Beijer Ref (Buy, TP: SEK185.00) - Q2 supports M&A and margin story
We have raised our 2021–2022e EBIT by 8–9% following a strong Q2, which we believe supports the M&A and margin case. The company could continue to look for higher-margin targets, thereby improving the M&A payback profile and reducing margin dilution. In our view, EPS growth drivers appear to be in place with: 1) a strong organic growth outlook from pent-up demand and a solid drop-through of 19% on our estimates; 2) accretive margins from M&A (16% margin from M&A in Q2); and 3) additional value creation from M&A with the ‘new’ strategy of higher-margin targets. We reiterate our BUY and have raised our target price to SEK185 (165).
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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