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. ...

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...

Nibe Industrier (Hold, TP: SEK325.00) - Growth case supported, downsid...

The Q1 report supports our view of a sound long-term growth case from the higher heat pump penetration rates and M&A, alongside the scope from improving margins due to price increases and higher margins in acquired units. However, near-term we see risks from a 4% FX headwind, raw materials headwinds, and ambitious M&A factored in. We have raised our 2021-2022e adj. EBIT by 5-4% and reiterate our HOLD but have raised our target price to SEK325 (300).

Nibe Industrier (Hold, TP: SEK300.00) - Upside from Stoves in Q1

Ahead of the Q1 report, we have raised our 2021–2022e adj. EBIT by 3–2% and our target price to SEK300 (295), but we reiterate our HOLD. NIBE has de-rated versus HVAC peer Beijer Ref, offering slight re-rating potential. However, while we still like the long-term growth story, we believe solid performance in 2021 is well reflected in consensus. We believe Europe will remain the main growth driver of Climate Solutions and higher Nordic replacement demand could start to kick in 2021e.

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).

Northern Lights

Nibe Industrier (Hold, TP: SEK295.00) - Solid end to the year

We like the long-term growth story of higher penetration rates of heat pumps and M&A, while there is scope for improving margins from price rises and higher profitability in acquired units. However, we still see short-term risks from a 5% FX headwind in 2021e, and we believe the share price factors in ambitious M&A above NIBE’s track record. In addition, margin potential could be slightly limited by rising refrigerant prices and raw materials inflation in the coming year. We reiterate our HOLD, ...

Northern Lights

Nibe Industrier (Hold, TP: SEK275.00) - Ambitious M&A factored in

We forecast continued solid organic growth of 4% YOY for Q4 versus consensus of 1%. However, for 2021, we estimate a 5% FX headwind, while we believe the share price factors in ambitious M&A growth above NIBE’s track record. Although we like the long-term growth story and believe we may have placed too much weight on the short-term risk from rising refrigerant prices, we see little upside potential in the share price; we reiterate our HOLD, but have raised our target price to SEK275 (245).

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

Nibe Industrier (Hold, TP: SEK245.00) - Heating up but already pumped

We reiterate our HOLD but have cut our target price to SEK245 (250) following a change of analyst. We still believe the long-term fundamentals are in place for organic growth, but see a risk of lower demand in light of declining energy prices. The challenge for NIBE is to find large-enough targets to maintain its level of M&A growth, and we believe market expectations of medium-term M&A are high and above the historical average of adding 11% of sales.

Northern Lights

Nibe Industrier (Hold, TP: SEK250.00) - Pumping above expectations

We find further support in the long-term growth story from higher penetration rates of heat pumps and M&A, from the UK’s ‘green industrial revolution’ where the government has pledged to install 600k heat pumps a year by 2028. While this could potentially represent 10x the Swedish market, we view the timing as uncertain, and due to the high valuation, we reiterate our HOLD and SEK250 target price.