Serneke: Heading in the right direction - Nordea

Serneke published a solid Q2 report, delivering EBIT growth of 248% q/q, beating our EBIT estimate by 102%. The strong EBIT was mainly driven by project development (Serneke Invest), with an EBIT margin of 37.4% in Q2 (up 52 pp y/y, 22 pp above our estimate). The construction segment (Serneke Sweden) delivered an EBIT margin of 0.7%, 1.8 pp below our expectations. We hence lower group EBIT by 1% for 2021E and 16% for 2022E. Despite the continuing miss on our EBIT estimates, Serneke managed to reach positive profitability within construction, which shows that the company is heading in the right direction. To maintain momentum, we argue it is important for Serneke to keep up its stable pace of divestments in Karlastaden and to realise the value potential of its building rights. The asset divestments in Karlastaden also strengthen the contracting backlog, which is important for continuing construction margin improve ments and earnings stabilisation, in our view. Marketing material commissioned by Serneke.