美国电力设备与多产业Q2业绩预览

1、Table of Contents HYPERLINK l _bookmark0 EE/MI 2Q19EarningsPregame6 HYPERLINK l _bookmark1 Summary 2Q and2019Estimates6 HYPERLINK l _bookmark2 MacroBackdrop8 HYPERLINK l _bookmark3 Valuation Safety Still ataPremium17 HYPERLINK l _bookmark4 EarningsPreviews22 HYPERLINK l _bookmark5 Dover(N)22 HYPERLI

2、NK l _bookmark6 Honeywell(OW)23 HYPERLINK l _bookmark7 Danaher(OW)25 HYPERLINK l _bookmark8 Lennox(UW)26 HYPERLINK l _bookmark9 UnitedTech(OW)27 HYPERLINK l _bookmark10 3M(UW)28 HYPERLINK l _bookmark11 Watsco(UW)30 HYPERLINK l _bookmark12 Hubbell(OW)31 HYPERLINK l _bookmark13 Pentair(OW)33 HYPERLINK

3、 l _bookmark14 IR(OW)34 HYPERLINK l _bookmark15 GeneralElectric(UW)35 HYPERLINK l _bookmark16 Fortive(NR)38 HYPERLINK l _bookmark17 Roper(N)39 HYPERLINK l _bookmark18 JohnBean(UW)40 HYPERLINK l _bookmark19 Wesco41 HYPERLINK l _bookmark20 Emerson(OW)42 HYPERLINK l _bookmark21 Rockwell(N)44 HYPERLINK

4、l _bookmark22 JohnsonControls(N)45 HYPERLINK l _bookmark23 Atkore(N)46 HYPERLINK l _bookmark24 Evoqua(N)47 HYPERLINK l _bookmark25 NN,Inc.(OW)48 HYPERLINK l _bookmark26 Fortive Corp.49 HYPERLINK l _bookmark27 HubbellInc.51 HYPERLINK l _bookmark28 John Bean Technologies53 HYPERLINK l _bookmark29 Rope

5、r Technologies55 HYPERLINK l _bookmark30 Investment Thesis, Valuation and Risks57EE/MI 2Q19 Earnings PregameSummary 2Q and 2019 EstimatesTable 1: Calendar 2Q Guidance SummaryEPS Guidance ($)JPMe ($)Street ($)ATKR0.88-95$0.92$0.91DHR1.13-6DOV1.541.53FTV0.86-0.900.900.89GE0.050.12HON2.05-8HUBB2.172.17

6、IR2.092.05JCI0.630.63MMM2.052.08ROK2.352.32EMR0.940.930.94ROP3.00-3.043.033.04PNR0.63-0.660.650.65LII4.314.17NNBR0.280.25AQUA (EBITDA)$57-61$59$60JBT1.05-7UTX2.082.05WSO2.652.54 WCC1.451.43Source: Company reports, Bloomberg, and J.P. Morgan estimatesTable 2: Summary of FY19 EPS expectationsEPS Guida

7、nce ($)JPMe ($)Street ($)ATKR3.25-3.403.333.23DHR4.72-4.804.744.78DOV5.65-5.855.855.81FTV3.55-3.653.603.60GE0.50-0.600.370.55HON7.90-1HUBB7.80-5IR6.356.456.36JCI1.85-1.951.901.92MMM9.25-9.759.009.43ROK8.85-9.158.908.87EMR3.60-3.70 (GAAP)3.653.65ROP12.70-13.0013.1012.95PNR2.30-2.352.302.31LII12.00-12

8、.6012.5012.32NNBR1.10-1.301.151.15AQUA (EBITDA)$220-240$225$228JBT4.35-4.554.604.49UTX7.80-8.008.007.97WSO6.806.71 WCC5.10-5.705.355.40Source: Company reports, and J.P. Morgan estimates.Model UpdatesHUBB We are updating our 2020 numbers, with better understanding of the cadence in restructuring savi

