Besqab AB (publ)

Hi, and a warm welcome to BESCAP's presentation of the first quarter of 2025. My name is Mattias Karlsson and I will be moderating this broadcast. With me in the studio are BESCAP's CEO Magnus Andersson and CEO Magnus Sundell. A warm welcome.

Thank you.

Before we start, I would like to remind you that you can ask questions in the chat. We will then gather these and take a question time after the presentation is finished. With that said, we are very interested to hear how the first quarter has gone. So I'll hand it over to you.

Thank you, Mattias, and welcome to all of you who are listening to our presentation from Beskav for the part-year report for the period from January to March 2025. As Mattias said, I will, together with Magnus, give a presentation on the development of the quarter. I will start with this picture, which is a picture of our project Tegelvik in Södermalm. This is a project with 93 housing rights that we started selling during the quarter. And as you can see in the picture, we had a first spade yesterday, including with Stockholmsstad for this project. This is a project that we have had a strong sales in the quarter, a good reception and we are a little extra proud of this project where we are working very actively to reduce our climate impact in production. We have a goal to reduce the climate impact in ongoing production by 50% by 2030. Here we work with alternative material choices that have a high degree of recovery. We work with green concrete, we work with supplied energy, solar cells on the roof and we recover heat from the waste water so that we in this project not only deliver high quality but also sustainable and climate-efficient housing that we are a little extra proud of. I'll start by starting the quarter by summarizing a quarter where we have had a very strong sales, above all. We have a turnover in the quarter of 512 million kronor, a gross profit of 92 million kronor. That gives a gross margin of 18 percent, which we think is a stable level. We have a turnover result in the quarter of 30 million kronor. It gives a turnover margin of 6 percent. As I said, we have had a strong start during the quarter and very good sales. We have booked or sold 221 homes during the first quarter. And this gives us a booking rate of 80 percent, so that what is sold or booked for ongoing production increases to 80 percent. We started two projects in the quarter, which sums up to 104 homes that started production, and that means that we at the start of the quarter had a total production volume of 1,676 homes in ongoing production. Vi har gjort några ytterligare förvärv och tillskott till byggrättsportföljen som vid kvartalets utgång summerat till totalt 6996 framtida byggrätter i starka lägen i Uppsala och Stockholm. The construction portfolio, we have a strong construction portfolio, we think, in good terms. We have a strategy to have a construction portfolio that corresponds to at least six years of production starts, and I think we have that with a good margin. These are future project opportunities in attractive locations, close to public transport, service and recreation. And as we see on the circle diagram to the right, the geographical distribution is so that we have about a quarter of our building rights in Stockholm city, about 15% in Uppsala and the remaining part of the building rights lies in the suburbs and outskirts of Stockholm. This portfolio sums up to 6,996 building rights i olika planskeden. Vi har en bra mognadsgrad i portföljen. Ungefär en fjärdedel har laga kraft under detaljplan. Ytterligare nästan 40 procent ligger långt framskridet i planprocessen, så vi har med det en bra beredskap att kunna starta upp projekt under kommande kvartal. Vi förädlar ju portföljen hela tiden. Vi har adderat ett förvärv med 130 byggrätter vid Solna station och vi har också tilldelats en markanvisning i huvudstad i Solna under kvartalet. And that means that we add 380 new building rights during the quarter. The station house, as the project is called, is located in the area of Ballongbergen in Solna. This is a acquisition from Scandia Fastigheter and it includes 130 building rights for housing rights. It is a project that is in direct connection to Solna station in a collective traffic-near situation. Good parking distance to central Stockholm. Byggrättarna har laga kraft under detaljplan, och det gör att vi nu förbereder oss för att starta upp projektet, vilket vi ser framför oss ska kunna ske kring årsskiftet 2025-2026. Then we also have a map from Solna stad that we have been assigned. It includes 250 buildings where half of them are rental properties. These buildings are located in Huvudstad in Solna and the detailed plan work is now underway and we are looking forward to a possible production start as early as 2028. Let's move on to the market. As I said, we've had a strong and good start to the sales year, despite the uncertainty affecting the housing market. If you look at the statistics, the price changes for housing rights in Stockholm per April, the price development for housing rights in the last three months is basically still standing. In the last 12 months, they have increased by 4.4%. Boprisindikatorn som mäter hushållens förväntningar om framtida prisutvecklingen på bostäder är 39 