美股-投資策略-美國(guó)多產(chǎn)業(yè)策略：10大關(guān)鍵行業(yè)問(wèn)題

1、COREU.S. Multi-Industry10 Key Sector QuestionsWe recently published a report ( HYPERLINK /go/publications/link?contentPubID=FC2473548 Global Industrial Learnings from Earnings #7: 5 HYPERLINK /go/publications/link?contentPubID=FC2473548 Main Takeaways; August 8, 2019) providing context around the cu

2、rrent industrial downturn.Inthisnote,weofferamoreprescriptivetone,addressing10common questions / topics ofdiscussion.Tooearlytobuythesector:TheMIsectorhasunderperformedtheS&Pby1100bps sincethebeginningof2018(withtheS&Pup8%overthatperiod).WhileitisnotINDUSTRY UPDATEU.S. Multi-Industry NEUTRAL Unchang

3、edU.S. Multi-IndustryJulian Mitchell+1 212 526 1661EquityResearch14 August2019al n rten I-d e tc itr sReclearthatweareheadingintoafull2015-2016industrialrecession,thegyrationson tradepolicyarelikelytocontinueweighingonprivatesectorinvestmentappetites/MI salesgrowth.AverageMIvaluationsareonlyslightly

4、cheap(0.5XP/Ediscounttothe S&P,vs.anin-linevaluationduringpriordownturns,and0.8Xpremiumona10-year history),sodonotcapturemuchal n rten I-d e tc itr sReNegativeEPSestimaterevisionsarefarsmaller(+1%netrevisionsstillYTD)thanwhat wesawatthesamestageofthepriordownturn(-6%overJanuary-August2015); consensu

5、sforecastsaverageMIsalesgrowthof3%in2020(in-linewiththeLT average).Inventoriesstillseemhighinthechannel/atmanyMIcompanies.Balance sheetsarefairlyleverednow(average1.9XPFend-2019END/EBITDA,againstourest. 6monthsagoof1.5X)duetotheM&Aspree,implyinglessself-helpoptionality.End-marketsthat couldinflect:

6、End-markets/productcategoriesthatareslowingand could flip to negative include Industrial compressors, LV equipment, Process Automation,andWarehouseAutomation.End-marketswhicharedecliningbutwhich lookmostlikely(tous)toexhibitbetterorlessbadtrendsin2020includeElectronics, andGasTurbines/ThermalPowerGe

7、n.Themostresilient-lookingend-marketsare Defense, Institutional Construction (we expect Commercial Construction to slowbut remainpositive),andConsumer.ShortCycle Q4maybethe time?Despitetheirsevere18-monthunderperformance, wearecontenttostickwithjustoneOWrating(KMT)amongtheSCstocks,givenhigh estimate

8、revisionrisks(EPSest.-4%YTDonaverage,against-12%overJanuary- August2015).WethinkQ419mayofferamoreattractiveentrypoint,asitislikelytobe the2ndQofthedownturnformanySCcompanies;historically,thisiswhentheSC stockshavestartedtofindafloor,onarelativebasis.Highestdownsideestimaterisk:Stockswiththehighestex

9、posuretomarketsatriskof negativeinflectionincludeEMR,ETN,GDI,NVTandROK.Stockswhereguidance embedsapositive2HrevenueinflectionincludeMMMandPNR.Ofthecompanieswho saw5%organicsalesdeclinesin2015-2016(adjustingforcurrentportfolios),EMR andETNarestillexpectedtoseerevenuegrowthinthecomingyear.Inventory/sa

10、les ratioslookhighest(relativetohistory)atETN,GTES,KMT,LII,MMM,ROK,andSWK.FX risksfromastrongerUS$arehighestatGDI,GTES,KMT,ROK,andSWK.Whatstocksdowelike?Itistoolatetopositiononapurelydefensivebasis,inourview (the2015-2016experiencealsounder-scoresthis).DOVandUTXareattractivegiven theircatalysts,whil

