Margin strength brings targets closer - Q3 review

Stronger margins largely offset lower-than-expected sales in Q3. Segment sales of SEK652m were 13% below our forecast, while EBIT of SEK91m was just 2% below, corresponding to an EBIT margin of 14.0% versus our 12.4% estimate. The gross margin reached 21.6%, exceeding our 19.0% forecast and Besqab’s 20% target. Lower net financial costs lifted pre-tax profit 7% above our estimate. We raise our 2026e EPS by 7% and our fair value range to SEK42–57 (41–55).

Moving closer to targets. R12M gross and EBIT margins reached 19.5% and 13.3%, respectively, while ROE improved to 11.3% in Q3. Strong margins alongside 219 production starts strengthen our confidence in underlying project economics. Management highlights solid project earnings and continued cost discipline, including in projects acquired over the past 18 months. In our view, the remaining improvement towards the 15% EBIT margin target looks increasingly volume- and operating-leverage driven.

Volume ramp the next support. Starts matched our estimate, while 452 completions left 1,488 homes in production, slightly above our 1,478 forecast. The temporary production decline was expected, and management still sees at least 2,000 homes in production during 2027. Stronger demand after the summer and the deferral of a Solna project to Q4 support the near-term pipeline. Sales of 147 homes were stable Q/Q, with only six completed unsold homes. However, the sold or booked share in production fell to 56% in Q3, from 62% in Q2, highlighting the importance of continued sales conversion.

Higher confidence in normalised earnings. Q3 strengthens our confidence in Besqab’s ability to grow profitably and for profitable volume growth to lift earnings and capital returns. Segment operating cash flow of SEK-65m leaves cash conversion to be proved. Sustaining margins while converting the launch pipeline into production remains central to the story, in our view.