Cyclicals: Back on the Menu?

Research evidence excerpt

Cyclicals: Back on the Menu?

Q2 results on July 17. After a subdued Q1 performance

primarily due to adverse weather conditions and significant negative FX effects, we

anticipate Q2 will better align with the group's usual standards, although still

slightly below consensus estimates. So far this year, the M&A contribution has

been relatively limited and volume growth has been modest compared to the sector

average. Higher rates and weaker consumer confidence are further delaying the

recovery of the residential market. We retain a Hold rating. See full report here.

Nexans: Feedback from the Electra event: We attended Nexans' inauguration of

its third cable-laying vessel, Electra, in Oslo yesterday, which was followed by a

Q&A with management. Electra is a best-in-class cable laying vessel with lower

emissions that should help Nexans win more tenders and improve margins as it

relies less on 3rd parties. Nexans should also know the result of an MI project tender

to replace GSI in the short term, by early Q3. Outside of transmission, management

sounded very positive on the demand outlook within data centers, both in Europe

(where large project momentum is accelerating) and in the US, with Republic Wire

providing a springboard for its MV cable offering. The valuation remains compelling

with the shares trading at a deep c.40% discount to Prysmian, with a growing

exposure to data centers and the US market. See full report here.

Sandvik: Q2 faces tougher order comps but trend growth remains intact: Sandvik

reports Q2 results on July 17. The company is enjoying positive market dynamics

in both mining and industrial exposures but growth comps get tougher from here

in Mining. That said, we think the company will deliver Q2 results in line with DB