Flat earnings as bad as it gets in mild downturn. Deep-cyclicals now partly de-risked, so value opportunities fewer. Epiroc and Hexpol down to HOLD; prefer Alfa, Assa, Metso, Hexagon, Volvo.
Outside of construction, most end-markets were solid, pricing and margins held up, and cash flow was strong. We think Alfa Laval, SKF and Volvo look attractive in H1’24.
Earnings hold up on big backlogs; PMIs have turned, but only slowly. Meanwhile, stocks have bounced, multiples back to normal. We favour Alfa Laval, Epiroc, Metso, SKF and Volvo.
Q4 results due on 31 January. We expect orders +4%, adj. EBIT margin 10.9% (5.3%). Valuation unattractive, but momentum and structural changes support.
Solid Q3 with better cash flow, adj. EBIT +2-5%. Storage reassessment surprising, opens up wide value range. Up to HOLD (Sell) as SOTP optimism will rule.