för Stockholm och 46 för riket. Det har fallit tillbaka en del. Det här är ju tecken på att omvärldsläget med den geopolitiska osäkerheten skapar en osäkerhet på bostadsmarknaden och en mer avvaktande marknad. But despite that, we have had a good sales, and we also see that this also leads to forecasts that we have continued real wage increases in Sweden. We have an inflation that is under control, and above all further interest rates drops over the later part of the year. This strengthens the conditions for our business. And above all, we also see that in our geographies with strong locations in Stockholm and Uppsala, there is a need for new housing. It is a great need that exists and we think that the strong sales that we have had during the first quarter is a good quota. Vi har som sagt haft ett starkt intresse för våra bostäder. Vi sålde eller bokade 150 bostäder i pågående produktion under kvartalet och utöver det så bokade eller sålde vi 71 bostäder i ei produktionsstartade projekt. This gives a sales rate in ongoing production of 80% and if we take out rents from that equation, we have a bookkeeping rate in housing and property rights that goes up to 60%. These are high figures. It gives us great confidence that we can start more projects without the bookkeeping rate going down too much. Det som också är väldigt bra, vi har bara sju osålda bostäder i avslutad produktion, så vi har varit bra på att sälja slut de bostäder som finns i projekt som går mot ett avslut. Vi har en aktiv försäljning. Vi har under kvartalet säljstartat ytterligare sex stycken projekt i Stockholmsområdet. De ser vi till höger i bild. Det är Tegelvik på Södermalm som jag inledde med. Sjöstråket i Upplands Väsby, ett småhusprojekt. Vi har ett projekt som heter Vigbeängar i Pärby. Härta i Danderyd och Tegeltornen i Sundbyberg. Sen avslutningsvis har vi Fransyskan i slakthusområdet i Stockholm. We have a sale that takes place in a total of 23 projects. Eight of them are in production and six of them were sold during Q1. In these projects that have not yet been produced, we have booked or sold 71 homes. Some of the ones in the picture have been produced. The circle diagram shows the number of homes for sale in new production in Stockholm and Uppsala. It shows that with the sales we have in the market, we have taken a real market share and are actually market leader in our geography here in Stockholm and Uppsala. New production starts. We have started two projects during the quarter. It is a project in Rockstad called Glimten and the second stage of Tegeltornen in Sundbyberg. This means that we have a production volume of 1,676 homes in ongoing production at the end of the quarter. It is divided into 20 total housing projects in nine municipalities. where the majority of the project is housing rights. And it is in line with our strategy that we are now focusing on starting up property rights and housing rights, even in the future. We think that the cost picture on the construction side continues to be good. We have good conditions for entrepreneurship, a decrease in cost inflation combined with that we also have a good competitive situation on the market. We have few start-ups and a great interest in submitting offers to our projects. During the quarter, we carried out one major entrepreneurial development and that is Tegelvik in Södermalm, a total entrepreneur that we think came in at very good levels. Vi har inga färdigställda projekt under kvartalet, men vi överlämnade ett hyresrättsprojekt med 156 lägenheter i Huddinge till Patricia. Det är en del av den här stora hyresrättsportföljen som vi sålde 2022. Den här överlämningen är det andra projektet vi lämnar över till Patricia. Det kommer att vara helt färdigställt det här projektet under innevarande kvartal. Vi har en målbild om att vi ska ha 2000 bostäder i pågående produktion. Det beräknar vi att vi kan nå under 2027. Vi har fortsatt en hög färdigställande grad, många projekt som kommer till avslut under året, så vi ser att volymerna kommer att gå ner en del innan de sedan börjar klättra upp mot den långsiktiga målbilden om 2000 bostäder i pågående produktion. And a little more details about the project that has been started. It is a project called Glimten. It is located in Rockstad in Vällingby, Stockholm. It is 22 city council houses, an infilled project in Vällingby Parkstad, which we carry out as housing rights with immigration in Q3 2026. This project has received a very good reception, good sales, great interest from our customers, so we have then production started the project during the quarter. And here we have sold an external total entrepreneur for the implementation. Then we have the Tegeltorn in Sundbyberg. This is the second stage of the Tegeltorn, where we have also had a good sales development. And to two apartments as housing rights, where we have immigration 2026-2027. And this project is also an externally sold total entrepreneur. And in the last stage of the Tegeltorn, we have now completed the entire area of the factory park, where BÄSKAB historically has developed a large number of homes and created a new part of the city in central Sundbyberg. Both of these projects have come about in a very good way, we think. And with that, I ask to hand over to Magnus to talk about the figures.

