Hexpol (Buy, TP: SEK123.00) - Undervalued earnings growth
We reiterate our BUY but have cut our target price to SEK123 (130) after lowering our 2021–2022e adj. EBIT by 3–0% as a result of short-term supply-chain issues. We still find Hexpol well positioned for sound earnings growth from its sector-leading recovery and undervalued compounding case, and forecast a 2021–2023 EPS CAGR of 9%, while M&A in line with its 5-year track record would offer 10% upside to our base case 2023e EPS. The stock is trading at a 2022e P/E of 15.5x, a 10% discount to its 5-year average.
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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