Energy Morning - 30 April 2025

Alfa Laval (Buy, TP: SEK515.00) - Marine margin thesis playing out

Alfa Laval had an optically weak quarter, but it was clean in operational performance. Early signs of macro caution emerged through a newly introduced “cost prudence initiative” and repeated comments pointing to softer Marine order intake from Q2, but overall stable demand for the group. Still, margin execution was strong, with Marine reaching 21.8%, confirming our positive thesis in the stock, which is now one of the few in the sector where we expect earnings growth YOY in 2025. We have cut our 2025–2027e adj. EBITA by 3–4% (mainly FX) and target price to SEK515 (565), but reiterate our BUY.

A few things to worry about, but a lot to like

Kone (Hold, TP: EUR55.00) - Limited surprises

Q1 provided few surprises: total orders were a touch better than expected; orders received margins continued to decline; China orders matched our estimates; cash flow was strong; and the 2025 guidance was broadly in line with consensus. Having raised our 2025–2027e clean EPS by c2% on average, we have increased our target price to EUR55 (52) but reiterate our HOLD.

Pareto Bank (Buy, TP: NOK84.00) - Solid start to the year

Helped by still-solid core revenues and firm cost efficiency, PARB reported a Q1 ROE of 13.5%, despite some provisions. With deposit volumes rising by ~8.1% QOQ, the bank somewhat increased its bond holdings in the quarter, resulting in a ~5bp lower CET1 ratio at quarter-end, offset by strong earnings generation. We have made only minor changes to our 2026–2027e EPS. With the stock trading at a 2026e P/E of ~8.0x, we still find the valuation attractive, and reiterate our BUY and NOK84 target price.

Sparebanken Møre (Hold, TP: NOK95.00) - Higher margin pressure and costs

With elevated margin pressure and higher costs YOY, Q1 ROE was 11.2%, despite modest loan losses. Given the composition of the lending growth, MORG increased its risk-weight assets, leading to a ~ 20bp lower CET1 ratio QOQ. That said, the bank guided for a net positive effect of ~1.5%-points from the pending implementation of Basel IV in Q2 and Q3, leaving an ample buffer to its 16.15% requirement (including P2G), boding well for solid distributions. We have lowered our 2026–2027e EPS by ~5% on lower NII and higher costs, and our target price to NOK95 (100), but reiterate our HOLD.