JPM sees varied, end-market-dependent volume recovery for European building materials
05/12/2024 10:02
** J.P.Morgan expects volume recovery on the cards for
European building materials but for it to vary depending on
end-market, seeing an average volume growth of about 2% in 2025
** The brokerage expects infrastructure volumes to be up
mid-single-digits and new build residential activity to be flat
to slightly up
** It expects new build non-residential activity to be
likely flat to slightly down and renovation activity to once
again be more resilient
** The broker sees a rather positive pricing environment
(+2%), expects price increases to offset cost inflation
** It sees like-for-like earnings growth on average of 9%
and an average 2% pricing growth for the sector in 2025
** JPM highlights its relative preference for names in the
heavyside sub-sector due to more valuation upside, fiscal
stimulus in the U.S., improving industry fundamentals in Europe
** While it sees positives for the lightside sub-sector when
interest rate cuts start supporting volumes, it expects this
likely in H2
** JPM downgrades Sika SIKA.S to "underweight" from
"neutral" expecting further rating cuts for the Swiss industrial
and construction chemicals company if end-markets do not recover
as quickly as expected, and price fixing likely to remain an
overhang
Heavyside:
COMPANY NEW RATING OLD RATING NEW PT OLD PT
Heidelberg Materials HEIG.DE overweight - EUR 151 EUR 150
Holcim HOLN.S overweight - CHF 108 -
CRH CRH.N overweight - $118 $116
Buzzi BZU.MI neutral - EUR 46 -
Lighside:
COMPANY NEW RATING OLD RATING NEW PT OLD PT
Saint-Gobain SGOB.PA overweight - EUR 114 -
Travis Perkins TPK.L overweight - GBp 910 GBp 1,000
Howden Joinery HWDN.L neutral - GBp 849 GBp 680
Rockwool ROCKb.CO neutral - DKK 2,810 DKK 2,990
Sika underweight neutral CHF 209 CHF 250
Kingspan KSP.I underweight - EUR 65 -
(Reporting by Marta Frąckowiak)
((marta.frackowiak@thomsonreuters.com))