Aros Bostad: Margins holding up better than peers - ABG

Sales -31% vs ABGSCe, GP margin 20%
67 units started in the quarter
Management notes fading building cost increases


Q3 sales and EBIT below ABGSCe

Aros Bostad delivered a Q3 report with sales of SEK 316m (-31% vs ABGSCe) with a GP-margin of 20% (ABGSCe at ~24%, company target at 20%). GP margins are lumpy between quarters and we did expect a higher-than-average margin in the quarter thanks to project completions (rental units in Täby to CBRE), which should allow for some final profit recognition, hence boosting margins. However, it seems like the official project handover has been in done in October (Q4), and given that GP margins have come down significantly for peers in the Q3 reports, we view the 20% margin as solid. We also believe that the topline deviation compared to our estimate partly stem from the fact that project "Viggby Ängar 3" will be started in Q4 rather than Q3, and starts usually boosts topline due to the transfer of land. EBIT amounted to SEK 42m, up 63% y-o-y (ABGSCe at SEK 77m). Aros started 67 units and sold 12 units in the quarter, respectively. Aros also completed the acquisition of two additional ALM-projects. Management notes that building cost increases are starting to fade and there is a large interest from contractors in recent procurements.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/aros-bostad/Equity-research/2023/11/aros-bostad---margins-holding-up-better-than-peers/