Alfa Laval Steps Up Investments to Meet High Demand and Expand Product Portfolio; FVE Increased

Alfa Laval announced an investment program between SEK 7 billion and 8 billion over the next three to four years to satisfy high levels of existing demand and help expand its portfolio to cater to its customers ongoing decarbonization ambitions. We believe the step-up in investments will support Alfa Laval’s track record for product innovation and the group’s wide moat rating, which we maintain. We raise our fair value estimate to SEK 265 from SEK 242 to reflect a more favorable outlook in Alfa Laval’s end markets. The most notable increase is in the marine segment, which stands to benefit from new marine regulation, supporting a recovery in shipbuilding activity in the latter stages of our forecast period. Shares appear richly valued.