Kone (Hold, TP: EUR47.00) - Expecting cautious 2018 guidance
We expect focus in the Q4 results (due 25 January) to be on the 2018 guidance, with a risk of disappointment given over-optimistic consensus margin forecasts for next year. We forecast Q4 FX-adjusted order and sales growth of 2.6% and 3.2%, respectively, and a 2017 DPS of EUR1.70, with potential for a special dividend. We reiterate our HOLD recommendation and have lowered our target price to EUR47 (49), having trimmed our 2018–2019e EBIT by 3–4%.KONE is an elevator and escalator industry group based in Finland. Co. is engaged in the provision of products and services for the installation, modernization and maintenance of elevators, escalators and automatic building doors. Co. provides its products and services throughout the entire lifecycle of the equipment, beginning from the installation of new equipment to the maintenance and modernization during their lifecycle and the full replacement of the equipment. Co.'s customers are active in industry segments such as residential, office, retail, public transportation, hotel, hospital, and marine.
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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