11、eHONhasabalancesheettouse.WethinkALLE(highinstitutional constructionexposure),LII(highUSConsumerexposure)andFTV(weremoveditas ourTopPickinDec2018,butitisnowtradingatasimilarP/FCFtoROKandMMM, andhasunderperformedthecompoundersby30%YTD)havede-ratedtoosharply. WithinSCnames,weviewKMTsself-helpstory/FCF

12、attroughasattractive.ofandtodoAsabethathaveathattheofasa HYPERLINK mailto:julian.mitchell julian.mitchell BCI, USJason Makishi+1 212 526 5335 HYPERLINK mailto:jason.makishi jason.makishi BCI, USJoao Pedro Carvalho+1 212 526 8431 HYPERLINK mailto:joao.carvalho joao.carvalho BCI, USTableofContents HYP

13、ERLINK l _bookmark0 ISTHESECTORATTRACTIVE?3 HYPERLINK l _bookmark1 STOCKSTOOWN/WHOHASCATALYSTS?7 HYPERLINK l _bookmark2 CANWEBUYSHORTCYCLENAMESYET?12 HYPERLINK l _bookmark3 WHICH END MARKETS ARE SLOWING OR COULD TURN HYPERLINK l _bookmark3 NEGATIVESOON? HYPERLINK l _bookmark4 WHICHEND-MARKETSAREBOTT

14、OMING/COULDTURN HYPERLINK l _bookmark4 POSITIVESOON? HYPERLINK l _bookmark5 WHEREDOESTIMATESLOOKTOOHIGHFOR2H19/2020 HYPERLINK l _bookmark5 ANDWHOASSUMESDEMANDISBETTERORWORSEIN HYPERLINK l _bookmark5 2H19?29 HYPERLINK l _bookmark6 HOWDOINVENTORIESLOOKATOUROWNCOMPANIES?33 HYPERLINK l _bookmark7 HOW DO

15、 INVENTORIES LOOK ON THE CUSTOMER / HYPERLINK l _bookmark7 CHANNELSIDE? HYPERLINK l _bookmark8 HOWDIDMULTI-INDUSTRYBUSINESSESPERFORMINTHE HYPERLINK l _bookmark8 LAST INDUSTRIAL RECESSION, AND HOW ARE THEY HYPERLINK l _bookmark8 PERFORMINGNOW? HYPERLINK l _bookmark9 WHOHASBALANCESHEETOPTIONALITY?39 H

16、YPERLINK l _bookmark10 FXIMPACT40IstheSectorAttractiveNow?Our quick answer is No, not really.YTD, average Multi-Industry valuation multiples have expanded, following a sharp compressionin2018.Thesectorsrelativevaluationmultiple(totheS&P)todaylooksfairly similar(ata0.7XdiscountonadjustedP/E;onadivide

17、ndbasisitlookslessappealing)to whereitoftenlayduringthelast3industrialdownturns(-0.4Xin2008-2009,+1.6Xduring 2012-2013,andin-lineduring2015-2016),andwhereithasbeenoverthelastdecade (+0.8Xpremium).Inabsoluteterms,thesectorsP/E(adjustedEPS)valuationlooksalittleelevatedcompared withthelast3industrialdo

18、wnturns.FIGURE 1US Multi-Industry Relative Multiples during Industrial Recessions(GreyareasrepresentIndustrialrecessions)FIGURE 2USMulti-IndustryAbsoluteMultiplesduringIndustrial Recessions(GreyareasrepresentIndustrialrecessions)NTM P/E (X)MultiIndustryAverageReltoS&P AverageAverage+1 Std Dev.NTM(X)

19、Multi Industry Average AverageAverage+1 Std Dev.50-5 Average-1StdDev.10021801660401120 Average-1StdDev.10080604020Aug-19Aug-19Source:CompanyData,BarclaysResearch,BloombergAnalyticsSource:CompanyData,BarclaysResearch,BloombergAnalyticsMuchofthesectorsreboundthisyearhasbeendrivenbyvaluationmultipleexp

