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Assa Abloy AB B ASSA B

Rating as of

Morningstar’s Analysis

Valuation
Currency in SEK
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Increasing Our Assa Abloy FVE to SEK 270 on Higher Digital and Smart Lock Growth Expectations

Analyst Note

| Denise Molina, CFA |

Facing an easy comparison on revenue but raw material headwinds, wide-moat Assa Abloy posted a solid second quarter with 23% organic revenue growth and a 15.2% EBIT margin, in line with the 15.9% margin reported in the second quarter of 2019 after normalizing for currency and acquisitions. A positive revenue mix effect of 40 basis points more than offset a 20-basis-point negative impact from raw material prices, but more pressure is likely in the second half. Below-normal levels of travel affected demand in the global tech and APAC divisions, and we expect both divisions to see above-normal recovery growth levels stretched in 2022 as a result. Based more on long-term factors, we are increasing our fair value estimate to SEK 270 per share from SEK 215, with a higher revenue growth outlook driven by digital solutions being the key driver for the upgrade, affecting both growth and return on invested capital assumptions. The shares offer modest upside.

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Company Profile

Business Description

Assa Abloy has the world’s largest installed base of locks, protecting some of the most security-sensitive buildings, including the European Parliament in Brussels. Three fourths of its revenue comes from government and commercial customers. The company's product base is centred on electromechanical locks, which require identification to unlock with a keycard, biometric scan, or PIN. The company's products are sold directly to security systems integrators, locksmiths, hardware stores, and original equipment manufacturers.

Contact
Klarabergsviadukten 90, P.O.Box 70340
Stockholm, SE-107 23, Sweden
T +46 850648500
Sector Industrials
Industry Security & Protection Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 50,727

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