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Siemens Gamesa RE 3Q17 results are poor. Our TP goes UR

Siemens Gamesa RE reported –7% in 3Q17 sales that were negatively affected by a freeze in the Indian market. Sales ex-India increased +1%. The underlying EBIT pre PPA fell –21% to €211mn and the margin dipped to 7.8% (and 8.6% ex-India), down from 9.2% a year ago. Reported EBIT was down –81%. The underlying net profit was €135mn and the reported net profit €12mn.

The orderbook fell –7% with the WTG orderbook retreating –20%. The 2017 guidance is of €11,000-11,200mn sales (+5-7%) and an underlying EBIT ex PPA of €900mn (-5%). This guidance is below our 2017e sales of €12,200mn and EBIT of €1,195mn.We put our target price under revision until we trim down our forecasts to reflect the guidance and the growth prospects.