Lindab International (Buy, TP: SEK270.00) - Profile margins bouncing b...

For Q2, we estimate sales of SEK3,478m, with organic growth of -4% YOY and an adj. EBIT margin of 8.5%, which overall puts us somewhat below Bloomberg consensus on adj. EBIT. We have increased our 2024–2026e adj. EBIT by c3% on average, and raised our target price to SEK270 (244) after updating our valuation. We reiterate our BUY and note that the latest Euroconstruct data indicates a solid market recovery in the Nordic construction market (c40% of Lindab’s sales) in 2025.

Lindab International (Buy, TP: SEK244.00) - A bump in the road

Lindab’s markets remain under pressure, but comparables are becoming easier, and we expect positive organic growth in H2 2024. Due to the weak Q1, we have reduced our 2024–2026e adj. EBIT by c5% on average and our target price to SEK244 (250), but reiterate our BUY. We expect earnings growth from Q4 onwards, and see upside potential to our target price.

Lindab International (Buy, TP: SEK250.00) - M&A adds value

Q4 was overall weaker than we expected, driven by lower profitability. As we include the most recent M&A announcements (Airmaster brings an especially strong margin) but lower underlying estimates, we have raised our 2024–2025e adj. EBIT by c3% on average and reiterate our SEK250 target price. Lindab is picking up M&A speed, while we expect positive organic growth in H2 2024. We reiterate our BUY.

Swedish small caps

Swedish small caps

Lindab International (Buy, TP: SEK250.00) - Even brighter days ahead

For Q4e, we are c2% below Bloomberg consensus on sales and c12% below on adj. EBIT. We have cut our 2023–2025e adj. EBIT by c7% on average (c3%-points due to FX), while we reiterate our BUY and SEK250 target price based on our updated valuation (multiples and DCF rolled forward). We see scope for organic growth in H2 2024e (and beyond) and highlight the c9% FCF yield for 2024–2025e. In the medium to longer term, we believe Lindab is set to benefit from the regulatory trends in the European const...

Lindab International (Buy, TP: SEK250.00) - Raising the bar

Q3 was another quarter of impressive margin execution, which together with stronger-than-expected sales growth resulted in Lindab beating our estimates. Management announced new, ambitious 2027 targets, which we see as positive. We have raised our 2023–2025e adj. EBIT by c5% on average, and our target price to SEK250 (238). We reiterate our BUY.

Lindab International (Buy, TP: SEK238.00) - Double-digit FCF yield for...

We estimate Q3 sales of SEK3,122m, with -15% YOY organic growth and adj. EBIT of SEK250m. Lindab continues to operate in a tough market environment, especially for its Profile Systems business, which has c50% of its sales in Sweden. We have raised our 2023–2025e adj. EBIT by c1% on average (due to M&A and FX changes), and reiterate our SEK238 target price and BUY.

Lindab International AB: 2 directors

Two Directors at Lindab International AB bought 2,222 shares at between 155.980SEK and 161.588SEK. The significance rating of the trade was 51/100. 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 director...

Lindab International (Buy, TP: SEK238.00) - Another strong quarter

Lindab continues to prove its positive qualities, with strong margin resilience in a tough market. CEO Ringdahl has initiated cost-cutting measures and stated that Ventilation had positive YOY organic growth in June (we, however, remain conservative in our growth estimates). We still like the direction in which Lindab is heading, while its markets remain tough. We have raised our adj. EBIT for 2023–2025e by c2% and our target price to SEK238 (235) as we reiterate our BUY.

Lindab International (Buy, TP: SEK235.00) - Far better than feared

The Q1 results beat our estimates and consensus, with organic growth of -5% YOY versus our -10% (no consensus) and an adj. EBIT margin of 8.2% versus our 6.7% and consensus of 7.5%. Ventilation Systems reported solid margins (10.2% on EBIT) despite temporary raw-material headwinds and tough market conditions. Largely on the back of this, we have raised our 2023–2025e adj. EBIT by 10% on average and our target price to SEK235 (212); we reiterate our BUY.

Still going strong

Although reported EU taxonomy alignment for the sector is low, we have identified which companies screen best and could benefit from attracting ESG capital. We still favour China, mining, energy and aftermarket exposure, and see upside potential to consensus estimates, but view overall risk/reward as neutral on elevated valuation.

Lindab International (Buy, TP: SEK212.00) - Few surprises – limited ch...

The Q4 results were broadly in line with our estimates, with stronger organic growth but weaker margins than we expected. We have made only minor changes to our estimates, reducing our 2023–2024e adj. EBIT by 1.8% on average. While the coming quarters look set to be tough, we believe this is more than reflected in the share price. We reiterate our BUY but have lowered our target price to SEK212 (215).

Lindab International (Buy, TP: SEK215.00) - Set for final inventory ad...

Lindab is due to report Q4 results at 07:40 CET on 9 February. We estimate -2% YOY organic growth and margins affected by temporary inventory adjustments in Q4. We have reduced our 2022–2024e adj. EBIT by 4% on average, and in turn our target price to SEK215 (220), while we reiterate our BUY.

Industrial blues

DNB Markets’ Strategy and Macro team suggests being underweight industrials, due to the sector’s premium valuation and risk of >10% earnings cuts in 2023 from a cyclical slowdown. Our sensitivity analysis shows Volvo, Dometic and Autoliv have the greatest downside risk to earnings in a cyclical slowdown, while Assa Abloy and Hexagon (two of our sector top picks) should be most resilient. We prefer mining, energy, aftermarket and China exposure.

Northern Lights

Lindab International (Buy, TP: SEK220.00) - Double-digit FCF yield 202...

Q3 earnings were weaker than expected due to inventory adjustments, cost inflation and inclusion of acquisitions weighing on margins. We have cut our 2022–2024e adj. EBIT by 8% on average and as a result reduced our target price to SEK220 (240). However, we reiterate our BUY and still see substantial upside potential.

The looming energy crisis

Europe is facing an energy crisis of unparalleled scale. While we believe the direct impact of higher energy prices is manageable for Swedish Capital Goods companies, with energy costs generally making up only 1–2% of sales (we estimate Trelleborg, Hexpol and SKF are most exposed), in our view, gas rationing in Europe this winter would have profound consequences and pose the biggest risk to the sector. In our opinion, Alfa Laval (BUY), Atlas Copco, ABB and Nibe (all HOLD) could be relative winne...

Lindab International (Buy, TP: SEK240.00) - Demand holding up (so far)

We have raised our 2022–2024e adj. EBIT by c5% after a solid Q2, and in turn our target price to SEK240 (230). Demand remains strong (so far), and negative price revisions are not in Lindab’s short-term plans. Renovation and M&A will likely partly offset any potential downturn in construction in 2023, in our view. We reiterate our BUY.

Feedback from meetings last week

Below we summarise the key take-aways from our meetings with management of Trelleborg, Beijer Ref, Hexpol, Thule, Lindab and Nibe last week.

The end of globalisation

Recent supply chain disruption has raised questions about global value chain integration. We believe prospects of deglobalisation have increased, and have identified potential winners and losers in the sector from this. We see negative implications for sector profitability as companies would likely: 1) carry higher inventories; 2) increase the number of suppliers; and 3) move production closer-to-home.