ArjanF schreef op 6 november 2014 09:25:
SNS Morning notes
BAM Groep (Buy): Strong results, conservative outlook
The facts: BAM reported a trading update. Analyst conference call at 10:00 hours CET.
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Our analysis: BAM reported better than expected 9m results. Infra pre tax results were in the green again in Q3, which we see as a positive signal, as this was the division with the largest problems. Regarding the remaining problem project in the UK a new technical solution has been found, which suggest that the problems with this project (not the bus lane) are getting under control. In construction, results continued to be negative (Netherlands) which is not a good signal, while the results in the UK are decreasing.
Property results were clearly better than expected due to sales of commercial real estate. Residential sales develop strongly with 1,424 new homes sold in the first 9 months, compared to 936 with thee 1H results, which suggests a continued strong momentum, despite the holiday season. PPP results continued to be strong with 6 projects transferred to the PGGM joint venture and 3 projects have been landed this year.
The financial situation is stable and solvency further improved to 21.8%, the group was within covenants. On the other hand, working capital deteriorated in Q3 with 70 basispoints to -6.1% of sales.
BAM reiterated its outlook of a pre tax result of at least EUR 20m (before restructuring and impairments) over the full year. This looks very conservative with a pre tax result of EUR 15m in the first 9 months and a seasonally strong fourth quarter ahead.
Conclusion & Action: After the capital markets day in October, this trading update did not contain major surprises.
All in all, results were better than expected and in light of the 9M result of EUR 15m, the outlook of >EUR 20m pre tax profit before restructuring and impairments looks very conservative with a seasonally strong 4th quarter ahead.