Strong month for construction-related
Carnegie Småbolagsfond rose 0.4 percent.
The National Institute of Economic Research’s September survey shows the construction market standing out with a strong confidence indicator in otherwise rather weak reading. Moreover, the Swedish housing market has been stable for a long time now and has even shown slightly rising prices. Given a great need for infrastructure investment, the Swedish construction market seems an attractive place in an uncertain world.
One of our favourite shares is waterproof membrane producer Nordic Waterproofing. The connection to the Swedish construction market is not very large; both the Finnish and Danish markets are more important, and its products are mostly used for renovations rather than new construction.
But the connection still exists, and for the market’s valuation of the company it is impossible to ignore the mood in Swedish construction. The company is well run and its valuation is very attractive. It is traded at about 10 times this year’s earnings and pays a dividend yield of 6 percent. Attractive. It rose 8 percent in September.
In light of a stable Swedish construction market, Peab also appears attractive. It has for several years been the brightest shining star among the listed construction companies in terms of building margin and the absence of impairments. Peab’s housing operations have shown impressive resistance to market volatility. We believe this picture will remain for the rest of the year. The valuation looks attractive. The share rose 9 percent in September and we increased our holding.
AtriumLjungberg has long been a core holding. Its properties are well located, the project portfolio is perhaps the most attractive in the market, and the valuation is low in relation to net assets. We have long looked forward to, and expected, the company to be included in the highly influential EPRA index for European real estate companies.
This happened on September 23, and we believe it may be the beginning of an appreciation of a share that is still traded at a discount to the sector. The share rose 8 percent in September.