Hexagon AB (Buy, TP: SEK830.00) - 29% EBIT margin excluding FX
We believe Hexagon is well-placed in 2021 as: 1) it is positioned to outgrow a cyclical recovery; 2) its software mix is set to drive predictable incremental EBIT margins to 27–28% in 2021–2022e; 3) it has a EUR3bn ‘bankroll’ for potential M&A; 4) we see it as a potential beneficiary of the EU Taxonomy; and 5) it should provide new ambitious five-year targets later in 2021. We reiterate our BUY and SEK830 target price.Hexagon is engaged in the provision of integrated design, measurement and visualization technologies. Co. has two segments: measurement technologies, which consist of Geosystems that captures, processes and stores position-related information, Metrology, which provides manufacturing evaluation, process qualification and final parts inspection, and Technology, which provides engineering software as well as geospatially powered solutions; and Other Operations, which focuses on the transportation industry in the car and heavy vehicle segments. The Other Operations conducts its business in the Nordic region.
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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