Kone: Broad-Based Structural Growth Resumed In Q2; Buy (Preview)

Company Update (KNEBV FH) (Buy)

Summary

• Q2 results showed a strong rebound from COVID-impacted 2020, with orders received up 17.2% and net sales up 12.7% organically.

• Growth was broad-based across regions and businesses; Kone's maintenance base has grown by more than 5% year on year.

• New equipment orders in China again grew by more than 10% in units, pricing was slightly better, and services take-up is growing.

• 2021 outlook was revised slightly, implying at most 20 bps of margin decline, despite higher inflation, and up to 9.5% of EBIT growth.

• With shares at €70.22, we expect a total return of 37% (9.8% annualized, with 2.5% dividend yield) by 2024 year-end. Buy

Introduction

We review Kone OYJ's Q2 2021 results released this Tuesday (July 20). Kone is Buy-rated in our coverage; we also have a Buy rating on close peer Otis, scheduled to report its Q2 results next Monday (July 26).

We initiated our Buy rating on Kone in June 2020. Since then, Kone shares have gained 18.4% in EUR in 13 months (including dividends) (as measured…