Metso (Buy, TP: EUR33.00) - Long-term case intact
Metso’s Q4 report confirmed our view that Minerals’ service sales are suffering from capacity constraints and weak pricing in consumables. We expect Minerals’ EBITA margin to be 9.8% for 2018, as supplier network expansion takes its time, and price increases roll in gradually. Our case is unchanged, as we expect strong 2018 order intake to support sales in 2019 with high operational leverage, after cost ramp-up in 2018e. We keep our BUY recommendation and EUR33 target price, assuming a 2019e EV/EBIT of 12x.Metso is a global services, products and systems provider. Co. serves its customers in mining, oil and gas as well as aggregates industries. Co. serves also some other process industries, such as pulp and paper industry. Co.'s offerings to the mining industry include grinding mills, mill linings and grinding media; as well as crushers and screens. Co.'s offerings to the aggregates industry include crushers; as well as screens, feeders and conveyors. Co.'s offerings to the oil and gas industry include control valves, on-off valves; intelligent safety valves; intelligent valve controllers and limit switches; intelligent field services; spare and wear parts; as well as performance services.
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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