A good start to the year

Q1 EPS 7% above, but some special elements. Backlog implies revenue estimates are robust. Strong momentum, high expectations - HOLD.

Kongsberg Gruppen (Hold, TP: NOK780.00) - Solid Maritime margin beat i...

Q1 EBITDA beat our estimate and consensus by 9%, explained by a stronger Maritime (KM) margin than expected. However, as previously guided, the Defence (KD) margin did fall to 17% in this quarter. We have edged our 2025–2026e EPS up 2% after primarily raising our KM margin assumptions, but reiterate our HOLD and NOK780 target price as we believe the stock is already pricing in a possible ramp-up of NATO defence spending to at least 2.5% of GDP for all member states.

More price hikes

Q2 EBITDA -2%, but hiking kraftliner and lumber prices. Early-cyclical share with large growth projects. EBIT +SEK 1bn. Forest values up to SEK 154/sh, mid-cycle value SEK 205/sh.

SCA (Buy, TP: SEK190.00) - Earnings growth is on

The Q1 report shows SCA is in good shape and – thanks to its own forest operations – can mitigate higher wood costs. We see good reason to be optimistic on the price prospects for its industries both short- and longer-term, and for Q2 we expect ample earnings support from higher prices across the board. We have made limited 2024–2027 estimate changes; however, on growing confidence of good 2024 earnings growth, we have raised our target price to SEK190 (185). We reiterate our BUY.

Rich in growth, quality and valuation

Still growing well into Q1e. Strong tailwinds in Defence, but within expectations. Strong growth into the end of the decade priced in - HOLD.

Zalaris - Commencement of strategic review

Zalaris announced a strategic review process on 2 April, as the company explores potential opportunities to accelerate growth and maximise value for both customers and shareholders. The potential of a sale and delisting reflects the sentiment from many other listed technology businesses that have recently gone private, finding public markets a restraint to investment in growth. There is no certainty that an initiative, event or transaction will take place. Zalaris’s Q124 results are scheduled fo...

Kongsberg Gruppen (Hold, TP: NOK780.00) - NATO spending sets the tone

We have downgraded to HOLD (BUY), but raised our target price to NOK780 (680), as we believe the valuation now reflects a probable NATO defence-spending ramp-up. Based on our analysis of various Western defence-budget scenarios and the correlation to Kongsberg Gruppen’s growth and valuation, we find the following priced in: by 2030, all non-US NATO defence spending rising to 2.5% of GDP, the equipment share of spending increasing from 30% to 40%, and Kongsberg Gruppen’s EBITDA margin expanding f...

SCA (Buy, TP: SEK185.00) - From headwinds to tailwinds

We have made relatively small but positive revisions to our 2024–2025e earnings, which remain well above consensus. We continue to see plenty of value in SCA, as well as a good risk/reward, with evidence of better pulp markets and signs of improved pricing for the containerboard business and completed large investments generating significant incremental earnings for 2024–2025e. We reiterate our BUY but have raised our target price to SEK185 (180).

Zalaris - Simplifying HR and payroll solutions

Zalaris is a leading European provider of comprehensive payroll and HR solutions and services, covering the entire employee lifecycle. The company’s proprietary platform PeopleHub is tailored towards multinational corporations or large and complex single-country projects, the more attractive end of the business process outsourcing (BPO) market. Due to long-term relationships with customers and a low churn rate, the company has an improving financial profile with good revenue momentum as well as ...

Svenska Cellulosa AB SCA: 1 director

A director at Svenska Cellulosa AB SCA bought 1,800,000 shares at 141.700SEK and the significance rating of the trade was 100/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last t...

Kongsberg Gruppen (Buy, TP: NOK680.00) - Solid earnings trajectory

Q4 EBITDA was NOK1.7bn, 8–7% above our estimate and consensus, driven by strong underlying performance across all segments. We have raised our 2024–2025e EPS by 6–5% on the Q4 print and find the 2025e P/E of ~21x too modest, as we believe the earnings compounding effect is set to continue beyond 2025. We reiterate our BUY and have increased our target price to NOK680 (575) on our raised estimates and multiples expansion among defence and maritime peers.

SCA (Buy, TP: SEK180.00) - Buying opportunity in quality

The Q4 report demonstrated SCA is able to generate healthy earnings in tough markets. It guides for better 2024 market conditions for all industries, which we find encouraging given the earnings leverage to better prices and volumes. With the stock under pressure due to published commentary regarding mismanaged operations and accounting fraud (groundless, in our view), we see a solid entry point in a high-quality name, and we also continue to find consensus earnings outlook too low for 2024e. We...

Kongsberg Gruppen (Buy, TP: NOK575.00) - Earnings compounding continue...

We estimate 2023 revenue growth of ~25% YOY to ~NOK40bn, with a book-to-bill of ~1.2x in Maritime and ~2.3x in Defence for the year, suggesting the company will continue its impressive compounding journey in 2024–2025 (results due at 07:00 CET on 9 February. We continue to see meaningful upside potential for the stock given the strong earnings trajectory (trading at a 2025e P/E of ~18x). We reiterate our BUY and NOK575 target price.

Hexagon AB: 1 director

A director at Hexagon AB sold after exercising options/sold 1,000,000 shares at 119.572SEK and the significance rating of the trade was 100/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors o...

SCA (Buy, TP: SEK180.00) - Q4 should mark the bottom

Due to FX and lower price assumptions for sawn wood and containerboard, we have trimmed our 2024–2025e earnings forecast, but remain well above consensus. We see plenty of value in SCA and good risk/reward, benefiting from its unique backward-integrated business model, improving pulp and containerboard markets, and a significant earnings tailwind from completed large investments in 2024–2025e. We reiterate our BUY, but have lowered our target price to SEK180 (190).

SCA (Buy, TP: SEK185.00) - Earnings growth is on

We have trimmed our earnings forecasts, but remain well above consensus for 2024e. We still see plenty of value in SCA, as well as a good risk/reward, with evidence of better pulp markets and signs the painful inventory adjustment in the containerboard business is set to ease, plus a significant earnings tailwind from FX and completed large investments. We reiterate our BUY and SEK185 target price.

Kongsberg Gruppen (Buy, TP: NOK550.00) - Stand by for ‘harvesting’ mod...

We expect Q3 EBITDA of NOK1,529m (results due at 07:00 CET on 27 October), up 13% YOY, and 3% above consensus, reflecting a continued firm growth trajectory. We believe the solid Defence order intake in Q3 (we estimate ~NOK20bn) to be a sign of things to come and estimate a divisional revenue CAGR of ~19% for 2022–2025. We have raised our 2024–2025e EPS by ~3%, reflecting an even stronger Defence outlook. We reiterate our BUY and NOK550 target price.

Northern Lights

SCA (Buy, TP: SEK185.00) - Earnings resilience and leverage

Due to its integrated business model, good access to relatively cheap wood, well-invested industry assets and tailwind from completed growth investments, we believe SCA is positioned to outclass its peers on earnings. Given improving prices for containerboard and pulp but also a weaker SEK, we expect 2024 EBITDA to grow 42% YOY to close to SEK10bn. We believe 2024e consensus is much too cautious, and see significant valuation upside potential and an attractive investment case. We reiterate our B...