Dometic (Buy, TP: SEK107.00) - In transition but weak demand
Market headwinds strengthened in Q4, leading to weak margin development and EBIT significantly below consensus. On the positive side, Dometic continues to execute on its improvement programme, the number of SKUs was cut 32% YOY giving a significant working capital release, and 2019 cash flow was SEK3.55bn (2018 SEK2.72bn). We reiterate our BUY but have lowered our target price to SEK107 (110). We see good prospects for Dometic to execute on its margin expansion trajectory, deliver on its M&A agenda, and reduce its dependency on the RV market.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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