Swedish real estate still 'not out of the woods' - Handelsbanken

Sagax AB

26/09/2023 12:28

** Handelsbanken says Swedish real estate is "not out of the
woods yet", and sees interest rates remaining high for a
"meaningful" period, hitting companies with low-yielding assets,
high debt
    ** "Thin cash flows and too much debt may lead to companies
divesting their best assets in order to achieve a decent price,
which could dilute the quality of a company," it says
    ** Still, some high-quality stocks offer opportunities
despite higher rates, it says
    ** Castellum  CAST.ST , Catena  CATE.ST  and Wihlborgs
 WIHL.ST  (all "outperform") trade at attractive valuations with
relatively low-risk profiles, the broker says, calling them top
picks
    ** On the other hand, it expects higher risk and less
ability to cope with higher rates for longer to hit Atrium
Ljungberg  ATRLJb.ST , Balder  BALDb.ST , Heba  HEBAb.ST , John
Mattson  JOMA.ST  and Sagax  SAGAa.ST  
    ** It cuts Balder, Heba and Wallenstam  WALLb.ST  to
"underperform" from "market perform"
    ** Handelsbanken prefers the office segment, with "decent
demand", companies trading at about 35% discount and flat to
slightly positive 2023e-25e earnings profiles
    ** It sees no sign of weakening markets in the industrial
segment, while it says residential should be a net seller,
trading at about 50% discount
   

 (Reporting by Greta Rosen Fondahn)
 ((Greta.RosenFondahn@thomsonreuters.com))