SKF (Buy, TP: SEK290.00) - Pricing set to kick in during Q3
Q2 adj. EBIT beat consensus by 7%, with the margin a solid 15% despite a SEK250m stronger FX headwind than we expected. Management said demand remained strong going into Q3, and pricing is expected to kick in to offset raw materials cost inflation in H2. The company still has SEK4bn targeted annual cost savings to realise from plant closures up to 2025. We are 6–9% above consensus on 2021–2023e adj. EBIT. We believe SKF is attractively valued in relative and absolute terms, and reiterate our BUY and SEK290 target price.AB SKF is the parent company of the SKF Group, which supplies products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems. Services include technical support, maintenance services, condition monitoring, asset optimization, engineering consultancy and training. Co.'s business areas are: SKF Industrial Market - Strategic Industries, which includes bearings and bearing accessories and lubrication systems; SKF Industrial Market - Regional Sales and Service, which develops SKF Solution Factory facilities providing engineering capability; and SKF Automotive, which develops and manufactures bearings, seals and related products and 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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