Hexpol (Buy, TP: SEK90.00) - Set to rub it in
In our view, the sell-side is overlooking geographical mix effects in LVP, and has wrongly extrapolated an EBIT miss in Q2, explained by a 23% negative mix effect set to offer a positive delta into Q3. Falling raw material prices in Q3 could in our view have a slightly negative impact on growth, but should support higher margins, boosted by continued execution on cost synergies and cost control. We still expect organic growth of -10% in Q3, but have raised our adj. EBIT margin forecast, leaving us 34% above consensus. We reiterate our BUY, and have raised our target price to SEK90 (75).
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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