* Accretive SBBs set to continue in H1'26
* Room for M&A to drive earnings growth
* 2026e P/CEPS 11x vs. coverage average of 15x
Q4 stronger than expected
Q4 NOI was 4% ahead of our estimate and 1% ahead of Factset cons., with a stronger top line countered by higher operating costs. Central administration costs and net financials were slightly lower than we expected, resulting in rec. PTP 11% ahead of our forecast. The proposed dividend of SEK 0.28 per share was higher than our and cons. expectations at SEK 0.20.
Potential to drive estimates further
Occupancy improved 1.8pp q-o-q to 94.6%, driven by divestments in the quarter, and net letting amounted to SEK 1.7m. The earnings capacity (EC) IFPM was down 1.3%, while IFPM per share was up 0.5% on the back of SBBs. This has continued into Q1, with SBBs of ~8m shares in Jan, corresponding to 2.4% of the shares, taking the ownership to 6.7%. The mandate allows for up to 10% of the shares until the AGM in May, and we have the impression management intends to continue SBBs until then – we assume 8% until Q2. This drives positive estimate revisions, while we make slight negative underlying revisions. Trading at a 34% discount to reported EPRA NRV, SBBs are clearly accretive, and the implied yield of ~7% is likely one of the best deals on the table. Net LTV stands at 53.2%, and we have the impression that the company aims to have a net LTV of 55-60%; assuming the mid-point the potential investment volume is ~SEK 1bn. Assuming NIY in line with the current average valuation yield and current funding terms, this could boost CEPS estimates by ~6-7%.
'26e P/CEPS 11x vs sector at 15x
The share is trading at a '26e P/CEPS of 11x vs. the sector average of 15x, and a P/EPRA NRV of 0.7x compared to the sector average of 0.8x. Moreover, we expect the company to deliver average CEPS growth of 8% in '26e-'27e vs. the sector at 9%, where we see potential for Stenhus to drive earnings growth further through M&A.