9、ngs. Our 2020 EPS estimate is now $9.00 (vs $9.25 prior) with margins of 15.0%, up 60bps y/y (vs 15.4% prior). By segment, we now forecast Electrical at 13.7% margin (vs 14.2% prior) and Power at 16.9% (vs 17.0% prior), while the rest of our estimates are unchanged.HONWearetweakingourmodelonFCFquart

10、erlyprogression,whiletherestof our estimates are unchanged. We now model 2Q /3Q/4Q at $1.62B/$1.58B/$1.78B FCF converting at 105%/109%/115%, while our FY19 FCF estimate remainsat$5.88B (100% conversion) above the midpoint of guide ($5.5-6.0B, 95-100% conversion).MMM We update our model to reflect th

11、e new segmentation, as the company will start reporting on this basis this quarter. The segments Industrial, S&G and E&E were redistributed into the two segments Safety & Industrial and Transportation & Electronics, while the Healthcare and Consumer segments remain relatively unchanged, with the exc

12、eption of Healthcare now including Industrials separation and purification subsegment, and Consumers construction and home improvement subsegment now including Industrials retail auto care (previously in auto aftermarket). Our estimates remain unchanged, though on this new basis, we expect S&I down

13、3.4% with 19.5% margins, T&E down 2.6% with 23.0% margins,Healthcare up 0.3% with 25.1% margins, and Consumer down 1.0% with 20.3% margins.JBT We update our model to reflect the Prime Equipment acquisition, announced in early-June. Our 2019/2020 adj EPS estimates are now $4.60/$5.40 (prior$4.55/$5.3

14、0).ROP We update our model to reflect the news that Gatan will remain part of the portfolio (the deal to sell it to TMO fell apart due to regulatory hurdles). As a result, our 2019/2020 EPS estimates move to $13.10/$13.35 (prior $12.90/$12.90).FTV We update our model following 1Q results. Our 2019/2

15、020 EPS estimates are now $3.60/$3.95 (prior $3.75/$4.10), primarily reflecting lower margin assumptions at PI. Our 2Q estimate is $0.90 vs guidance of $0.86-0.90.Bias to positioning into the quarterIn terms of short-term positioning into this quarters print, our recommended longs are HON, UTX and E

16、MR. Names we would avoid are MMM and ROK.Macro BackdropTable 3: US Macro DashboardKey Macro StatMetricRecentRolling 3MARolling 12MARolling 5YPMI (ISM)Absolute51.752.256.054.9Orders (ISM)Absolute50.051.557.057.7Inventories (ISM)Absolute49.151.052.350.3Core Cap Good ShipmentsY/Y4%4%5%1%Core Cap Good O

17、rdersY/Y1%2%4%1%Industrial ProductionY/Y2.0%1.7%3.4%1.3%PPI spreads (cap goods price vs cost)actual spread2.1%1.9%0.7%0.6%Capacity utilizationAbsolute75.775.876.575.4M&T I/S ratioAbsolute1.4Auto salesY/Y SAAR0%-1%-1%1%Auto SAARAbsolute17.2917.0217.0717.19NA Class 8 truck ordersY/Y-70%-65%-8%4%Manhei

18、m Used Vehicle IndexAbsolute139.6138.0137.8128.7Univ of Mich Consumer SentimentAbsolute100.098.597.394.0Initial jobless claimsAbsolute221219216219Housing startsY/Y-5%-5%-3%5%ABI IndexAbsolute50.249.551.451.9US Census PIP, non-resY/Y4%6%6%5%Dodge new contracts, non-resY/Y-3.8%2%4%8%CMBS SpreadsActual

19、 Spread300310314423HARDI monthly salesY/Y-1.9%9.8%Rig countsAbsolute9639811037964Lending standards (med-large businesses)-C&I%4484Global ASKsY/Y5.8Fastenal Daily Sales GrowthY/Y9.5%9.9%12.1%8.5%Total carloads excluding coal and grainsY/Y-1%-3%1%0%Total intermodal unitsY/Y-7%-6%0%1%Emerson order grow

