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Schindler posted a better-than-expected set of Q3 22 results although FCF and order intake were laggards. A satisfying print though, compared to Kone’s second consecutive profit warning last week. The guidance was also confirmed on net profit and stipulated as towards the upper end of the previous range on top-line growth. However, the key takeaways from the management’s comments can be summed-up as: “caution”. This especially concerns the cost inflation and NWC topics, while the Chinese market
Companies: Schindler Holding (SCHP:VTX)Schindler Holding AG Pref (SCHP:SWX)
Schindler reported fully expected FY21 figures including a steep slowdown in the EBIT margin in Q4 21, as cost inflation accelerated and price mix in revenue is taking time to materialise. FY22 perspectives remain under cost and Chinese pressures, while management accelerated the phasing of the Top Speed 23 operational improvement programme without impacting its total amount. New guidance is unlikely to result in a drastic consensus revision.
Companies: Schindler Holding AG (0QOT:LON)Schindler Holding AG Pref (SCHP:SWX)
Schindler released broadly positive figures for Q3 21 following the Evergrande debacle and the wave of downgrades. However, the 7% beat on EBIT was only the result of lower-than-expected non-operating costs. Order intake remained strong but likely to be inflated by higher ASPs to compensate for higher input costs. The CEO sees pressure in the Chinese property market over the next six months, at least. Uncertainties in China justify the mean-reverting trend on the P/E in our view.
Q2 21 results portrayed a better performance than the mixed Q1 21. Order intake beat consensus, while revenues were back to their 2019 level despite a strong adverse FX effect. Guidance was confirmed on the top-line front and set above consensus on the net income front. H2 21 should be lower than H1 21, with the acceleration of input cost headwinds, also putting at risk the FY22 margin.
Schindler’s 9M 20 revenue contracted by -6.6% yoy, driven by weaker new installations and modernization, while a strong Swiss franc exacerbated the decline. Despite this decline, Schindler experienced a recovery vs H1 20. Net profit fell by 19.4% yoy. Due to Schindler’s cost optimization programme, the company expects to incur up to CHF130m in restructuring costs (including the reduction of c.2k staff over the next two years). On the back of the more optimistic results, FY20 guidance was raised.
Companies: SHRQ SCHPN SCHP SHLAF 0QO1
Schindler’s H1 20 revenue contracted by 8.7% yoy, driven by lower demand and a strong Swiss franc. Net profit shrank by 28% yoy. Consequently, Schindler launched a cost optimisation programme, including the reduction of c. 2k staff over the next two years (part of an up to CHF150m restructuring programme). Schindler’s outlook sees revenue contracting between -6% and 0% (local currencies), net profit between CHF680m and CHF720m, and the market not returning to FY19’s level until 2022.
Companies: Schindler Holding AG Pref
Schindler’s Q1 revenue fell by 5.2% yoy to CHF2.4bn. The resilient services division (deemed a “system critical service” by many governments) partly relieved the overall revenue contraction brought by new installations and modernisation units. Logically, APAC (especially China) suffered the most during Q1 20, while other regions followed a similar pattern starting in early/mid-March. Given Schindler’s revenue breakdown by region (c. 73% of sales coming from outside APAC), we expect Q2 to impact
Schindler maintained its guidance despite the long-term threat of labour cost inflation.
Hence, following this earnings release, we expect no change in either our forecasts or our target price and, hence, we will keep our Add recommendation.
With the potential merger of Kone and ThyssenKrupp, there is a high chance that in some countries Kone would have to divest some activities to obtain the competition authorities’ approval for the deal. Much as CRH did in buying assets from LafargeHolcim, Schindler could be selective in buying assets from Kone/ThyssenKrupp. Therefore we believe that Schindler would be the true winner of such a merger and we intend to keep a positive recommendation on the company.
Schindler posted lower growth than Kone and a sharper contraction of the EBIT margin.
Raw material and labour inflation will continue to have an impact on profitability. Schindler is expecting to increase EBIT on an absolute basis, but it will be challenging to maintain the margin reached in FY18.
We expect to lower our operating profit by some 3%, which should have an about 5% negative impact on our target price.
Schindler managed well to adapt to changing market conditions (flattening of demand in China, difficulties in Brazil, cost inflation, wage inflation, trade wars, and so on…) and successfully continued its growth path while at the same time improving its results. Concerning the outlook, China will remain a key factor for growth and profitability, but management also said that it sees the US at the top of the economic cycle and sees risk in tightening financing conditions.
The company continued to grow and posted the best reported sales growth in the lift industry. Management sees a FY18 revenue increase of 3-5% in local currencies. Moreover, the conversion rate in China is above 70%, the best figure in our opinion in the industry, and Schindler is willing to work on pricing, in the same way as market leader Kone did in 2017 in order partly to offset the raw material price increases.
• Orders received grew by 5.2% and by 5.6% in local currencies.
• Revenue rose by 2.7% and by 2.9% in local currencies.