Thank you, Magnus. Let's move on to my department. A picture that shows our development towards our long-term goals. The bubbles on the right show what we communicated on a capital market day exactly a year ago. We will long-term achieve a gross margin of 20%, the moving margin 15%, that is, a reduction between gross and moving at 5% units. and a drop of 15% over a short-term cycle of own capital. Solidity 30 is our long-term financial goals. We also see our ambitious climate goals in this picture. But in order to achieve this, that the burn-off between the brutto result and the turnover result should only be a maximum of 5% of the turnover, this can be achieved either by driving up the turnover, of course, thereby sped up our low-cost budget, or trim the costs. In our case, we work with both. And the picture to the left, Magnus has already been in on the numbers earlier. But we are quite stable here, quarter over quarter, at 18% gross margin, which is quite close to our long-term goal, so we are quite satisfied with that. But on the other hand, we are quite far behind on moving margin, which in this quarter is 6%. It was a little higher for previous years. And that's what I mean, that we have to work both with the top line and trim our costs so that over time we reach 15 percent of the moving margin. And that is then connected to this long-term goal that Magnus was talking about, that we must have at least 2,000 apartments in production at any given time for this math to go together. And we see that we will achieve this with the plan we have for 2027. The second part of the cost budget is to realize the synergies that we saw already in the agreement between Aros and Beskav a year ago, that over time we will be able to shrink the cost system by about 100 million per year. That plan is stuck and towards the end of 26 we will have reached that goal. We have a complement to our core business. The core business is of course housing development, but we also have administration facilities in our own balance that we manage for our own account. Over time, it can both increase and decrease, depending on where we determine we get the best discount for the shareholders' capital. Today we have three properties, two in Uppsala and one in Nacka, approximately 300 apartments, fully rented, which produce an annual turnover of about 33 million, which then contributes to our gross profit. We have ongoing sales processes, shall we say, for all of these three, which, if they now reach their goal during the rest of this year in our plan, will not give any remarkable results, with, on the other hand, quite significant liquidity increases. A few words about the quarter. 92 million in gross profit, we have mentioned. Still a strong gross margin of around 18%. Two started projects and none completed. And we heard earlier that there are exactly 20 projects we have in ongoing production that have contributed to this result to varying degrees. We have also taken a adjustment during the quarter in one of the projects, a radius project, which we have forced to reduce the expenses to meet the market. We take that adjustment in its entirety here now in the quarter and the adjustment of the project profit is that. The project contributes about 14.5 million negative hits in this quarter. So, for that, we are roughly a good bit over 100 and a gross margin of 20. Our plan to reduce our admission costs, as I mentioned, is set at 100 million a year, and by the end of 2026, we think we will have reached that goal. If we look specifically at this quarter, it will be burdened by costs of entrance fees of about 5 million. which is associated with the acquisition and integration costs from the acquisition, ARA's acquisition of Beskab, and a part of the upcoming list change. Of course, there will always be one or the other post of starting character in the quarter, but if you specifically want to analyze this quarter, we have that post with us. In short, we have 5.6 billion SEK in the balance sheet, which is financed with 55% of our own capital, which gives us 55% of the solidity and the rest of the debt. We have a strong cash flow at the beginning of the quarter at nearly 340 million SEK. Finally, the ongoing project during the spring and which keeps us busy until the summer is the ongoing and initiated process to change the list to the stock market's main list. The application is submitted, the revision process is in full swing and goes completely according to plan and around the half-year shift it is our assessment that we should be able to make this move to the main list. The total cost budget that we have identified for this project is around SEK 7-8 million, and most of those costs will hit our second quarter. So, with that, Mattias, over to you.

