reports
- Viktor Trollsten
Nibe Industrier (Hold, TP: SEK108.00) - Upside potential in energy pri...
We reiterate our HOLD but have cut our target price to SEK108 (115) and our 2021–2022e adj. EBIT by 3–2%. We see upside potential to heat-pump demand from higher energy prices, as investment decisions depend on the economic benefits. If energy prices remain at current highs, we could see greater penetration rates in regions in which gas and oil heating are common such as North America, Germany, and the UK. We are 3% below consensus on Q3 adj. EBIT.
- Viktor Trollsten
Lundin Mining (Buy, TP: SEK88.00) - A cash-flow generator
With the stock suffering from 1) fading earnings momentum owing to a lower copper price; 2) challenging operations at Candelaria; and 3) political risk in Chile putting pressure on multiples, we believe Lundin Mining’s cash-flow generation is poorly reflected in the share price. We forecast a 2022–2023e FCF yield of 17–19%, driven by high Cu-equivalent volume growth and low capex intensity compared to peers. We have cut our 2021–2022e EBITDA by 5–7% to reflect mark-to-market metal prices and FX....
- Viktor Trollsten
SSAB (Buy, TP: SEK56.00) - Potential upside from US exposure
While steel earnings are inherently volatile, we believe the sell- and buy-sides are discounting a full historical downturn, with consensus for ASPs falling 25% between Q4 2021 and Q4 2022, and the market cap implying an over-the-cycle EV/EBITDA if the weighted steel spread falls 60%, suggesting a good risk/reward. We have raised our 2021–2022e EBITDA by 0–3% and our target price to SEK56 (55), and reiterate our BUY.
- Viktor Trollsten
Dometic (Buy, TP: SEK190.00) - Caterpillar turning into a butterfly
Dometic continues to execute its strategy, with earnings tailwinds from organic expansion, higher margins, and M&A as a potential EPS growth driver. In our organic base case, we forecast a 2021–2023e EBIT CAGR of 18%; and, although M&A activity could be more limited short-term, we still see 10% upside potential to our 2023e adj. EBIT from a SEK3.6bn M&A bankroll. We have cut our 2021e EBIT by 1% and raised 2022e by 6% to reflect the latest acquisition. We reiterate our BUY and have raised our ta...
- Viktor Trollsten
Hexpol (Buy, TP: SEK123.00) - Undervalued earnings growth
We reiterate our BUY but have cut our target price to SEK123 (130) after lowering our 2021–2022e adj. EBIT by 3–0% as a result of short-term supply-chain issues. We still find Hexpol well positioned for sound earnings growth from its sector-leading recovery and undervalued compounding case, and forecast a 2021–2023 EPS CAGR of 9%, while M&A in line with its 5-year track record would offer 10% upside to our base case 2023e EPS. The stock is trading at a 2022e P/E of 15.5x, a 10% discount to its 5...
- Viktor Trollsten
Boliden (Buy, TP: SEK350.00) - Benefiting from diversification
We reiterate our BUY but have cut our target price to SEK350 (400) after lowering our 2021–2022e adj. EBIT by 5–12% to reflect marked-to-market metal prices and FX. We are 1% below consensus on Q3 adj. EBIT, and believe increased sick leave and Covid-19 restrictions could limit production in the open-pit mines. Our copper production forecast is 11% below consensus. We still like the long-term story, with a higher smelting earnings base from operational improvements and recovering external smelti...
- Viktor Trollsten
Beijer Ref (Buy, TP: SEK215.00) - Short-term pain, long-term gain
We expect Beijer Ref to continue to face short-term challenges from supply-chain issues and Covid-19 lockdowns, especially in its OEM business. However, short-term delivery problems could fuel pent-up demand from swelling order books in OEM, pent-up HORECA demand in refrigeration, and strong HVAC growth in Europe. We have cut our 2021–2022e EBIT by 3–0% but have not changed our view of a sound long-term earnings growth case and reiterate our BUY with a new target price of SEK215 (185).
- Viktor Trollsten
Nibe Industrier (Hold, TP: SEK115.00) - Operational excellence
We reiterate our HOLD but have raised our target price to SEK115 (90) and our 2021–2022e adj. EBIT by 12% (10–8% underlying). The Q2 report supports our view of a sound long-term growth case as North America is showing signs of returning to growth in Climate Solutions at 12% FX-adjusted growth in Q2 (-8% in Q1). Raw materials headwinds have been a key investor concern, but with a Q2 gross margin of 95bp QOQ and 28% operating leverage, we believe Nibe’s decentralised model is showing resilience. ...
- Viktor Trollsten
Lundin Mining (Buy, TP: SEK98.00) - Dividend case activated
We reiterate our BUY but have cut our target price to SEK98 (105) and our 2021–2022e EBITDA by 9–4%, reflecting marked-to-market metal prices and lower production in Candelaria. Q2 EBITDA was 3% above consensus, and the report supported the dividend case as the company raised its regular DPS by 50% (again) and announced a semi-annual performance DPS of CAD0.18, for an annualised yield of 5%. However, guiding for lower production in Candelaria also in 2021–2022, the stock is facing earnings headw...
- Viktor Trollsten
SSAB (Buy, TP: SEK55.00) - Supercycle earnings at a discount
We reiterate our BUY but have cut our target price to SEK55 (57) while raising our 2021–2022e EBITDA by 9–10%, noting that steel peers’ multiples have fallen. We continue to expect meaningful upside to consensus (we are 23–28% above on 2021–2022e EBITDA), which we believe is not priced in at an implied 12-month forward EV/EBITDA of 3.0x compared to the historical trough valuation implying SEK65/share. With the market pricing SSAB at historical average profitability in 2022e, we see material upsi...
