HSBC forecasts deeper downturn in lightside building materials

CRH

06/07/2023 10:05

** HSBC expects further downturn for the European building
materials sector in 2023-24, citing limited pricing power in
lightside residential and non-residential sector
    ** The brokerage sees more value in the heavyside due to its
relative volume resilience on high infrastructure exposure,
strong energy cost tailwind and pricing power in discount margin
(DM), which could lead to positive margin and near-term earnings
surprise
    ** HSBC downgrades lightside stocks Geberit  GEBN.S  to
"reduce" from "hold" and Kingspan  KSP.I  to "hold" from "buy"
on weaker near-term fundamentals
    ** It cuts Heidelberg Materials  HEIG.DE  to "hold" from
"buy" after a strong share price rally since October 2022 lows,
while upgrading Vicat  VCTP.PA  to "hold" from "reduce" on
strong gains from energy price declines in emerging markets
    ** HSBC's preferred "buys" in the heavyside are CRH  CRH.L 
and Holcim  HOLN.S , benefiting from high U.S. exposure, and
Saint-Gobain  SGOB.PA  and Sika  SIKA.S  on the lightside thanks
to their volume and margin outperformance

 (Reporting by Anastasiia Kozlova)
 ((Anastasiia.Kozlova@thomsonreuters.com))