Thank you very much for this kind introduction. I think we'll start with this question from the audience. And we've got a question here from Kayvan Shirvanpur from SEB. And he asks, in connection with Q4, do you guide for 439 finishes in Q1? However, all seem to have been suspended for a quarter. Er pågående produktion indikerar ni 637 färdigställningar i Q2. Räknar ni med att färdigställa samtliga i Q2?

We have a few projects that we had previously expected to be completed under Q1, where we have just crossed the quarter shift, so we have no conclusions. The project that we are handing over to Patricia is an example where we have not finished negotiating the entrepreneurship yet, and we have not completed the project. But in general, the numbers for Q2 should be correct.

And if we then go on to look at your gross margin, you just mentioned that you had 14 million in initial costs. As I calculated right now in my head, the underlying gross margin is about 20%, almost 21%. Is that right?

Yes, mathematically, that's the effect. Then it will always hit some percentage here or there, depending on which projects in that quarter contribute the most. And we know that when we start projects in an early phase, we release a little less profit calculation and it can be a little more towards the end. So it will always hit a little bit between the quarters, but otherwise I agree with you.

Okay, then you are on the target when it comes to gross margin. And if I look at the rolling 12 now before, if you don't adjust for this, You were at 18% in the last 12 months. How do you maintain this in the projects you are starting? Are you confident that you can start with a brutto margin of around 20%?

That is our absolute goal, and I think that this quarter, as you mentioned, we have a very stable income in the operational business. I think that we see that the development of construction costs is planning out. We have had revenues where we have been able to screw up the revenues in the ongoing project in sales. But we are in this uncertainty now, this disturbance on the market now. And I think it's too early to say what this will take. But the projects that we are starting up now, they have an absolute goal that we will handle 20 percent gross margin. And I think it's positive here during the quarter that we have had a good part of the year, we have had a good sales, that we can deliver. We see that the income in the project is on a good level. It's true that we have now had a adjustment in a project, but cleared for that, we are on a very good gross margin.

If we look at the EBIT margin, it was 6% in Q1, and the rolling 12 is at 7%. How do you see that? Of course, it depends on how much you start production. But if you look at the cost synergies that we have developed so far, where are you? You're talking about 100 million in total.

As I mentioned earlier, that number is very dependent on how much top line we have. We need to have at least 2,000 apartments in production in order to reach the target of 15%. That is the biggest contributing factor when it comes to the drop-off and the movement margin. Regarding the synergies, as we count and track, look at the two companies that came together a year ago. They had that cost cost. When we budget and put these homes together, take out different double costs and doubled services, we see that when we budget towards the end of 2026, the total cost will be like this. So we are somewhere in the middle of that journey. And the net is about 100 from start to finish. Then it is also the case with training, it is backward-looking and the effects that we do to achieve this, they are 80-90% already included. But the result of it has a lagging effect on two to four quarters. I would say that we have done 80-90% of the measures, but to see it in the results, it may take a bit into next year.

If we take a look at the volume part, you started production in 104 locations in the Q1. I know that Magnus has said that you are counting with 750 production starts in 2025. Is the goal still intact?

Yes, that is what we have guided on, that we will be somewhere between 700 and 800 startups this year, and that is what we have in our plan. Then we will see what this market, the monitoring market that we have now, if it affects that goal in any way, but we think it is too early to say to revise that adjustment, but it is stuck. We have a plan that we will be able to start these projects and they are quite a lot now in Q2, and then there is also a part under Q4, so we expect that we will be able to keep that forecast.

You mentioned that you have launched six projects in Q1. How is the sales going?

We think, as I said in the presentation, that it has been a very good reception in all projects. For us, it is important to get up to a booking level so that we can get funding from an external bank, which is normally 30-40%. We feel that this is a goal that goes completely according to plan. And we see a great interest in the local geographies where we put these projects out. In general, all projects have gone very well. We have now pressed the morning that we have started production, another one of them, where we have reached a sales requirement for financing. So it is Sjöstråket in Upplands Väsby that we are now starting.

Just to fill in there, 71 booked apartments are still in a start-up project in the quarter. That's a pretty good figure. And that's exactly what we're talking about, these special start-up projects that have not yet started production.

A total of 221 units, and if I'm not mistaken, roughly a billion in sales.

