Bonava: small improvement
Numbers Q1 2025
Short description
Bonava is a Swedish homebuilder that focuses on constructing homes for both investors and individuals. The company builds houses, villas, apartment buildings, and even entire neighborhoods. It operates in Germany, Sweden, Finland, Estonia, Latvia, and Lithuania.
The company specializes in spreading risks by building different types of homes and targeting different markets. Investors often pay a portion of the price upfront, while individuals only pay upon occupancy of the house. Although sales to individuals generate higher margins, the risk is spread through customer diversification.
Bonava was spun off from the conglomerate NCC in 2016. NCC constructs offices, large apartment buildings, hospitals, warehouses, and infrastructure.
Bonava operates in 19 regions across the mentioned 6 countries, with Germany being the largest market, accounting for 55% of the revenue, primarily around Berlin, Cologne, Bonn, and Saxony. Bonava still sees Germany as a growth market.
Why we selected Bonava
When I originally wrote about this company in the Dutch newsletter, it was trading at one-third of its tangible book value. My assertion from the beginning was that even though the stock was only trading at one-third of book value, I anticipated a doubling. This was because I expected there to be write-downs and a capital increase that would erode book value.
The capital increase is behind us, and we’re noticing a turning point in the housing market.