Hexpol (Hold, TP: SEK76.00) - Near-term challenges
We have downgraded Hexpol to HOLD (BUY) and cut our target price to SEK76 (79) and 2020–2022e adj. EBIT by 6% on average, due to FX and a lower Q2e (our adj. EBIT is 40% below consensus). We believe the big drop in automotive production (c37% of Hexpol’s end-market exposure) will trump its good cost control and solid cash flow achieved in Q1, and consider the shares fairly valued at a 2021e EV/EBIT of 11.9x – a 12% discount to the next-12-month 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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