Fra Danske Bank:
Q1 could get a boost from above-base work
Q1 21 trading statement due 5 May, around 07:30 CEST
We maintain our Hold recommendation and TP unchanged into the Q1 trading
statement. We do however expect Q1 organic growth to come out slightly ahead
of consensus based on above-base work from key accounts. We expect positive
comments on the turnaround, including contract renegotiations and cost
reductions, but we also believe consensus is too optimistic on growth in Q2-Q4.
Q1E -8% org. growth vs. cons at -9.2%. For Q1E we expect revenues of
DKK16.7bn, with organic growth slightly better than both management’s initial
commentary of a Q1 in line with H2 20 (~10% down) and consensus based on
above-base work continuing its strong momentum from Q4 into Q1 on deep
cleaning and disinfection.
Q2 ramp-up slightly delayed due to vaccine roll-outs in key markets While
important markets such as the UK and the US are getting their populations
vaccinated, most other key ISS markets in Continental Europa are slightly behind
with positive COVID-19 tests increasing. Based on this we do not think companies
are as eager to get staff back into their offices just now and with company collected
consensus expecting 5.6% organic growth for Q2E (DME: 3.8%), we do not see
upside risk to FY forecasts just yet.
Longer-term office space outlook a bit better In a recent KPMG survey, global
executives are now less eager to downsize office than six months ago, which we
see as better than ISS’ Dec 2020 strategy that assumed 10-15% less office space.