20、ansion.EPS estimatesareincreasinglyadjusted,renderingP/Ecomparisonsacrosshistorysomewhat tricky;usingdividendsasalessadjustablemeasureshowsthesectorsvaluationlooksfar fromcheaponarelativebasis.FIGURE 3Thesectordoesnotlookcheapbasedondividendyield, relative tohistoryDev.MultiDivYieldvs USMultiAverage

21、vsDev.FIGURE 4MI P/E multiples have expanded 8% in 2019 thus farImplied-0.5S&PUplift from Multiple Expansion (%)2001200220032004200520062007200820092010201120122013201420152001200220032004200520062007200820092010201120122013201420152016201720182019Althoughweappeartobeenteringanotherindustrialrecessi

22、on,consensusonaverage estimatespositiveEPSgrowthin2019,andhigherEPSgrowthin2020thanin2019.Hence, thereisaclearriskofestimatereductions,whichdoesnotappeartobewellcapturedinthe valuationmultiple.FIGURE 5Consensus estimates higher EPS growth in 2020FIGURE 6Due to still-healthy top-line growthY-o-Y80% C

23、hange60%40%20%0%-20%-40%2001200220012002200320042005200620072008200920102011201220132014201520162017201820192020AverageMultiIndustryEPSGrowth (Barclays)AverageMultiIndustryChangeinShare PriceConsensus2019/US Multi Organic Sales Growth (%)US Multi Average US Multi Organic Sales Growth (%)US Multi Ave

24、rage Consensus Estimate USMultiLT10%5%0%-5%-10%-15%20002002200420062008201020122014201620182020-20%20002002200420062008201020122014201620182020Source:CompanyData,BarclaysResearch,RefinitivSourceCompanyData,BarclaysResearch,RefinitivAftersteadyupwardsEPSestimaterevisionsforMulti-Industrycompaniesthro

25、ugh2018 andearly2019,EPSestimatesfor2020startedtobecutbythesell-sideduringearnings previewsaheadoftheJuneQ,andthiscontinuedoverthecourseofQ2earningsseason. Sell-sideEPSestimatesfor2020arenow3%lowerthanwheretheywere2yearsago, despitetheUScorporatetaxcutsthatwereenactedintheinterim.FIGURE 7Street EPS

26、estimate revisions for 2020 likely still have further scope to come downUS Multi-Industry10.0%8.0%6.0%4.0%2.0%0.0%1-Jan-161-Mar-161-Jan-161-Mar-161-May-161-Jul-161-Sep-161-Nov-161-Jan-171-Mar-171-May-171-Jul-171-Sep-171-Nov-171-Jan-181-Mar-181-May-181-Jul-181-Sep-181-Nov-181-Jan-191-Mar-191-May-191-

27、Jul-191-Sep-19Agg.Cons.EPS Estimates (Rebasedto201820192020Source:CompanyData,BarclaysResearch,2018isbasedtoJan2016,2019isbasedtoAugust2016,2020isbasedto August2017Ifwecomparetheestimaterevisionssofarinthecurrentdownturnwiththosethattook placeinthefirstyearofthepriordownturn,wecanseetherecouldbecons

28、iderableroom forestimatestodropfromhere.FIGURE 8US Multi-Industry EPS Estimate Change (%)Jan2014-Jan Jan2018-JanJan2015-Jan2019-July2015-JanJuly201920152019August2015August20192016CurrentUSMulti-IndustryTotalEPSEstimateRevisionsatcomparableUS Multi-Industry EPS Estimate Change (%)Jan2014-Jan Jan2018

29、-JanJan2015-Jan2019-July2015-JanJuly201920152019August2015August20192016Current15%10%5%0%-5%-10%Source: Company Data, Barclays ResearchIfwelookatthesharepriceperformanceofindividualstocksduringthelastdownturn,they behavedonthewholeasonewouldexpect,withtheearlydownturnperiod(2015)seeing theShortCycle

30、namesunderperformandtheLongCycle/defensive/construction-centric/ compounder names outperform, and this then reversed somewhat in 2016.Sofarinthisdownturn,ShortCyclenameshaveunderperformed,withtheLongCycle/ defensive / construction-centric / compounder names typically outperforming; the last monththo