- Viktor Trollsten
Dometic (Buy, TP: SEK185.00) - No change to long-term case
We reiterate our BUY and our SEK185 target price, as the long-term case appears intact where: 1) margins could shift up on good drop-through from organic expansion; 2) M&A with accretive margins (18.9% EBITA margin versus Dometic’s 18.6%) could make the margin target conservative as we believe it includes 100bp of dilutive M&A; and 3) a SEK5.4bn M&A bankroll could add 16% to estimates and warrant a re-rating. We have fine-tuned our 2021–2022e EBIT by -1/+1% (-2% organically and 1–3% from FX), bu...
- Viktor Trollsten
Hexpol (Buy, TP: SEK130.00) - Stay cool with Hexpol
After beating adj. EBIT margin consensus for the fourth quarter in a row, we believe Hexpol has proven its tight cost control and investor concerns about margin dilution from raw materials costs should ease. We like its sector-leading organic growth and margin recovery, set for a 2020–2023e EPS CAGR of 19%, and believe the M&A option is undervalued and could offer a re-rating of the stock. We reiterate our BUY and have raised our target price to SEK130 (120).
- Viktor Trollsten
Beijer Ref (Buy, TP: SEK185.00) - Q2 supports M&A and margin story
We have raised our 2021–2022e EBIT by 8–9% following a strong Q2, which we believe supports the M&A and margin case. The company could continue to look for higher-margin targets, thereby improving the M&A payback profile and reducing margin dilution. In our view, EPS growth drivers appear to be in place with: 1) a strong organic growth outlook from pent-up demand and a solid drop-through of 19% on our estimates; 2) accretive margins from M&A (16% margin from M&A in Q2); and 3) additional value c...
- Viktor Trollsten
Nibe Industrier (Hold, TP: SEK90.00) - Potential upside to Q2 consensu...
We have raised our 2021–2022e adj. EBIT by 4-5%, and we are 15% above consensus on Q2 adj. EBIT. We forecast 21% organic growth, driven by continued strong demand in Stoves, with mainland Europe and Nordics driving performance in Climate Solutions. The valuation has been further re-rated YTD and while the long-term growth prospects deserve a significant premium in our view, it would take 12 years for the stock to trade at a P/E of 10x based on historical EPS growth. NIBE is trading at an 9% prem...
- Viktor Trollsten
Lundin Mining (Buy, TP: SEK105.00) - Yield machine on Chile uncertaint...
While the stock has suffered from political risk in Chile related to a proposed tax that could cut 2025e EPS by 25% on current conditions, we believe a yield machine is in the making thanks to its growing cash returns. We forecast a 2021–2022 dividend yield of 2–3% and FCF yield of 12–16% that can be utilised for extraordinary dividends or share buybacks. The share price has decoupled from the company’s underlying commodity portfolio, and we reiterate our BUY. That said, we have cut our target p...
- Viktor Trollsten
SSAB (Buy, TP: SEK57.00) - Looking around the corner
With the steel spread at a record-high, we believe investors are concerned about falling steel prices after 2021 and are thus attributing little value to near-term earnings (2021e EV/EBITDA of just 2.6x). While steel earnings are indeed volatile, we believe the sell- and buy-sides are discounting a full historical downturn, with consensus for ASPs to fall 25% from Q3 2021 to Q4 2022 and the market cap implying an over-the-cycle EV/EBITDA if the weighted steel spread halves, suggesting a good ris...
- Viktor Trollsten
Beijer Ref (Buy, TP: SEK165.00) - Set for strong earnings growth
We believe Beijer Ref should enjoy solid quarters ahead given pent-up demand in refrigeration, strong HVAC growth in Europe and a big OEM order backlog, while operating leverage on higher volumes could yield higher margins. We estimate a SEK4.5bn M&A war chest could lead to 12% annual M&A growth in the coming years, and assuming 20% operating leverage on our 2021–2022e organic growth of 13–9% leaves our 2022e EBIT margin 60bp above consensus. We reiterate our BUY and have raised our target price...
- Viktor Trollsten
Hexpol (Buy, TP: SEK120.00) - Set to rub it in
We believe the Q2 results could prompt 3–4% positive estimate revisions for the coming years, as we are 16% above consensus on Q2 adj. EBIT. Consensus is for an 8% QOQ sales decline while we forecast a 6% increase, from: 1) 3% QOQ growth in weighted LVP production; 2) ASPs set to rise QOQ to offset higher raw materials costs (synthetic rubber +11% YOY in Q2 after -2% in Q1); and 3) fully integrated acquisitions, which could add 2% QOQ sales growth. Our 2021–2022 adj. EBIT forecasts are unchanged...
- Viktor Trollsten
Dometic (Buy, TP: SEK185.00) - Delivering on its value levers
As Dometic executes on its M&A agenda, we believe the equity case has evolved from earnings tailwinds from organic expansion and higher margins to include M&A as an EPS growth driver. In our organic base case, we forecast a 2021–2023e EBIT CAGR of 12%, and we see 16% upside potential from a SEK5.5bn M&A war chest that we estimate could add SEK27/share in value. We reiterate our BUY and have raised our target price to SEK185 (145), as we have lifted 2021–2022e adj. EBIT by 2-3%.
- Viktor Trollsten
Boliden (Buy, TP: SEK435.00) - Upside potential from hidden value
We have taken a deep dive into the smelting division and believe investment in expanding operations and technical capabilities have lifted the earnings base to the next level, not reflected in consensus and underestimated in the implied smelting valuation of EV/EBIT 6.2x (peers: 8.5x). We forecast Smelter adj. EBIT of SEK4bn for 2022e, 14% above consensus. We have upgraded Boliden to BUY (HOLD) and lifted our target price to SEK435 (355).
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