Hexagon Composites (Hold, TP: NOK32.00) - Dividends on the horizon
With a faster than expected margin recovery in Agility in Q2, we have raised our 2023–2025e EBITDA by 18–24%. Having deleveraged to 2.4x, the company has started to speak vaguely about potentially paying cash dividends. With margins still rebounding, and some remaining capex related to its capacity expansion and refinancing set for H2 2024, we do not expect any meaningful dividends prior to 2025. We reiterate our HOLD, but have increased our target price to NOK32 (31) on higher estimates.Hexagon Composites is divided into three business segments. Co.'s Hexagon Ragasco segment manufactures low-pressue composite cylinders, such as cylinders for propane gas; and Co.'s Hexagon Lincoln/Hexagon Raufoss segment develops and supplies complete storage and transport systems for natural gas and hydrogen to the bus and automotive industry and for bulk transport of compressed gas. The Group's activities are divided into the following regions: Europe, North America, South-East Asia, Middle East and South America.
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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