• Solid Q3 report and unchanged outlook
• More sold units and more completed unsold units in Q4e
• Fair value range kept intact at SEK 25-35

Strong Q3 report

Besqab delivered a Q3 report with gross profit and EBIT 6% and 3% above our expectations, respectively. The company started 77 units and sold 101 in the quarter, which puts the pre-sold ratio at 85% (70% excluding rental projects). There were no changes to guidance on starts, and the expected synergies from the merger were reiterated. We raise our EBIT estimates by ~7% and ~6% for 2025e and 2026e on lower opex, while we leave our top-line and GP estimates relatively unchanged on the back of limited revisions to starts/completions.

Lots of completions in Q4e

Of the 1,785 units in ongoing production, no fewer than 821 (46%) are scheduled for completion in Q4'24. The completions include rental projects which have been sold, but a majority are condominiums. As of Q3, Besqab has a very limited amount of completed and unsold units (21), but this will likely increase significantly going into Q4. Based on the conference call following the Q3 report, we got the impression that the sales ratio in the projects up for completion in Q4 is in line with, or just slightly above, the overall group average of 70%. Applying the group average sales ratio and excluding the rental projects, this would imply that Besqab has ~159 units up for completion in Q4 which have not yet been sold. Selling closer to completion is obviously easier, and we expect the number of sold units to increase sequentially.

Earnings multiples coming down fast in 2025e-2026e

The residential market has improved significantly YTD, with prices up across Sweden, housing price sentiment indicators turning positive, and building cost inflation dropping. We expect Besqab to generate high earnings growth in the years ahead, and the share is currently trading at a 2026e adj. P/E of ~6.5x. We keep our fair value range intact at SEK 25-35.