Sandvik (Buy, TP: SEK270.00) - Short cycle waning, mining robust
We are 2% below post-Q2 consensus on Q3 orders and sales, but 4% below on adj. EBITA. We expect comments on demand to remain solid for Mining and soft for Infrastructure, while short-cycle weakness has affected SMM. Early trading comments for daily order intake in SMM for the first few weeks of Q4 are likely to indicate it has been stable QOQ, implying no improvement. We have cut our 2024–2026e adj. EBITA by 2–3% (mostly on FX), but reiterate our BUY and SEK270 target price.Sandvik is organized into five business areas: Sandvik Mining, Sandvik Machining Solutions, Sandvik Materials Technology, Sandvik Construction and Sandvik Venture. Sandvik Mining specializes in equipment, tools and service for the mining industry. Sandvik Machining Solutions focuses on tools and tooling systems for metal cutting. Sandvik Materials Technology specializes in products made from stainless steel grades and special alloys. Sandvik Construction specializes in equipment, tools and service for the breaking, drilling and crushing niches. Sandvik Venture generates value by promoting growth of small and medium-sized businesses of particular interest to the Sandvik Group.
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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