Hexpol (Buy, TP: SEK125.00) - Cash flow generator at a discount
Q3 was in line overall, with a solid adj. EBIT margin and strong cash flow generation. We have made limited estimate changes, and believe the negative sales price effect is fading (weighing less on organic growth). Hexpol said it is still looking for M&A opportunities; we believe it has scope for M&A, dividends and buybacks. We reiterate our BUY and SEK125, and continue to see an attractive valuation.Hexpol is organized in two business areas: HEXPOL Compounding and HEXPOL Engineered Products. HEXPOL Compounding is engaged as a supplier in the development and manufacture of polymer compounds. HEXPOL Compounding focuses primarily on two key segments of the polymer market: rubber compounding and thermoplastic elastomer compounding. HEXPOL Engineered Products is engaged as a supplier of products such as gaskets for plate heat exchangers and wheels for the forklift industry. The business area also provides rubber profiles, mainly for the construction and engineering industries.
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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