Yes, and that's a very high figure. 221 booked and sold in the quarter. That's the highest quarter figure we've had in a long time. So we really think we've had a really good start in the course of the year.

That sounds good. And then you have also made a lot of acquisitions of buildings and lately this one in Solna. How do you see the market for buildings? It looks like you have been successful in acquiring attractive buildings in Stockholm. How does it look in the future?

We think there are opportunities on the market and we are quite selective in which building rights we really want to acquire. I think these two building rights in Solna are good examples of good building rights in central locations where we see a good local demand. Vi fortsätter att jobba med det och vi har en ambition om att vi ska förvärva lika mycket byggrätter som vi startar varje år så att vi upprätthåller vår volym i byggrättsportföljen som minskar 6 års produktionsstarter framför sig. Vi har jobbat väldigt aktivt med nya förvärv och vi kommer säkerligen under året att ha ett antal tillskottsförvärv.

And there is still a fairly low supply of building starters in Stockholm. How does this affect the deals with entrepreneurial companies and project profits in the future?

We can clearly see that the development of construction costs has been very poor for a number of years, especially after the outbreak of the Ukraine war. But it has planned out now, and we also see this local competition situation that is very good. We have many who mention offers. We see that we can press the prices of our entrepreneurial campaigns and we get good campaigns at good levels. So we take advantage of the fact that we have a market with few start-ups. That gives us a good competitive situation, plus that we also see that the cost of building inflation is actually decreasing and even decreasing over certain periods.

If we look at the financial side, you have a cash register of 275 million kronor, a solidity according to IFRS of 55%. How would you sum up the financial strength and the opportunity to finance future projects?

Just to clarify for the listeners, you mentioned 275, and that is correct in our segment review. In EFRS, it is over 300, and that is because we consolidate the housing rights associations in EFRS and the cash register that is there, if anyone wonders. No, but we see that we have a very strong balance sheet, which gives us financial security. We have good sales impressions, not least, as Magnus has been talking about in our started project, which gives us good conditions to finance the project. And we also think that the climate to finance is good. Then it's a little different in different banks. Different banks make a different assessment of the market as such in the future. So it's a little different response when we talk about different banks. But in general, we see that we get good conditions, good offers on the financing that we do and trade. So we think we're in a pretty good position. Then it's always like that. Liquidity is the most difficult thing to predict in this business, because it's very, very solid. But in general, I think we are in a pretty good position.

Magnus, you showed an interesting picture of that you have taken market shares and are now actually the largest in the region with the number of locations up for sale. How do you see it in the future? Have you differentiated yourself against your biggest competitors?

What we focus on is that we start selling in projects that we think are in strong local conditions. Many of these building rights are in central Stockholm, central parts of nearby areas. And we think it's very nice to see. We think it's a strong quote that the projects we put on the market have such a big demand and that we dare to do that. And we see that we can get up to the booking level that gives us the opportunity to start production on the project. I think it's a nice quote that we are very active in the market and put out projects that customers actually demand. And we hope that we will continue this trend. Now we are in a period of a more waiting market, we will see what that means, but we have a plan to continue to sell start projects during the year, because that is a prerequisite for us to be able to start production later.

And your goal is then 2,000 apartments in production during 2027. And to get there, what do we need to see in terms of price increases, increased demand, or can you do it with the thoughts of the projects you have and the apartments? Can you get there at least if the market doesn't improve further?

It's a bit too early to say how this insecurity will affect the housing market, but what we're trying to emphasize in our report is that this insecurity can also mean, for Sweden's part, that we have continued real-life increases. We have an inflation that is under control, and we have seen forecasts from various banks about further interest-lowering, and we think that's important. These are important factors that can strengthen our business. Vi ser ingen anledning nu att revidera vår långsiktiga affärsplan och vi kommer att fortsätta starta projekt. Då tror vi att någonstans under 2027 har vi kommit upp i den här mer stabila volymen på 2000 bostäder i pågående produktion.

Då tackar jag så mycket för den här presentationen och för frågestunden och lämnar över till er om ni har några slutgiltiga kommentarer och sammanfattningar.

Nothing special for me. Not me either.

Okay, great. Thank you all for watching and have a great day. Bye.