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
Industrials
Activism on easy street - shares soar after response to Elliott’s demands. While there is some operational / fundamental / earnings risk in the near future, Mio Kato would not be surprised to see the market mostly ignore this and instead choose to focus on what the “new” DNP will look like. He describes it as a less sexy play than Toshiba and Softbank, but thinks the returns on offer are greater, while the risks feel noticeably lower. Mio also believes this could prove to be a key acceleration point for Japanese governance improvement and provides a simple and obvious playbook for activism in the country.
Edition: 154
- 17 February, 2023
Toshiba Bid Underlines Japan Value
Asset Allocation
The Toshiba private equity offer and Hitachi’s ongoing corporate reinvention highlights the significant upside in Japan if balance sheets are managed more aggressively. Given the China geopolitical threat the Toshiba deal looks politically doable alongside a likely bid by Micron for NAND maker, Kioxia, which will further boost activist ambitions in the country. With the weak JPY offsetting a cyclical rally, Japan’s share of the MSCI AC is down to under 7% (despite an accelerating buyback and ROE trend) - as US share peaks, this could double within five years.
Edition: 108
- 16 April, 2021