SKF (Hold, TP: SEK225.00) - Currency conundrum
The Q4 report included Q1 and 2024 organic growth guidance in line with consensus, while a key highlight was the strong Industrial margin, where efforts to prune the portfolio started to take effect. FX had a surprisingly negative effect on sales growth, and the company made a SEK338m adjustment to EBIT for hyperinflation accounting in Argentina, which we estimate will result in EBIT being overstated by 2–3% in 2024. We reiterate our HOLD, but have raised our target price to SEK225 (220), having increased our 2024e adj. EBIT by 7%.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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