DnB Markets - Beijer Ref AB Class B (BEIJ B) Beijer Ref (Buy, TP: SEK430.00) - Solid outlook on easing headwinds

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DnB Markets

Viktor Trollsten

EUR 90.62 For Business Accounts Only

Beijer Ref (Buy, TP: SEK430.00) - Solid outlook on easing headwinds

We reiterate our BUY and have raised our target price to SEK430 (425), and believe headwinds from falling refrigerant prices are easing, adding further support to Beijer Ref being on course for above-average revenue and earnings growth. We have raised our 2021–2022e adj. EBIT by 2% on slightly higher organic growth assumptions in 2021 and announced acquisitions.

29/03/2021 15 EN

Underlying

Beijer Ref AB Class B

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SE0011116508 Nasdaq Nordic Stockholm Sweden

Provider

DnB Markets

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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Analysts

Viktor Trollsten

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Beijer Ref (Buy, TP: SEK215.00) - Short-term pain, long-term gain

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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 rai...

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Beijer Ref (Buy, TP: SEK165.00) - Set for strong earnings growth

We believe Beijer Ref should enjoy solid quarters ahead given pent-up demand in refrigeration, strong HVAC growth in Europe and a big OEM order backlog, while operating leverage on higher volumes could yield higher margins. We estimate a SEK4.5bn M&A war chest could lead to 12% annual M&A growth in the coming years, and assuming 20% operating leverage on our 2021–2022e organic growth of 13–9% leaves our 2022e EBIT margin 60bp above consensus. We reiterate our BUY and have raised our target price to SEK165 (147), after lifting our 2021–2022e EBIT by 1–2%.

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Elkem (Hold, TP: NOK22.00) - Silicones overcapacity still an issue

We expect group Q3 EBITDA of NOK1,078m (4% below consensus), including NOK140m from Silicones, driven by smaller improvements in the European market. However, given overcapacity in silicones, weak end-market demand and muted commodity prices, we do not expect a material earnings boost in the coming years. We reiterate our HOLD and NOK22 target price. The Q3 results are due at 07:00 CET on 24 October.

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Tomra (Sell, TP: NOK95.00) - Next stop, Poland

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Beijer Ref (Buy, TP: SEK430.00) - Solid outlook on easing headwinds

Beijer Ref (Buy, TP: SEK215.00) - Short-term pain, long-term gain

Beijer Ref (Buy, TP: SEK185.00) - Q2 supports M&A and margin story

Beijer Ref (Buy, TP: SEK165.00) - Set for strong earnings growth

Elkem (Hold, TP: NOK22.00) - Silicones overcapacity still an issue

Tomra (Sell, TP: NOK95.00) - Next stop, Poland

Arctic Bioscience (Hold, TP: NOK15.00) - HeROPA-trial results

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