BEIJ/NIBE: US HVAC - July shipments +22% y-o-y

BEIJ/NIBE: US HVAC - June shipments +10% y-o-y

Beijer Ref (Hold, TP: SEK175.00) - Valuation stretched

Overall we view Q2 as somewhat stronger than forecast and expect H2 comparables to result in stronger organic growth YOY (relative to H1). We have slightly increased our 2024-2026e and raised our target price to SEK175 (166), mainly due to expanded peer multiples. However, we still find the valuation stretched, despite the growth potential, and reiterate our HOLD.

The organic recovery continues

Solid 13% EBITA growth as organic sales grew 2%, '24e-'26e adj. EBITA up 2%; 11% CAGR '23-'26e, keep HOLD, TP SEK 190 (180)

2% adj. EBITA beat on in-line sales

BEIJ/NIBE: US HVAC - May shipments flat y-o-y

Return to organic growth on the cards

Q2 due Friday, 19 July, 08:30 CET, small adj. EBITA changes; 10% CAGR '23-'26e, keep HOLD, TP SEK 180 (170).

Beijer Ref (Hold, TP: SEK166.00) - Price tailwinds from the US

We estimate Q2 sales of SEK9,560m, organic growth of c1% YOY, and an adj. EBIT margin of 11.3%, leaving us 2% above Visible Alpha adj. EBIT consensus. We have raised our 2024–2026e adj. EBIT by c1% on average. In this note, we also address the US A2L regulation and its potential price impact on the US HVAC-R industry. We reiterate our HOLD, but have raised our target price to SEK166 (156) on updated peer multiples and estimates.

The power of M&A compounding

BEIJ/NIBE: US HVAC - April shipments +5% y-o-y

BEIJ/NIBE: US HVAC - Easter held back shipments

BEIJ/NIBE: Positive impressions from US peers

US peer Watsco sees positive trend

Ready for a return to growth

In-line earnings, strong FCF, growth in Q2, '24e-'26e EBITA up 2-4%; 10% CAGR '23-'26e, keep HOLD, TP SEK 170 (165)

Beijer Ref (Hold, TP: SEK156.00) - Building (cash flow) confidence

We have increased our cash flow estimates but have made moderate underlying forecast changes after the Q1 report. Inclusion of recent M&A and updated FX has led us to raise our adj. EBITA by c3% on average for 2024–2026e. We have raised our target price to SEK156 (152) due to our model changes and updated peer multiples. We reiterate our HOLD and see limited upside potential given the valuation seems on the high side.

Beijer Ref (Hold, TP: SEK152.00) - Minor quarter

We estimate Q1 sales of SEK8,145m and adj. EBIT of SEK727m (adj. EBITA of SEK777m), in line with Visible Alpha consensus. We have raised our 2024–2026e adj. EBITA by c3% on the latest M&A, updated FX and our underlying estimate changes. We reiterate our HOLD, but have increased our target price to SEK152 (142) on updated valuation.

Beijer Ref (Hold, TP: SEK142.00) - Cash and valuation

Q4 adj. EBIT missed our estimate, but cash flow was clearly better than expected. We have raised our cash flow estimates, which, combined with an updated peer valuation (which has come up since our previous update) has prompted us to increase our target price to SEK142 (112). Despite this, we see limited upside potential (trading at a premium to its own history) and highlight the EQT placing risk at these levels. We reiterate our HOLD.

Decoding Alpha

Our analysis of underlying total shareholder return (TSR) drivers for Swedish Industrial companies reveals that high returns are not synonymous with high valuations. Investors tend to overpay for ‘growth’, while cash returns such as dividends and buybacks are typically deeply discounted. We believe Autoliv, Alfa Laval and Hexagon offer the most long-term TSR potential (13–14% annualised), with SKF and Trelleborg at the other end of the spectrum (8–9%), while also concluding that several stocks l...

Beijer Ref (Hold, TP: SEK112.00) - Hitting the growth reset button

Overall, Q3 missed our estimates and consensus, with negative organic growth YOY the main surprise. We have cut our 2023–2025e adj. EPS by ~8% on average (and adj. EBIT by 4%), and in turn our target price to SEK112 (124); we reiterate our HOLD. We now expect negative organic growth (YOY) for the next two quarters given tough comparables for HVAC.

Beijer Ref (Hold, TP: SEK124.00) - Difficult comparables

We estimate Q3 sales of SEK8,702m and EBIT of SEK970m, in line with Visible Alpha consensus. Heritage’s sales should be boosted somewhat by the USD/SEK, something to consider when assessing the underlying US demand. We have lowered our underlying estimates, but our headline forecasts are broadly unchanged when including the latest M&A and updated FX. We reiterate our HOLD but have cut our target price to SEK124 (145) on updated valuation.