20、thY/Y4%4%6%2%WCC monthly sales growthY/Y3%2%3%2%Source: J.P. Morgan.Table 4: International Macro DashboardKeyMacroStatMetricRecentRolling 3MARolling 12MARolling 5YEuropePMI mfgAbsolute47.647.750.753.3OrdersAbsolute46.746.448.653.1InventoriesAbsolute50.249.550.149.0German IFO Index ofbusinessclimateA

21、bsolute97.498.2100.7100.9IndustrialProductionY/Y-0.5%0.3%0.1%2.0%AutoRegistrationsY/Y-1%-2%-1%4%EUconsumerconfidenceAbsolute-7.2-7.0-6.4-7.1TruckregistrationsY/Y22%10%5%6%ChinaPMI mfgAbsolute49.050.050.450.6OrdersAbsolute48.850.050.250.6InventoriesAbsolute49.5IndustrialProductionY/Y6%6%6%6%Autosales

22、Y/Y-17%-14%-12%3%ChinaFloorStartsY/Y (3 monthaverage)14%12%19%3%ElectricityProductionY/Y6%7%7%5%HDGTTruckshipmentsY/Y-1%1%-4%8%ExcavatorSalesy/y-2%9%20%21%ChinaFAIY/Y5%5%6%8%Monthly average hours ofKomtraxaveragehoursmachine use per unitof-5%-6%-5%-3%KOMTRAX (Y/Y)ChinaloangrowthY/Y13%14%13%14%OtherB

23、razilTruckproductionY/Y35%5%15%Source: J.P. Morgan.Table 5: China economy heat mapGreen=acceleration, yellow = deceleration, red = contraction.Source: Bloomberg, CEIC, J.P. Morgan Economics.Global PMIs deceleratingThe US ISM manufacturing index, a key macro indicator for the group from both a fundam

24、ental and sentiment perspective, ended much lower at 51.7 in June, its lowest since 10/16 (vs March 55.3, avg of 58 in 2018), and new orders were also down to 50.0 (vs 57.4 in March, avg of 60 in2018).Figure 1: US ISM Index and ISM New70656055504540Mar-19Mar-19Source: ISMISMIndexOrdersGlobally, PMIs

25、 continued to fade this quarter, with global output down slightly to50.1 in May vs 51 in 1Q, and 52 in 4Q. Inventories were down through the quarter to 49.5/49.1 in April/May (vs 50.0 in March) but generally stable in the 49- 50 range (1Q 49.5, 4Q18 49.7).Figure 2: Global Output and Inventories Stea

26、dy (Global PMI)JPM Global PMI OutputPMI Finished Goods InventorySepSep07Feb08Jul08Dec08May09Oct09Mar10Aug10Jan11Jun 11Nov11Apr12Sep12Feb13Jul13Dec13May14Oct14Mar15Aug15Jan16Jun 16Nov16Apr17Sep17Feb18Jul18Dec18May19OutputInventoriesSource: J.P. Morgan EconomicsThe US PMI decelerated throughout the qu

27、arter, at 52.7/50.7 in April/May (vs 53 on average in 1Q, 55 in 2H18). Inventories also decelerated from 51.4 in March/April to 49.1 in May but remained generally stable (50.4 in 1Q, vs 49 in 4Q).Figure 3: US Markit PMI Output Decelerating with Inventories StablePMI OutputPMI Finished Goods Inventor

28、y55.050.045.040.035.030.0JanJan08Sep08May09Jan10Sep10May11Jan12Sep12May13Jan14Sep14May15Jan16Sep16May17Jan18Sep18May19OutputInventoriesSource: J.P. Morgan Economics, MarkitTurning to rest of world trends, among the key non-US regions, China PMI decelerated slightly through the quarter from 51.3 in M

29、arch to 50.7/50.1 in April/May but remains stable at 50, similar to previous quarters, and inventories were stable as well at 48.3/49.3 in April/May (48.7 in 1Q vs 50.3 in 4Q). Europe PMI was slightly lower at 48.0/49.0 in April/May (vs 49 in 1Q, 51 in 4Q) while inventories faded through the quarter

