Weir Group PLC’s higher exposure to mining makes it a winner among engineers,

PLC () is set to benefit from strong recovery in global mining capital expenditure in 2021, said UBS, upgrading the engineering group to a ‘buy’ rating.

The FTSE 250 group is seen emerging as a “premium mining pure-play”, with the analysts near-term positive view supported by a global mining survey carried out by the investment bank.

This industry research has pointed high raw material prices driving capex expansion, significant and urgent equipment replacement needs, and “mostly supportive” leading indicators.

Following a 9% decline in orders in 2020, UBS’s model forecasts around 13% order growth in the new financial year, in line with sector mining capex forecast and 500 basis points higher than consensus forecast.

Revenue is seen growing 8% on an organic basis, reflecting low-teens underlying growth against a fairly strong 2020 thanks to work on the Iron Bridge mine.

For the medium-term, UBS has adopted a more cautious stance for global mining capex, but see sees potential for Weir to outgrow the market.

Mid-single digit growth compound annual growth out to 2025 is based on declining ore grade and availability requiring more rock processing, which benefits Weir’s exposure across exploration and material processing, plus an increased focus on sustainability and efficiency by miners, which should drive demand for Weir products which are known to be more energy and water efficient.

Compared to other resource services companies, Wier has the highest tilt towards mining of 80% versus the 50% peer average, and a slightly higher aftermarket exposure of 80% versus 70%, both of which are seen supporting a more consistent medium term growth.

A new share price target of 2,150p is up from 1,600p.