of the report and expect a positive share price reaction.

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...

Surgical Science (Buy, TP: SEK230.00) - Tough comparables in Q1

We expect a 4% slide YOY in sales in Q1, and an adj. EBIT margin of 25% versus 26% in Q1 2023 (the results are due at 07:30 CET on 15 May). We reiterate our BUY, but have lowered our target price to SEK230 (235).

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...

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.

Byggfakta Group (Hold, TP: SEK52.00) - Bid raised to SEK52/share

Last night, Giant BidCo raised its take-private offer – to SEK52/share (up 13% from the initial SEK46/share) – in line with our expectation. We have downgraded to HOLD (BUY) and cut our target price to SEK52 (57), as we see a low likelihood of a further raised bid given: 1) the support for the new bid from remaining institutional IPO investors; 2) other potential suitors likely would have already shown interest; and 3) it represents a compromise between Giant BidCo and the institutions that seem...

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...