Nexans (NEX FP) France
Industrials
Sean Maher adds NEX his green grid infrastructure basket (includes Rolls-Royce, Cummins, Ming Yang) after unjustified YTD weakness on a 14x PER, a 3-point discount to Italian rival Prysmian. Sean highlights NEX’s recent agreement with TenneT (largest in its history) and successful testing of the first 525 kV DC cable which enables a substantial increase in transmission capacity. Furthermore, as digital decoupling from China extends to subsea data infrastructure, what was already a very strong growth market driven by international data volumes in providing highly sophisticated multi-layer cables now has a further tailwind from national security led duplication and redundancy.
Edition: 163
- 23 June, 2023
Nexans (NEX FP) France
Industrials
US potential and pivot to electrification pure play offers 45%+ upside - Sustainable Investing are more bullish on US transmission & distribution (T&D) growth than consensus (sees the market doubling to $600bn in a decade - 2x size of EU). NEX's leverage to US is underappreciated - it is currently only 22% of revenue, but will be closer to 40% by 2025, driving a 33% increase in group EBIT. The group's pivot to electrification pure play via the disposal of telco and industrial cable and the HVDC acquisition also drives margin improvement. 30% valuation discount to peers; NEX should be worth 9x EV/EBITDA, in line with Prysmian.
Edition: 127
- 21 January, 2022
EU Net Zero Ideas: Cable offers long term FCF & returns, Electrolysers do not
HVDC players (Nexans, Prysmian and NKT) offer improved growth, margins and ROIC as interconnection becomes a key enabling technology for net zero. The US market could triple. Barriers to entry are high and incumbents are well placed to be the main beneficiaries.
Electrolyser producers (Nel and ITM Power) face increasingly competitive industry dynamics (similar to German solar in 2008) and overcapacity / pricing pressure through 2030. Current leaders are unlikely to generate cash in the coming decade or remain independent. Both could raise capital again.
Edition: 122
- 29 October, 2021
Nexans (NEX FP) France
Industrials
U-turn from generalist to ultra-focused cables producer specialised in electrification of wind and solar grids - with a leading market position and rapidly growing pipeline AIR expect the company's margins to increase significantly over the next few years. Proceeds from the planned disposal of its Telecom & Industry units can also be used to finance strategic acquisitions. Forecasts EBITDA of €450m in 2021 and €525m in 2022. TP increased to €120 (70% upside).
Edition: 110
- 14 May, 2021