MT Højgaard is a Danish construction and infrastructure contractor — a low-margin (4% EBIT), project-based business. Its 31% adjusted ROIC looks exceptional, but it reflects a very small invested-capital base (contractors run negative working capital — paid by clients ahead of supplier outflows), not a high-return franchise.
Because the reverse-DCF capitalises NOPAT on that tiny capital base, it prints a misleading +108%. The market's own implied perpetual growth is negative — i.e. it correctly prices a low-margin, cyclical contractor exposed to project risk, not the headline upside.
The +108% reverse-DCF is a low-capital-base/high-ROIC artifact, not a target. For a 4%-margin, project-based contractor the right frame is a modest earnings multiple with project-execution and cyclical risk; net cash provides some support.
Base DKK 320 (flat); bull DKK 400 (strong order book + margin improvement + Danish construction demand); bear DKK 240 (project losses, a construction downturn, or margin pressure).
The market pays today’s enterprise value for roughly -20.7% NOPAT growth over 5 years. The business earns 26% on capital against a 8% cost of capital (spread +17.7 pp); the no-growth value is DKK 544/share (197% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | DKK 400 | -9% | +45% | 30% | Strong order book + margin improvement |
| Base | DKK 320 | -16% | +16% | 45% | Low-margin cyclical reality; flat |
| Bear | DKK 240 | -25% | -13% | 25% | Project losses / construction downturn |
| Prob-weighted | DKK 324 | — | +17% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 734 | 819 | 881 | 982 | 1,056 | 1,260 |
| 7.25% | 624 | 693 | 742 | 823 | 881 | 1,043 |
| 8.00% (base) | 544 | 601 | 641 | 707 | 755 | 886 |
| 8.75% | 483 | 531 | 565 | 620 | 659 | 767 |
| 9.50% | 436 | 476 | 505 | 551 | 584 | 675 |
Green = fair value above the current price of DKK 276.00. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
A net-cash position and negative working capital support the balance sheet.
A contracted order backlog provides near-term revenue visibility.
Public infrastructure and construction demand underpin volumes.
Specialised construction/marine capabilities support selective margins.
A 7.8% free-cash yield on a capital-light contractor model.
MT Højgaard is a low-margin Danish contractor whose headline ROIC/DCF flatter a cyclical, project-risk business; the market correctly prices the reality. HOLD, medium conviction; base target DKK 320 (flat).
A strong order book and margin improvement are the upside; project losses and construction cyclicality are the principal risks.