FLSmidth "Closing the quality gap to peers. Upgrade to Buy." (Buy) Hussey

Research evidence excerpt

FLSmidth "Closing the quality gap to peers. Upgrade to Buy." (Buy) Hussey

are incrementally more positive post Q1

There are three key reasons why we are incrementally more positive following the Q1 Ed Hussey

results. First, commentary around large orders (particularly greenfield) has improved. Analyst

edward.hussey@ubs.comSecond, FLSmidth appears to have continued to gain market share in PC&V. Third, book-

+44-20-7568 3946

to-bill in both Service and PC&V was very strong (1.21x in each division), providing good

visibility on revenue growth and margin progression in the coming quarters. Overall, we Andre Kukhnin

believe the results demonstrate FLSmidth’s ability to deliver strong top-line growth, and Analyst

andre.kukhnin@ubs.com

we are now incrementally more positive on the outlook for large equipment orders.

+44-20-7567 2162

Valuation: Gabriel Huber

Associate Analyst

FLSmidth trades on the lowest multiple amongst the peer group, and is currently trading gabriel.huber@ubs.com

on a fwd EV/EBIT of 11x vs the average of the peer group on 17x. FLSmidth is also +44-20-7883 0295

trading at a c.30% discount vs the historical average of c.18%, despite closing the gap

to peers on financial performance. Our price target implies a 2027E EV/EBIT of 13x,

which is still a sizeable discount vs peers. However, we think this is justified despite the

improvements in FLSmidth's financials, as FLS still lags peers on margins and cash

conversion, and remains subscale relative to peers.

Highlights (DKrm) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 24,106 20,187 14,612 14,858 15,995 17,204 18,506 19,611

EBIT (UBS) 1,681 1,999 2,036 2,256 2,484 2,734 3,003 3,229

Net earnings (UBS) 802 1,191 588 1,533 1,603 1,815 2,031 2,215