SANDVIK (+) : Swedish industrials trip - corporate contact

Research evidence excerpt

SANDVIK (+) : Swedish industrials trip - corporate contact

Refinitiv

Sandvik thinks Chinese export restrictions on tungsten and higher tungsten prices will create opportunities to gain

market share. As we have previously flagged, the Ministry of Commerce and the General Administration of Customs in

China have added high-precision cemented carbide tools and ultrafine-grained cemented carbide materials to the dual-

use export control list for Japan. Japan is an important country for production of high-end cutting tools with a global

market share of around 30% and most of the tungsten raw materials and ultrafine-grained tungsten powder required

for Japan's high-end cemented carbide production is likely imported from China. Mr Widing seems to agree that this

could lead to further market share gains if Japanese cutting tools manufacturers are not able to source tungsten.

Sandvik has not started to see Chinese players gaining market share in the international market because of higher

tungsten prices.

Sandvik has raised cutting tools prices in the beginning of May, and we think Sandvik will have to raise prices at least

one more time this year to cover the higher tungsten prices. We think consensus estimates are too low if current

tungsten prices persist, and in that scenario, we could probably see 10-20% upside potential to consensus 2027

earnings estimates. On the other hand, materially lower tungsten prices should be considered a risk to the share price

performance.

In Q1, Sandvik launched the EverPath Technology for its Mastercam software, which is built to make CNC programming

faster, simpler, and more flexible. It features a built-in user assistance system for contextual guidance and real-time

validation which identifies potential issues during programming.