SSAB (Buy, TP: SEK49.00) - Margins should expand in H2
Q2 EBITDA was 3% below our forecast, despite strong shipments and selling prices. Margins in Americas and Special Steels were disappointing, as input cost inflation was above our estimate. The Q3 guidance is supportive, with lower raw materials cost inflation and higher selling prices offsetting a seasonal slowdown. We have lowered our 2018e EBITDA by 2% and 2019e EBITDA by 1%, and cut our target price to SEK49 (52). That said, we reiterate our BUY recommendation.SSAB is a supplier of high strength steels with products comprising various qualities and dimensions within wear steels and structural steels. Co.'s solutions also include services, from concept to finished delivery. SSAB Wear Services also provides advice, repairs, and sales of spare parts to the aftermarket. The business is organized into three business areas; SSAB Americas, SSAB EMEA and SSAB APAC as well as the subsidiary, Tibnor, which is a steel distributor in the Nordic region. SSAB EMEA consist of Europe, the Middle East and Africa; SSAB Americas of North and Latin America; SSAB APAC of Asia, Australia and New Zealand and Tibnor of steel and metal distribution in northern Europe.
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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