Hexagon Composites (Buy, TP: NOK30.00) - High seasonal hit, strong margin
The High Pressure division beat our estimates, but Low Pressure fell short as the company reported a stronger seasonal impact than expected. We have cut our 2018e EPS by c1%, but raised our 2019–2020e EPS by c6% as positive adjustments for Mobile Pipelines and revenue growth outweigh our trimmed margin forecasts for Hydrogen and Light Duty Vehicles. We reiterate our BUY recommendation and NOK30 target price.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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