Orders are strong but cost inflation is looming, KONE profit margin expansion is limited, maintain buy (Deutsche Bank)
The Deutsche Bank report pointed out that KONE's order growth was strong, but cost inflation began to appear, limiting the room for profit margin expansion.
The Deutsche Bank report pointed out that KONE's order growth was strong, but cost inflation began to appear, limiting the room for profit margin expansion. Financial forecasts show that the group's revenue and adjusted EBIT will increase slightly, with profit margins expanding by about 40 basis points year-on-year. The investment logic is that the quality and sustainability of order growth are sufficient to support valuation, and cost pressure is controllable. One-sentence conclusion: KONE's order fundamentals are strong and it is a core target for investment in the elevator industry. However, it is necessary to pay attention to the impact of inflation on profit margins. The upside of the stock price depends on the continued conversion of orders into revenue. Positive/negative: Positive for KONE Corporation (KNEBV.HE). Strong orders are a core positive, but the market may have partially priced in cost inflation risks, and the upside to stock prices is relatively modest. Catalysts: 1) New order growth and profit margin changes; 2) Raw material cost and labor cost trends; 3) Real estate and infrastructure activity data in major markets (China, Europe).