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03 Feb 2022
A flying finish to an exceptional year
Compagnie de Saint-Gobain SA (SGO:PAR), 0 | Wienerberger AG (WIE:WBO), 0 | Sika AG (SIKA:SWX), 0 | Ferguson Plc (FERG:LON), 16,950 | Travis Perkins plc (TPK:LON), 725 | Geberit AG (GEBN:SWX), 0 | Kingspan Group Plc (KRX:DUB), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Armstrong World Industries, Inc. (AWI:NYS), 0 | Trex Company, Inc. (TREX:NYS), 0 | Owens Corning (OC:NYS), 0 | Ibstock Plc (IBST:LON), 148 | Forterra Plc (FORT:LON), 161 | Armstrong World Industries Inc Shs Unsponsored Brazilian Depository Receipt Repr 1 Sh (AWII34:BSP), 0 | ROCKWOOL A/S Class B (0M0A:LON), 0 | Invesco US Treasury Bond 7-10 Year UCITS ETF (TREX:LON), 0 | Wienerberger AG (0MKZ:LON), 0
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A flying finish to an exceptional year
Compagnie de Saint-Gobain SA (SGO:PAR), 0 | Wienerberger AG (WIE:WBO), 0 | Sika AG (SIKA:SWX), 0 | Ferguson Plc (FERG:LON), 16,950 | Travis Perkins plc (TPK:LON), 725 | Geberit AG (GEBN:SWX), 0 | Kingspan Group Plc (KRX:DUB), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Armstrong World Industries, Inc. (AWI:NYS), 0 | Trex Company, Inc. (TREX:NYS), 0 | Owens Corning (OC:NYS), 0 | Ibstock Plc (IBST:LON), 148 | Forterra Plc (FORT:LON), 161 | Armstrong World Industries Inc Shs Unsponsored Brazilian Depository Receipt Repr 1 Sh (AWII34:BSP), 0 | ROCKWOOL A/S Class B (0M0A:LON), 0 | Invesco US Treasury Bond 7-10 Year UCITS ETF (TREX:LON), 0 | Wienerberger AG (0MKZ:LON), 0
- Published:
03 Feb 2022 -
Author:
Bromehead Yves YB | Roger Paul PR | Speak George GS | Whitworth Robert RW -
Pages:
15
A flying finish to an exceptional year
The lightside sector is set to cross the finish line at breakneck speed, fuelled by stronger than expected Q4 volume and pricing momentum. We expect Saint-Gobain, Wienerberger and AWI to take podium positions and Rockwool and Geberit continue to struggle on inflationary concerns.
H122 ready to rumble
H122 base effect fears should fade as record-high backlog conditions and further market recovery pushes near-term volume expectations higher. Non-residential and renovation end-markets are expected to lead the pack.
Inflationary pressure to persist but pricing gathers momentum
We believe inflation will persist, and whilst margin squeeze remains a risk for Q122 we expect unprecedented price increases to gain momentum and rapidly catch up with costs. Distributors will be rubbing their hands as inflation leads to further margin improvement.
Q421 earnings season top-pick: SGO (+) and WIE (+)
SGO is our top pick with recent earnings releases from peers pointing towards stronger than expected French, UK and Nordic renovation datapoints in Q421 and a buoyant outlook in H122. Favourable weather conditions and elevated housing completions in Q421 should support WIE.
Keep away from inflationary headwinds: ROCKB (-)
We expect Rockwool Q4 volumes to surprise positively but for the outlook to stay pressured as energy prices hit margin. In our view, consensus expectations of roughly flat margins are optimistic.
Cherry-picking between value and quality plays
The value rotation has taken its toll on an otherwise quality and growth-biased sector. We find attractive opportunities in our quality basket via Sika and Kingspan, whilst cheaper alternatives including Saint-Gobain and Wienerberger are still undervalued in our view.