31、ughhasseenalmosteveryMIstockunderperform.WhilewearenotrecommendingmanyShortCyclestocks,wethinkitisnowtoolatetobe solelydefensivelypositionedwithinthesector,giventheexperienceof2015-2016,andthe valuationsthatShortCyclestockshavede-ratedto;ifthedemandenvironmentisreallythat bad,LongCycleandConstructio

32、nstocksshouldstarttounderperform,andifthetrade policyormonetarypolicymovesputafloorunderglobalgrowth,thenShortCyclenames shouldreboundsharplyinto2020.FTVandKMTaretwoofthenameswhowethinkstand tobenefitthemost,inthelatterscenario.FIGURE 9USMulti-IndustryRelativeSharePricePerformancetotheS&Pduringeachp

33、haseofthe2015-2016downturn,compared withthesharepriceperformanceintheCurrentDownturnPrice Perf. Relative to S& P1H152H151H162H161H192H 19ALLECFXDHRDOVEMRETNFLOWFTVGDIGEGTESHDSHONIRJCIKMTLIIMMMNVTPHPNRRBCROKROPRXNSWKUTXSource: Company Data, Barclays Research, Note the blank cells indicate the stock d

34、id not trade for a meaningful period in the given rangeStockstoown/Whohascatalysts?Thenextcoupleofmonthsdonotappeartobeparticularlycatalyst-ladenforMInames;we thinkDOV(September10)standsoutintermsofevents.FIGURE 10CompanyTickerScopeCompanyTickerScopeformajorcap.deployment?Newfinancialtargets/newCEOP

35、ortfoliochange/strategicreview?Other, more minor eventsAllegionALLEColfaxCFXA&G Handling Sale Close (2H 19)DanaherDHRDental IPO (2H 19); BP Deal close (Q419)Water Quality Investor Day (Sept 16-17)DoverDOVInvestor Day (Sept 10)EmersonEMREatonETNLightingspin(2H19)AFCsaleclose(2H19);SSTCacquisitionclos

36、e(end2019)update?SPXFlowFLOWSaleoflargeshareof&EnergyFortiveFTVGardnerGDICloseIRIndustrialRMT(Q120)GatesGTESGeneralElectricGECashtransfertoGECapitalfromIndustrialO&G(2H19)BPclose(Q419) HDSupplyHDSHONPossible buybackIngersoll-RandIRCloseIndustrialRMT(Q120)ControlsJCIRepurchasesviasaleKMTLIIMMMMMMLike

37、lyAcelity closes(2H19)nVentNVTParkerHannifinPHM&Adealsclose(2H19)PentairPNRRegalBeloitRBCDay(MarchRockwellAutomation ROKCloseofSLBJV(lateRoperTechROPRexnordRXNStanleySWKUnited UTXSpinoffOtis,Carrier(Q120);UTX-RTNDealClose (1H20)Source: Company Data, Barclays Research,AmongourOW-ratednames,somethatwe

38、thinkaremostlikelytooutperformnear- terminclude:Largecaps:DOV:ThecompanyhasaninvestormeetingcomingupinSeptember,andlowexposureto end-marketsthathaveahighriskofimminentslowdown(40%ofsalesaccruefromRetail fueling,andRefrigeration&FoodEquipment).We expect the Investor Day to be interesting in a couple

39、of respects, and hope to hear on:(i)MoreclaritytobeprovidedontheFootprintoptimizationprogram;(ii)Potentiallysome addendumtotheSG&Aprogram,ifthemacrooutlookcontinuestodim;(iii)Morelightto beshedonthenon-Retail(FuelingandRefrigeration)assets,manyofwhichtendtobe under-appreciatedbutarehighqualitybusine

40、sses(suchasFluids)withinDOV;(iv)More clarityonwhatfinancial/businessmodelcharacteristicsanassetneedstodemonstrate consistentlyifitistoremainwithintheDOVportfolio,ratherthanbeexited(asElectronics and Energywere).FIGURE 112021-2022 DOV Blue Sky EPS Scenario Illustrative analysisEPS$0.51$7.79?$8.00+$0.

