MS sees better aftermarket sales for European mining equipment makers in 2025

Epiroc AB

09/12/2024 11:02

** Morgan Stanley expects European mining equipment makers'
aftermarket businesses to see a more supportive environment in
2025, while original equipment recovery will take more time
    ** "Miners have been given an incentive to maximise
production from existing assets, supporting equipment suppliers'
aftermarket businesses" - MS
    ** It predicts 2025 mining capex will be flat
year-over-year, followed by a slight decrease in 2026 - still
around 30% below the 2012 peak
    ** It double upgrades UK-based Weir Group  WEIR.L  and
downgrades Sweden's Epiroc  EPIRa.ST 
    ** MS says margin consensus for Epiroc is too high, while
its competitive advantage is "less clear", with Sandvik
 SAND.ST  taking market share in surface mining and electric
mining equipment
    ** Weir is expected to exceed its 20% operating margin
target by 2026, while its improved FCF leaves room for inorganic
growth or share buybacks, MS says
    ** Although the mining industry is fairly concentrated, MS
says further consolidation should not be ruled out
    
 COMPANY      RATING        OLD RATING    PT          OLD PT
 Epiroc       underweight   equal-weight  SEK 182     SEK 200
 Weir Group   overweight    underweight   2,560p      2,080p
 Metso        equal-weight  -             EUR 9.80    EUR 10
 Sandvik      equal-weight  -             SEK 220     SEK 215
 
 (Reporting by Agnieszka Olenska)
 ((Agnieszka.olenska@thomsonreuters.com))