GB : Sandvik - On track towards record margins

The 4Q results highlight a reduced cyclicality, delivering record margins during Covid despite margins at SMS (50% of group EBIT) remaining towards cycle lows. Our note puts this performance into historical context showing the increased importance of Mining, where margins are structurally 500bps higher. As the short-cycle recovery gets underway, we argue for a new higher margin corridor and M&A that could deliver a double digit EPS cagr, supporting a further re-rating to quality. Reiterate BUY.

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