Hexagon AB (Hold, TP: SEK480.00) - Chinese growth engine stalled
The Q2 report reinforced our view that Hexagon will see no organic sales growth over the next few quarters. The CEO said that the slowdown in China (Q2 organic sales growth: -25% YOY) is likely to continue in Q3; the earliest growth could return in China, in his view, is H1 2020. Our estimates, which are broadly unchanged, assume no organic sales growth on a group level until Q2 2020. HOLD and SEK480 target price reiterated.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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