Epiroc Reports Record High Revenue During the Fourth Quarter; Shares Appear Rich

Narrow-moat Epiroc reported a 3% increase in organic order intake (excluding Russian orders) during the fourth quarter, marginally outperforming its closest competitor Sandvik, before incorporating a 22% benefit from favorable currency movements and acquisitions. Order intake has remained at a high level throughout the year, sequentially growing by 4% organically from the previous quarter. Management was quick to dismiss a decline in equipment orders due to the lumpy nature of large orders and guided for group demand to remain at a similar high level in the short term. We expect demand to remain robust, even as commodity prices normalize, due to the secular shift toward Epiroc’s electric and autonomous mining equipment. We maintain our SEK 143 fair value estimate and view shares as richly valued.