ABGSC on the Capital Goods sector: “We particularly like companies whose products yield energy savings for their customers”

ABGSC analyst Anders Idborg shares his thoughts on the Capital Goods sector, ahead of our upcoming Capital Goods Sessions

 
Anders Idborg is an Equity Research Analyst in ABGSC’s Stockholm office, covering companies in the Capital Goods sector, such as Assa Abloy, Atlas Copco and Epiroc. In an interview, we asked him for his thoughts on the sector.
What trends and challenges are currently driving the Capital Goods sector?
“Companies in the sector currently face significant challenges, including rising energy costs, volatile supply chains and very likely slowing demand momentum, as consumers feel the pinch of cost increases”, Idborg explains.
In the face of all this uncertainly, what macro events will you be keeping an eye on over the next few months? Any specific indicators?
“We are closely monitoring many leading indicators such as purchase managers’ indexes and policy changes in China for signs of how the demand will play out”, he says. “But we also look for signs of improved supply of key components, including semiconductors, and we try to keep a close eye on how well companies manage to raise prices.
“So far, many companies have defended profitability in a very impressive way”, he adds.
What are the current opportunities in the sector?
“While most indicators suggest a slowing of earnings growth, share prices have also come down and there are companies with distinct value opportunities and companies which will continue to defy pessimists as they keep momentum up despite headwinds. We particularly like companies whose products yield energy savings for their customers”.
Can you tell us what we can expect from the upcoming Capital Goods Sessions?
“Some of the key things we will cover include pricing strategies, how companies in our sector cope with component shortages, as well as the opportunities to reposition through M&A”, says Idborg.
ABGSC’s Capital Goods Sessions will be available both in-person and virtually on 14 September. Attending companies will include Epiroc, Atlas Copco, Assa Abloy, ABB, Alfa Laval, Autoliv, and Volvo Group.
 
ABGSC clients can access the full agenda for the seminar here.
RSVP: invitations@abgsc.se
*Please note, this event is open to ABGSC clients only.