• Operating profit increased by 10.7%.
• EBIT margin reached 11.7% vs 10.9% in H1 16.
• Net profit grew by 12.6%.
• Cash flow from operating activities increased by 3.3%.
• Orders received rose by 5.9% in local currencies.
• Order backlog grew by 4.5% in local currencies.
• Revenue grew by 3.8% in local currencies.
• Operating profit increased by 10.6%, and 9.4% in local currencies.
• EBIT margin at 11.5% up by 70bp.
• Net profit almost stable.
• Cash flow from operating activities increased by 6.9%.
• Orders received rose by 4.1% (4.6% in local currencies).
• Order backlog increased by 6.8% (6.5% in local currencies).
• Revenue grew by 3.1% (3.6% in local currencies).
• Operating profit (EBIT) increased by 13.1% (13.9% in local currencies).
• EBIT margin was 11.7% (previous year: 10.7%).
• Before exceptional items, the EBIT margin was 11.5% (previous year: 10.5%).
• Net profit improved by 10.2% to CHF823m.
• Before exceptional items, net profit was CHF766m (previous
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Strix has issued a trading update today following a disrupted period due to China’s continued Zero Covid policy approach and ongoing macro uncertainty. This has so far restricted business activity for two of Strix’s top five major OEM customers, with further disruption expected. Revenues for the full year will be below initial expectations whilst profitability is impacted more heavily due to the operational gearing in the business. These difficult market conditions see Zeus full year revenue for
Companies: Strix Group PLC
Companies: Mpac Group PLC
Companies: Ilika plc
Calima Energy (CE1 AU)C; Target price of A$0.60 per share: Market cap paid back in 2 years, even after incorporating higher differentials - Four wells out of the five well 4Q22 programme have now been drilled with two wells already in production. Gemini#10 is producing in line with the type curve (IP of 120 boe/d gross and 60 boe/d net to Calima 50% WI). Gemini #11 was put into production on 24 November while Gemini#12 will be brought
Companies: PEN TCFF ALV CE1 HHR ALV RHC RHC SOU EOG ENQ ZPHR IOG PMG NOG SDX CHAR PEN
Positive interims, with LFL revenue growth of 9.3%, adjusted EBITDA growth of 45.7%, a 5% increase in the dividend and an in-line outlook statement. There is clearly added uncertainty going into 2023, the diversity of both its product base and customers means it remains in a good position. The share price has behaved more like a housebuilder and in our view, this fails to reflect the diversity of its model and the fact that the group's earnings continue to rise. On revised forecasts the shares t
Companies: Brickability Group PLC
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Companies: SThree plc
EQTEC is making good progress on the Italia MDC and remains on target for commercial operations by the end of the year. The project is being enhanced to include biochar production for which there is a growing market, and which will also enhance the low carbon potential of the project. Increased feedstock flexibility will further enhance the project. The project has the potential to be a flagship exemplar of what EQTEC can do both in Italy and further afield.
Companies: EQTEC PLC
Companies: Kier Group plc
Changes in planning policy in Scotland create risk and a potential delay to Powerhouse’s second UK project but could result in a more stable planning environment in the longer run if it creates a positive test case for the company’s low carbon waste-to-hydrogen technology.
Companies: Powerhouse Energy Group PLC
Dish of the day
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What’s cooking in the IPO kitchen?**
Kistos Holdings plc, intends to join AIM. The Company was incorporated to act as a new holding company for the group companies 0f Kistos plc (KIST), a holding company with the objective of creating value for its investors through the acquisition and management of companies or businesses in the energy sector. Anticipated Market Cap £327m. Expected 22 Dec 2022.
AT85 Global Mid-Market Infrastr
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Invinity has announced a further sale of its vanadium flow batteries (VFB), this one comprising 2.2MWh of its VS3 model. The purchaser is Bei Ying International Corporation, a Taiwanese industrial equipment wholesaler which is acting as a reseller for Invinity. This brings total sales announced since the interims to 14.3MWh and to 22.7MWh for the year to date. Given the run rate, we believe there is a high likelihood of further sales before year end, confirming solid demand for Invinity's VS3 pr
Companies: Invinity Energy Systems PLC
Dish of the day
BWP REIT joins the Wholesale Segment of the International Property Securities Exchange (IPSX). BWP REIT is a newly formed single asset company and has raised £35m by issuing 35m new ordinary shares at 100 pence per share to acquire Bridgewater Place, an office-led mixed use property in central Leeds and valued at £63m. The property is one of the tallest buildings in Yorkshire, comprising 234,000 sq. ft of office space, and is close to 90% let to EY, as well as multinatio
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ITM’s new CEO shows a wealth of experience in the market for green hydrogen and decarbonisation building on 14 years with Linde Engineering. He is taking up his role on 1st December allowing him to make an early start on running the company.
Companies: ITM Power PLC
Companies: RNO DOTD NTQ KMK PMG EVG