30、 to 50.0/48.2 in April/May (vs 50.7 in 1Q, 50.6 in 4Q). In LatAm, Brazil also decelerated in output to 53.0/50.7 in April/May (54 in 1Q, 52.4 in 4Q) while inventories picked up slightly from 51.1 in April to 52.1 in May (51 in 49.7 in 4Q,). Mexico output and inventories improved from March levels at

31、 49.1/48.8 respectively, to 49.7/50.2 in April and 50.2/51.9 in May(vs50.3/50.9 in 1Q, 49.1/52.2 in 4Q).Figure 4: European PMI Output vs. Finished Goods InventoriesPMI OutputPMI Finished Goods InventoryFigure 5: China PMI Output vs. Finished Goods InventoriesPMI OutputPMI Finished Goods Inventory68.

32、063.058.053.048.043.038.033.0Feb98Feb98May99Aug00Nov01Feb03May04Aug05Nov06Feb08May09Aug10Nov11Feb13May14Aug15Nov16Feb18May1953.051.049.047.045.043.041.039.037.035.065.060.055.050.045.040.0MarMar05Jan06Nov06Sep07Jul08May09Mar10Jan11Nov11Sep12Jul13May14Mar15Jan16Nov16Sep17Jul18May1956.054.052.050.048.

33、046.044.042.040.0OutputInventoriesOutputInventoriesSource: J.P. MorganEconomics,Markit.Source: J.P. Morgan Economics,CLSA.Figure 6: Brazil PMI Output vs. Finished Goods InventoriesPMI OutputPMI Finished Goods InventoryFigure 7: Mexico PMI Output vs. Finished Goods InventoriesPMI OutputPMI Finished G

34、oods Inventory65.060.055.050.045.040.035.0AugAug06May07Feb08Nov08Aug09May10Feb11Nov11Aug12May13Feb14Nov14Aug15May16Feb17Nov17Aug18May1954.052.050.048.046.044.042.040.065.060.055.050.045.0NovNov11May12Nov12May13Nov13May14Nov14May15Nov15May16Nov16May17Nov17May18Nov18May1958.056.054.052.050.048.046.044

35、.042.0OutputInventoriesOutputInventoriesSource: J.P. Morgan Economics, Markit-Banco Real.Source: J.P. Morgan Economics, Markit.While there are a number of company-specific factors that influence growth, y/y organic revenues on a sector-wide basis tend to be fairly tightly correlated with top- down i

36、ndicators like US core capital goods shipments and global industrial production. Most recently, EE/MI organic held up well while macro indicators showed slight deceleration. Trends seemed to stabilize in 1Q19, while EE/MI tweaked down to +4.4% organic.Figure 8: EE/MI Organic Growth vs Global Macro I

37、ndexIndex is 30% US Mfg IP, 15% US Core Capital Goods, 25% Europe IP, 30% Emerging Markets IP5%0%-5%-10%-15%3Q071Q083Q071Q083Q081Q093Q091Q103Q101Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q19EE/MIOrganicEconIndexSource: J.P. Morgan estimates.Figure 9: EE/MI Organic Growth vs. Ke

38、y US Indicators% Y/YFigure 10: EE/MI Organic Growth vs. Key International IndicatorsEE/MI Growth and Europe IP Y/YChina IP Y/Y15%-5%-15%-25%EE/MIOrganicUS Mfg USCoreCapGoodsShipments5%0%-5%1Q073Q071Q073Q071Q083Q081Q093Q091Q103Q101Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q19-15

39、%3Q061Q073Q061Q073Q071Q083Q081Q093Q091Q103Q101Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q161Q173Q171Q183Q181Q195%0%-5%-10%-15%-20%Source: Eurostat, NBS, J.P. Morgan Economics.EE/MIOrganicEuropeIP ChinaIPSource: Eurostat, NBS, J.P. Morgan Economics.Table 6: Y/Y EE/MI Average Organic Growth and Majo

