SSAB (Buy, TP: SEK54.00) - Special Steels margins set to grow
We are 13% below consensus on Q4e adjusted EBITDA, reflecting our expectation of a very weak result from SSAB Americas (Q4 results due at 7:30 CET on January 26). We see improving Special Steels margins in 2018, and recent data suggests a turnaround for the Americas. We have raised our 2018–2019 estimates, and our target price to SEK54 (45), assuming a 2018e EV/EBITDA of 7.3x and 7.2x for 2019e, in line with peers. Our recommendation remains BUY.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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