Assa Abloy Enjoys Strong Growth and Demand in the Third Quarter; Shares Attractive

Assa Abloy continued to enjoy strong demand and also margin improvement in the third quarter. Sales grew 14% organically and the normalized EBIT margin was up 60 basis points to 15.6%. Operating leverage, cost-cutting, and price increases were all positive contributors. In line with our investment thesis, customer uptake of electromechanical locks continues to outpace the group's growth with electromechanical category sales up 16%, also above the roughly 12% prepandemic pace achieved during 2015-19. Electromechanical locks are an important driver of revenue growth due to higher prices of two times or more, than those of mechanical locks, and relative early-stage market adoption. We maintain our wide moat rating. Shares look attractive relative to our SEK 300 fair value estimate.