Kone (KNEBV FH) Finland
Industrials
Iron Blue initiates coverage on the stock with a score of 27/60, which is top quartile (fertile grounds for shorting) and their equal highest score in the Capital Goods sector. They highlight 1) Reliance on percentage-of-completion revenue recognition. 2) Sustained stripped out restructuring charges. 3) An ageing debtor book (China construction). 4) Widened gap between capex and depreciation. They also note governance out of line with best practice (elevated non-audit fees, non-independent chair, board & remuneration committee and narrow CEO variable compensation payout metrics) as well as many areas of imperfect disclosure.
Edition: 201
- 13 December, 2024
KONE (KNEBV FH) Finland
Industrials
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.
Edition: 175
- 08 December, 2023
China 2Q23 elevator survey
Industrials
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.
Edition: 165
- 21 July, 2023
KONE (KNEBV FH) Finland
Industrials
China channel checks reveal underperformance in order activity - rather than being driven by the expected differences around pricing / financing terms between major OEMs, SRR’s industry contacts cite a combination of above-average exposure to distressed developers, replacement of an industry veteran with an outsider to lead its China business, and increased competitiveness of OTIS and domestic brands as key drivers of its underperformance. SRR estimates KONE may have lost up to ~150 bps of share over the past 12 months.
Edition: 156
- 17 March, 2023
China Elevators: 3Q22 orders tracking below expectations
SRR's channel checks point to orders growth in the negative 15-25% Y/Y range through August - worse than the negative 5-15% range that occurred in 1H22, despite an easier comp. Although their early September read is slightly better, it may not be enough to lift the quarter especially since there have also been less-than-encouraging reports of industry layoffs at Elevator OEM factories in the Shanghai region. OTIS and Hitachi appear to have held / gained market share 3QTD and YTD, while Schindler and Thyssen have lagged. After a strong 1H22 KONE appears to be struggling.
Edition: 144
- 16 September, 2022
China Elevator: Encouraging start to 2022
Industrials
Industry checks reveal a much better-than-expected order environment QTD - orders through the first two months of the year expected to only be down low to mid-single digit range (NB 1Q22 represents toughest comp of the year; 1Q21 orders >+20% y/y). Infrastructure orders are strong (provides further evidence of a pick-up in fiscal stimulus); Residential orders are down, but less-than-feared and absolute orders are well above 2019 levels. Given the downbeat forecasts by large Elevator OEMs such as Kone and Otis, SRR sees more upside than downside to expectations for the full year
Edition: 132
- 01 April, 2022
China Elevator checks better than expected
Industrials
Absolute level of demand inconsistent with China downturn scenario; OTIS share gains continued; prefer OTIS over KONE - 2Q21 Elevator orders were cited in the +20-40% range relative to 2019 (+10-20% y/y) and with most manufacturers only forecasting order growth of +0-10% y/y for 2021, bias to management guidance remains to the upside. OTIS’ strategic initiatives continue to bear fruit - more competitive and aggressive marketing is leading to increasingly sustainable share gains. Shanghai Mitsubishi has lagged significantly through 1H21 with KONE also underperforming.
Edition: 114
- 09 July, 2021