Hexpol (Hold, TP: SEK130.00) - Closing in on its fair value
Ahead of the Q4 results (due on 26 January), we have lowered our 2023–2025e adj. EBIT by 3% on average after factoring in updated FX and recent M&A. We expect Q4 sales of SEK5,095m (c-10% organic growth YOY) and adj. EBIT of SEK855m, both just below consensus. We have raised our target price to SEK130 (125) on recent peer multiples expansion; however, with limited potential upside following the c30% rally in the shares since early October, we have downgraded Hexpol to HOLD (BUY).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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