41、82$0.11$0.48 $0.07 $5.80$9.00$0.51$7.79?$8.00+$0.82$0.11$0.48 $0.07 $5.80$8.00$7.00$6.00$5.002019MidPointGuidance3.5%Sales2019MidPointGuidance3.5%SalesCAGR/ 30%Incrementals$10mSG&ASavingsRetailFuelingMargin Improvement$90mCOGSSavings$900mn Share Repurchase(upto Target 2.5Xleverage)2021ScenarioEPSNew

42、Operating System2022EPS+NewOSSource: Barclays Research, Company DataFTV:Thestockhasspentmuchofitsstand-alonehistoryebbingandflowinginatug-of- warbetweentheCompounders(ROP,DHR)andtheHighQualityShortCyclenames (MMM,ROK).Rightnow,thosewhoviewFTVasbeingaShortCyclenamehaveclearly wonthebattle,butwethinkF

43、TVsvariousportfoliomovesinrecentyearshavesubstantially reduceditscyclicality,andarguablythis,andthescopeforElectronicstoreboundin2020, shouldallowforare-rating.FIGURE 12FTVhasclearlybeengroupedrecentlywiththeShortCycle category ofstocksFIGURE 13Even though FTVs portfolio changes have increased its r

44、ecurring share of sales over the past three yearsP/FCF(NTM,35Current (2019)2016-2018 AvgYTDPricePerf (%)50%ShareofShareofSalesfromRecurringRevenueeMaint EnterprisesLandauerYTDSharePricePerformance(RHS,%)3025201510540%30%20%10%0%-10%80%70%60%50%40%30%20%10%ISCOrpakGordianASPFTVPFFTVPFRecurringas asha

45、reofsalesincreasedfrom 20%to0DHRROPKeysightFTVROK-20%0500100015002000250030003500Purchase / Sale Price, $mSource:CompanyData,RefinitivSource: CompanyDataHON: Thecompanyhasexposuretosomeend-marketswherethetop-lineoutlookis deterioratingsuchasProcess,UOP,andWarehouseAutomation,butAerospacecomprises al

46、most45%ofearnings,thecompanyhasastrongtrackrecordatconsistentlyreducing/ managing costs (even when cyclical tailwinds are at its back), and balance sheet optionalityisamongthehighestinthesector,giventhespateofM&Aactivity/re-levering alreadyunderwayatmanyotherMIcompaniesYTD.FIGURE 14HON PMT Top-line

47、Performance (Cumulative Organic Sales Growth) vs other US Multi O&G Businesses, in 2015-2016Organic Sales Cumulative Change (2015-2016, Y-o-Y %)0%-5%-10%-15%-20%-25%-30%-35%-40%-45%-50%FIGURE 15HON workforce reductions have stepped up y-o-yWorkforce Reductions05001,0001,5002,0002,5003,0003,5004,000H

48、ON(PMT)EMR(AS)GE(O&G)GDI2Q 3Q 4Q16 1Q 2Q17 3Q4Q 1Q2Q 3Q 4Q1Q 2Q(Energy Systems)(P&E)(Energy)16 161717 1818 18 18 19 19Source:CompanyDataSource: CompanyDataUTX:Thecompanyhascatalystsaroundtheportfolio(albeitinearly2020,not2019),alow valuation relative to its SOTP value, and a high exposure to A&D mar

49、kets; within Construction,Otistendstohaveoneofthemostresilientbusinessmodelsintheeventof any majorslowdown.FIGURE 16UTXImpliedCarrier+OtisStubValuationfromCurrent Prices18.0X16.0X20192019EV/EBITDA12.0X10.0X8.0X6.0X4.0X2.0X0.0XFIGURE 17E&E was one of the most defensive Buildings product categories in

50、 the last economic downturn2009Organic2009OrganicSalesChange(%)-2%-4%-6%-8%-10%-12%-14%-16% Source:CompanyDataSource:CompanyDataSMID caps:ALLE:ALLEhasde-ratedsharplyinrecentweeks,despiteraisingEPSguidancealongsideQ2 earnings,andhavinganun-leveredbalancesheet.ALLEout-grewtheMIsectorduringthe upturn,a

