Sandvik Closes Out a Solid Year, Alleviating Immediate Macroeconomic Concerns; Shares Fairly Valued

Narrow-moat Sandvik delivered impressive full-year results, reporting organic order and revenue growth (excluding its divestment from Russia) of 9% and 12%, respectively. Fourth-quarter performance was also solid, as well as the first few trading weeks of 2023, which will help alleviate investor concerns (at least for the time being) about the general health of the economy and its impact on the short-cycle nature of Sandvik’s business. Organic order intake grew 2% during the fourth quarter, despite a slowdown in demand for mining and construction equipment, with strong demand for mining aftermarket services and manufacturing activity in North America remaining robust. We reiterate our SEK 193 fair value estimate and view shares as fairly valued.