Dometic (Buy, TP: SEK109.00) - On track for higher margins
Following Q2 results, we reiterate our investment case and see good prospects for Dometic to: 1) execute on its margin expansion trajectory, 2) deliver on its M&A agenda, and 3) reduce dependency on the RV market. The shares fell 7% yesterday as Dometic revised its 2019 outlook, influenced by prolonged inventory reductions and additional US tariffs. However, we believe this was overdone as operational performance in Q2 was solid: margins were a strong 16.9% versus consensus of 16.8% and we have reduced our 2019–2021 EBIT forecast by only 2–4%. We retain our BUY but have cut our target price to SEK109 (SEK110).Dometic Group AB serves the market with a range of air conditioners, refrigerators, awnings, cookers, sanitation, lightning, mobile power equipment, windows, doors and other comfort and safety products. The products are sold in approximately 100 countries and are mainly produced in wholly owned production facilities around the world.
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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