40、r Global Macro Indicators% Y/Y; * Index is 30% US IP, 15% US Core Capital Goods, 25% Europe IP, 30% Emerging Markets IPEE/MI OrganicUS Mfg IPUS Core Cap Goods ShipmentsEurope IPEM IPEcon Index1Q16-0.7%-1.0%-6.6%2.1%1.5%-0.3%2Q16-1.4%-1.3%-6.1%0.9%2.3%-0.4%3Q16-0.2%-1.1%-6.8%0.9%2.2%-0.5%4Q160.6%0.3%

41、-4.3%2.7%3.4%1.1%1Q173.5%1.1%1.4%1.1%4.3%2.1%2Q174.0%2.5%3.9%2.5%4.4%3.3%3Q173.6%1.8%7.2%4.1%4.8%4.1%4Q173.6%2.5%9.9%4.0%4.9%4.7%1Q184.1%2.1%7.9%3.2%4.8%4.1%2Q185.2%1.8%7.1%2.4%3.9%3.4%3Q185.2%3.1%6.3%0.7%4.0%3.2%4Q185.7%2.2%3.9%-2.1%2.4%1.5%1Q194.4%1.8%4.0%-0.7%2.1%1.6%Source: FRB, US Census, Euro

42、stat, NBS, J.P. Morgan.Non-Res Construction Trends StableUS non-res construction PIP continued with positive but slightly decelerating growth QTD, with May up 2% y/y vs 4% on average YTD and in 2H18. Top down indicators (ABI, Dodge, credit metrics, etc) remain mixed but stable. Bottom-up vertical sp

43、ecific indicators remain solid on net. April/May saw a continuation of solid, but slightly decelerating trends in Office and Education where May showed slower growth, while Manufacturing is still positive after a long period of declines at solid 14% growth for the last three months, Commercial deter

44、iorated further to DD declines (vs MSD declines in 1Q19/4Q18) and Healthcare bumped back up to positive 4% growth as comps got easier. Overall tone from management teams remains optimistic, with expectations for LSD-MSD growth in 2019, solid but not necessarily differentiated vs overall macro and ot

45、her end markets, and labor shortage/tariffs pose risk for a slowdown. Our JPM aggregate non-res indicator was up 7.2%/4.3% in April/May, vs up 6.8% in 1Q, up 7.1% in 4Q18.Figure 11: EE/MI Composite Non-Res Indicator Versus Construction in EE/MI Non-Res Verticals (Historical View)EE/MI Non-Res Spendi

46、ngEE/MI Composite IndicatorFigure 12: EE/MI Composite Non-Res Indicator Versus Construction in EE/MI Non-Res Verticals (Near-Term View)EE/MI Non-Res SpendingEE/MI Composite Indicator-15%-25%-35%-5%Apr Apr 99Apr 00Apr 01Apr 02Apr 03Apr 04Apr 05Apr 06Apr 07Apr 08Apr 09Apr 10Apr 11Apr 12Apr 13Apr 14Apr

47、 15Apr 16Apr 17Apr 18Apr 195%-5%-15%-25%Oct Oct 09Apr 10Oct 10Apr 11Oct 11Apr 12Oct 12Apr 13Oct 13Apr 14Oct 14Apr 15Oct 15Apr 16Oct 16Apr 17Oct 17Apr 18Oct 18Apr 1925%15%5%-5%-15%-25%-35%Total EE/MINon-ResSpendingEE/MICompositeIndicatorTotal EE/MINon-ResSpendingEE/MI CompositeIndicatorSource: U.S. C

48、ensus, J.P. Morgan.Source: U.S. Census, J.P. Morgan.PPI spreads turning more positiveCapital goods PPI has accelerated slightly, up 2.5%/2.4% in April/May, vs up 2.7% in 1Q, up 2.3% in 4Q, up 2.0% in 3Q, while commodity price increases continued to decelerate vs prior quarters, up 1.2%/0.7% in April

