Bergman & Beving (Buy, TP: SEK105.00) - Short-term pain, medium-term gain
2019/20 is turning out to be even more of a transition year for Bergman & Beving than we earlier envisaged, with the weak Q3 results. The gross margin-boosting and cost-savings initiatives should see a good payback from Q1e, implying a major earnings turnaround. We have trimmed our 2019/20e EPS by 20% and 2020/21–2021/22e by 11–12%. We reiterate our BUY on the attractive medium-term operational improvement case and potential for value-enhancing acquisitions, but have lowered our target price to SEK105 (120).B&B Tools AB provides the industrial and construction sectors in northern Europe with industrial consumables, industrial components and related services. Co. has four business areas, Luna (Tools & Machinery), Skydda (Personal Protective Equipment), Essve (Fastening Elements) and Gigant & Grunda (Work Environment & Consumables), which supply TOOLS and other market channels with industrial consumables and related services. TOOLS is Co.'s market channel for industrial consumables and industrial components for Nordic industry. Via TOOLS, Co. has operation in Sweden, Norway and Finland.
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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