Industrials

Report by Silk Road Research

In SRR’s 3Q23 China survey report, channel checks indicated that KONE had outperformed the industry in terms of orders growth for the first time in over a year. SRR's latest dealer checks reveal that this outperformance has continued. While easy comps is one factor, industry contacts also cited management turnover at OTIS Electric (new China CEO effective Sept 1st) as having introduced a degree of uncertainty into the company, which may be benefiting KONE in the near-term. Other major brands mentioned for recent outperformance are Fujitec and Thyssen with Toshiba, Canny, Schindler and Yungtay underperforming.

Industrials

Report by Silk Road Research

The % of dealers expecting positive orders growth in 2023 exceeded those expecting the opposite by a net +20%, the highest in four quarters. Industry sentiment improved to a six-quarter high, although remained below 2020/21 levels. SRR’s survey readings also indicated a stable pricing environment. While customer receivables have improved from a year ago, SRR’s June reading was the lowest in 13 months. That said, this metric remained above levels seen prior to recent government measures aimed at improving the liquidity conditions for developers, with the recent extension of those initiatives through 2024 seen as a positive. Relevant stocks: OTIS, KONE, Schindler, Yungtay and Canny.