49、/May, vs 2.1% in 1Q, 3.5% in 4Q, 4.0% in 3Q. With flattening commodity inflation, we see potential for price/cost spreads to improve through the year, excluding tariffs, which remain somewhat of a wild card. Our price/cost spread proxy (capital goods pricing less industrial commodities ex-fuels) con

50、tinues to turn more positive, and has expanded to+175bps/+200bps in April/May, vs +140bps in 1Q, +20bps in 4Q, -40bps in 3Q.Figure 13: Capital Goods Y/Y PPI vs. Industrial Commodities Less Fuel PPIy/y % changeSpread10%8%6%4%2%0%-2%-4%Mar-81 Aug-82 Jan-84 Jun-85 Nov-86 Apr-88 Sep-89 Feb-91 Jul-92 Dec

51、-93 May-95 Oct-96 Mar-98 Aug-99 Jan-01 Jun-02 Nov-03 Apr-05 Sep-06 Feb-08 Jul-09 Dec-10 May-12 Oct-13 Mar-15 Aug-16 Jan-18-6%Mar-81 Aug-82 Jan-84 Jun-85 Nov-86 Apr-88 Sep-89 Feb-91 Jul-92 Dec-93 May-95 Oct-96 Mar-98 Aug-99 Jan-01 Jun-02 Nov-03 Apr-05 Sep-06 Feb-08 Jul-09 Dec-10 May-12 Oct-13 Mar-15

52、Aug-16 Jan-185%4%3%2%1%0%-1%-2%-3%PPI spread(rightside)CapequipPPIIndustrial commods lessfuelsSource: BLS, J.P. Morgan estimatesSteel Price (Domestic HRC, USD/short ton)120010000Source: Bloomberg.Figure 16: Oil Price ($/bl)Steel Price (Domestic HRC, USD/short ton)120010000Source: Bloomberg.Figure 16

53、: Oil Price ($/bl)0Source: Bloomberg.Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19North America Equity Research10 July 2019Figure 17: Aluminum (USD/MT)350030002500North America Equity Research10 July 2019Figure 17: Alumi

54、num (USD/MT)3500300025002000150010000Source: Bloomberg.Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19C. Stephen Tusa, Jr CFA (1-212) 622-6623 HYPERLINK mailto:stephen.tusa stephen.tusaFigure 14: Copper Price (USD/lb)C. St

55、ephen Tusa, Jr CFA (1-212) 622-6623 HYPERLINK mailto:stephen.tusa stephen.tusaFigure 14: Copper Price (USD/lb)0Source: Bloomberg.16Valuation Safety Still at a PremiumFollowing a bounce back in 1Q, the group has de-rated over the past few months, driven by shorter cycle stocks (3M/ROK), names with oi

56、l exposure (EMR), and other idiosyncratic stories (UTX). Multiples are still trading above our sector target multiple which remains at 16x for now, set at a 5% premium to the standing S&P FY1 multiple back in early Jan (roughly 15.5x), though the degree has narrowed. We find ourselves at the opposit

57、e of where we were in 1Q, with sentiment around China trade and relatedly market expectations for improved growth there worsening, along with a move back in ISM New Orders from 57+ in March 2019 to 50 in June 2019, the group is now back to close to 16x (17x), a 5% premium to market multiple which is

58、 now at 16x, as the “synchronized global growth” narrative lost mindshare.Figure 18: Group FY1 and FY2 MultiplesJan-04 Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 May-13 Dec-13 Jul-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18 Mar-19

59、25x 20 x 15x 10 x 05xJan-04 Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 May-13 Dec-13 Jul-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18 Mar-19PEFY2 GroupTargetPEFY1Source: Bloomberg and JPMorgan estimatesFigure 19: Group FY1 Multiple

60、s Relative to S&P 500130%120%110%100%90%80%Jan-04 Aug-04 Mar-05 Oct-05 Jan-04 Aug-04 Mar-05 Oct-05 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 Dec-13 Jul-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18 Mar-19EEMI Large Caps vs S&P500IndexAverage overperiodSource: