Kitron (Buy, TP: NOK37.00) - Set for improved margins near-term
While we have cut our 2024–2026e EBIT by 12–11% following the recent profit warning, we are still 2–6% above consensus, reflecting our expectation of near-term margin improvements as the company restores profitability at its CEE sites on additional cost-cutting measures and the process of moving customers to free up capacity for defence being finalised. Thus, we reiterate our BUY, but have cut our target price to NOK37 (42).Kitron and its subsidiaries comprise one of Scandinavia's enterprises in the development, industrialisation and manufacturing of electronics for the data/telecom, defence/marine, medical equipment and industry segments. The group has operations in Norway, Sweden, Lithuania and China. Co.'s activities are characterised by complex manufacturing processes and expertise. Co. has chosen to focus its sales and marketing activities within the Data/Telecom, Defence/Marine, Medical equipment and Industry market segments. Customers typically provide products or equipment for professional use. Co. is a typical high mix low volume Electronic Manufacturing Services company.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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