Neles (Hold, TP: EUR13.30) - Orders fine, profits soft

Post mixed Q2 results we have lowered our 2021–2023e clean EBITA by 5% on average. We reiterate our HOLD and EUR13.3 target price, and expect the shares to remain range-bound in light of the pending merger with Valmet.

Neles (Hold, TP: EUR13.30) - Merger with Valmet announced

Following the merger announcement on 2 July, we have downgraded to HOLD (BUY). The positive share price reaction reflects the merger details and suggests limited up/downside to our target price of EUR13.3. We consider the merger to be much as we had expected (Waiting for Valmet; up to BUY, 17 June).

Neles (Buy, TP: EUR13.30) - Waiting for Valmet; up to BUY

We have upgraded Neles to BUY (HOLD) and raised our target price to EUR13.3 (12). Our analysis has identified upside potential from a possible Valmet move for the rest of Neles. We have raised our 2021–2023e clean EPS by c2% on average. Please see our Valmet note (published earlier today) for more details on our view of a potential merger.

Neles (Hold, TP: EUR12.00) - Solid Q1 and markets to improve

We have lifted our 2021–2023e clean EPS by c3% on average post-Q1. We have raised our target price to EUR12 (11.5) and reiterate our HOLD on what we view as a fair valuation.

Neles (Hold, TP: EUR11.50) - Focus on orders and outlook

Ahead of Neles’ Q1 report due on 27 April, we have cut our 2021–2023e clean EBITA by c2% on average. We reiterate our HOLD and EUR11.5 target price.

Go West…

Sector profitability is set to be strong in 2021 but mounting supply chain constraints are an increasing concern. We favour US exposure (Assa Abloy, Hexpol, Dometic), mining equipment (Epiroc, Metso Outotec) and construction. We recently upgraded Alfa Laval and Hexpol (from HOLD to BUY) and downgraded Volvo and ABB (from BUY to HOLD).

Neles (Hold, TP: EUR11.50) - Solid delivery continues

Q4 was solid overall, and we have raised our 2021–2022e clean EPS by c3% on average. The case remains attractive in our view, but we see the valuation as fair. We reiterate our HOLD and EUR11.5 target price.

Northern Lights

Neles (Hold, TP: EUR11.50) - Limited triggers expected in Q4

Ahead of the Q4 report, we have made minor estimate changes. We reiterate our HOLD and EUR11.5 target price. We believe the Q4 results are likely to contain few stock price triggers, as the wait for Valmet’s (owns c29.5% of Neles shares) possible next move continues.

Green is good

Average alignment with the EU Taxonomy that defines ‘sustainable activities’ could be as low as 11% for the sector. Hexagon, ABB and Alfa Laval screen best, while ‘strong’ ESG cases like Nibe and Beijer Ref’s alignments are surprisingly low. We also see a mismatch between companies’ taxonomy alignment and ESG funds’ positioning, which could have a major impact on flows in certain stocks. For 2021, our top sector picks are Autoliv, Dometic, Epiroc, Metso Outotec, Hexagon and SKF, as we favour aut...

Northern Lights

Neles (Hold, TP: EUR11.50) - On the soft side

Q3 was on the soft side compared to our estimates and mixed versus consensus. We have cut our 2020–2022 clean EPS estimates by c6% on average. The outlook was largely reiterated, and the waiting game on the ongoing bid situation continues. We reiterate our HOLD and EUR11.5 target price.

Northern Lights

The new normal

Nordic Capital Goods (, ) - (69 pages)

Neles (Hold, TP: EUR11.50) - Eyes on recovery pace

Ahead of Neles’ Q3 report due on 28 October (no details announced), we have cut our 2020–2022e clean EPS by 2% on average. We reiterate our HOLD and EUR11.5 target price. Our estimates do not deviate materially from consensus (Vara) post-Q2.

Northern Lights

Neles (Hold, TP: EUR11.50) - Solid Q2 with outlook as expected

Neles’ Q2 orders and sales were in line with consensus, but slightly below our forecast, while clean EBITA beat our estimates and consensus. The H2 market outlook looks to be reflected in the share price. We have raised our 2020–2022e clean EPS by an average of 2%. We reiterate our HOLD and EUR11.5 target price.

Neles (Hold, TP: EUR11.50) - Alfa Laval bidding for Neles

Yesterday (13 July) Alfa Laval announced an offer to acquire all Neles shares in cash for EUR11.50, c20% above our target price. We have downgraded the stock to HOLD (BUY) with a new target price of EUR11.50 (EUR9.50), reflecting the offer.

Northern Lights

Neles (Buy, TP: EUR9.50) - Attractive niche growth company

We initiate coverage of Neles (formerly Metso Flow Control) with a BUY and EUR9.5 target price. We consider it an attractively valued niche case, with solid prospects for sales and profit growth as well as decent financials.