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.
Q2 order intake was strong, up 45% organically YOY and 6% above consensus. High minerals prices continue to put the fundamentals in place for miners to maintain high opex. Long-term, we like the case of secular growth from lower-ore grades, an increasing number of underground mines, and electrification and digitalisation of equipment. However, in the short to medium term, we expect a more stable order intake. Combining this with the rich relative valuation and strong share price performance YTD, we reiterate our HOLD and SEK200 target price.
We like the long-term case in Epiroc with secular growth from lower ore grades, more and more underground mines, and electrification and digitalisation of equipment. However, we have downgraded the stock to HOLD with a SEK200 (210) target price. We expect near-term equipment order intake to weaken somewhat from the high Q1 levels. Additionally, increased political risk in Chile and Peru could lead to a lower likelihood for new projects. Lastly, the stock outperformed the OMXS30 by 8% YTD and by 46% over the last year, which has left the valuation at a relative high level.
The Q3 results were slightly ahead of consensus, which should ease market concerns somewhat over how its earnings have been affected by high natural gas prices. We have made minor estimate changes (lifted 2022–2023e EPS by 2–3%), and continue to believe Yara’s earnings will benefit from high fertiliser prices, offsetting negative volume effects and elevated energy prices. We reiterate our BUY and target price of NOK550.
Husqvarna has been a relative winner during the stay-at-home trend this past year. It has extended its streak of better-than-expected quarterly results to eight, with demand strong in Q3. The next likely catalyst is the CMD on 1 December, where we could see a new EBIT-margin target and/or more details on its robotic-mower business. The 2022 outlook looks better post the Q3 report, but risks remain regarding a reversal of the stay-at-home trend and the lack of Briggs & Stratton engines, hence we maintain our HOLD and target price of SEK125.
Despite the disappointing removal of the previous cost target for 2022, we remain confident the bank is taking the right actions to improve profitability, including the planned divestments of operations in Denmark and Finland. We have trimmed our 2022–2023e EPS by 1–2% on reduced NII and higher costs, and our target price to SEK115 (118). However, we believe the stock remains attractively valued at a 2022e P/E below 11x, given the low-risk profile, strong long-term track record, our expectation of capital distributions and potential for efficiency improvements, and reiterate our BUY.
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