Intrinsic Value Selvaag Bolig ASA (0Q92.L)

• Previous Close: £34.75
• Intrinsic Value: £14.24
• Upside potential: -59%

Stock Valuation Context

Business Model And Market Position

Selvaag Bolig ASA is a Norwegian housing development company specializing in the construction and sale of residential properties across key urban markets, including Greater Oslo, Bergen, Stavanger, Trondheim, and Stockholm. The company operates in the competitive real estate sector, leveraging its expertise in project management and property rentals to diversify revenue streams. Its core business model revolves around acquiring land, developing residential units, and selling them to private buyers or institutional investors, ensuring a steady cash flow. Selvaag Bolig benefits from its subsidiary relationship with Selvaag AS, which provides strategic support and financial stability. The company’s focus on high-demand urban areas positions it well within Norway’s growing housing market, though it faces competition from larger developers and cyclical risks inherent to real estate. Its market position is reinforced by a reputation for quality and timely project delivery, though macroeconomic factors like interest rates and housing demand fluctuations remain key challenges.

Revenue Profitability And Efficiency

In its latest fiscal year, Selvaag Bolig reported revenue of NOK 1.97 billion, with net income of NOK 176.9 million, reflecting a modest but stable profitability margin. The company’s diluted EPS stood at NOK 1.9, indicating reasonable earnings power relative to its share count. Operating cash flow was NOK 87.1 million, though capital expenditures were minimal at NOK -4.4 million, suggesting efficient capital deployment in ongoing projects.

Earnings Power And Capital Efficiency

Selvaag Bolig’s earnings power is supported by its ability to monetize residential developments, though its operating cash flow of NOK 87.1 million highlights moderate liquidity generation. The company’s capital efficiency appears balanced, with limited capex outlays, but its reliance on debt (NOK 1.64 billion) suggests leveraged growth strategies, which could pressure margins in a rising interest rate environment.

Balance Sheet And Financial Health

The company maintains a cash position of NOK 383.6 million against total debt of NOK 1.64 billion, indicating a leveraged but manageable balance sheet. While liquidity is adequate for near-term obligations, the debt load could constrain flexibility if housing demand weakens. The absence of significant capex commitments provides some financial cushion, but sustained profitability will be critical to maintaining leverage ratios.

Growth Trends And Dividend Policy

Selvaag Bolig’s growth is tied to Norway’s residential real estate market, which has shown resilience but remains sensitive to economic cycles. The company’s dividend payout of NOK 1.25 per share reflects a commitment to shareholder returns, though its sustainability depends on consistent project completions and sales. Future growth may hinge on expanding its footprint in Stockholm or other Nordic markets.

Valuation And Market Expectations

With a market cap of NOK 3.23 billion and a beta of 0.98, Selvaag Bolig is viewed as a relatively stable real estate play, closely aligned with broader market movements. Investors likely price in steady demand for housing in its core markets, though valuation multiples could compress if macroeconomic headwinds intensify.

Strategic Advantages And Outlook

Selvaag Bolig’s strategic advantages include its localized expertise, strong project execution, and backing from Selvaag AS. However, the outlook is cautiously optimistic, as rising construction costs and interest rates could pressure margins. The company’s ability to adapt to market conditions and maintain sales volumes will be pivotal for long-term success.

Sources

Company filings, market data