51、ndwilllikelyout-growitsubstantiallyinanyfuturedownturn;institutional constructionrepresents50%+ofEBIT,andlookstobeoneofthemostsolidend-markets into2020.FIGURE 18Assa (ALLEs primary competitor) has outperformed in recent downturns14%ASSAASSAvs.EuroStoxxSharePrice Performance10%8%6%4%2%0%FIGURE 19And

52、preserved organic growth outside of a GDP recessionAssaAbloyAssaAbloyOrganicSalesGrowth5%0%-5%-10%DownturnDownturn-15%2001-200220092015-2016Source:Refinitiv,periods:1/1/2001-1/1/2003;1/120083/312009;1/1/201512/31/2016,AssaAbloyiscoveredbyLarsBrorsonSource: Company Data, Barclays ResearchKMT:Whilecle

53、arlyexposedtoweakeningShortCyclemarkets,wethinktheJuneQfigures boreoutthatKMTismakinggoodprogressonitsModernizationinitiatives,asreflectedin theimpressivelylowdecrementalmargins.WealsonotethatCapexisatapeak;asthis levelsoff,andModernizationsavingsincrease,thescopeforFCFgrowthseemssubstantial.FIGURE

54、20KMTdecrementalmarginswerebelowtheMIaverageinQ2FIGURE 21FCF is set to expand dramatically, as capex fallsQ2 19Decremental Margins (%) 160%0%MMM MMM HONETN (Hydraulics) GTES (Total) PNR ROK(A&S)DOV(R&FE)GDI(Total) ETN(Vehicle) FLOW(Total) RBC(Total) KMT(Total) ROP(PT)SWK(Security)AverageQ219Decremen

55、talMargins Q219SalesDeclines(RHS)Q2 19 Sales Declines (%)0.0%-2.0%-4.0%-6.0%-8.0%-10.0%-12.0%USDUSD$m0FCFCapex8110510811611824317128225021215011120162017201820192020E 2021EFCFCapex81105108116118243171282250212150111Source:CompanyData,BarclaysResearchSource:CompanyData,BarclaysResearchLII:WethinktheU

56、SConsumerislikelytobeoneofthemostresilientend-marketsoverthe NTM,andthismarketcomprises70%ofLIIsEBIT.Weunderstandthatwetweatherhas weighedonUSACdemandinrecentmonths,butviewthisissueassomewhatbackward- looking.Marginsmayalsobenefitfromongoingstrongpricedisciplineamongpeers,and falling commodityprices

57、.FIGURE 22Lowerpricesforinputssuchascoppermayfuelmargin expansion in2020FIGURE 23US Residential / Consumer exposure is very high at LIILII EBIT Split (2019)LIILIIGrossMargin30%Gross Margin (LHS)Copper Y/Y Change in PriceCopperGross Margin (LHS)Copper Y/Y Change in PriceCopperY/YChangeinPrice10%0%-10

58、%-20%20112012201120122013201420152016201720182019ECommercia lHeating& Cooling 22%Refrigeration 9%Residential Heating & Cooling 69%Source:CompanyData,BarclaysResearchSource:CompanyData,BarclaysResearchCanwebuyShortCyclenamesyet?ShortCyclenameshaveexperiencedslowinggrowthandvaluationmultiplecompressio

59、n forthemajorityofthepast18months.However,theEPSestimateriskstilllookstoohigh, andwedonotseecatalystsforanimminentimprovementintheirperformance,absent someroundofsubstantialglobalmonetarypolicyeasing/tariffdismantling.WethinkQ419mayrepresentamoreopportunetimetotakeanotherlook,pendingthe tariffenviro

60、nment(fortheUStosimplypostponetariffincreasesisunlikelytocauseCEOs globallytorushoutandinvestinnewcapitalprojects,inourview).Historical Downturn PerspectiveWeshowbelowShortCycleIndustrialorganicsalesgrowth,sharepriceperformance,and parablestagesinpriordownturns.Thestockstendtobottomin termsofrelativ