Slowing profit margin growth coupled with cost inflation increases the risk of Schindler downgrade (Deutsche Bank)
Deutsche Bank reported that Schindler Group's profit margin growth slowed down in the second quarter and faced stronger cost inflation and negative portfolio effects in the second half of the year.
Deutsche Bank reported that Schindler Group's profit margin growth slowed down in the second quarter and faced stronger cost inflation and negative portfolio effects in the second half of the year. The company's orders and revenue are expected to achieve low-single-digit local currency growth, and the adjusted EBIT profit margin will expand by about 53 basis points, but the expansion rate is slower than expected. Based on balanced risk-reward, the report highlights a neutral position. One-sentence conclusion: Cost and competitive pressures have put pressure on Schindler's earnings outlook, profit margin expansion has slowed, and the current stock price lacks clear upward catalysts. It is highlights to wait and see. Bullish/Bad Bear: Bearish for Schindler Group (SCHN.S). Market expectations may have included profit margin expansion, but the actual slowdown was faster than expected and stock prices faced downside risks. Catalysts: 1) Whether profit margin data can be improved in subsequent quarters; 2) Whether the cost transmission mechanism is effective; 3) Changes in demand in the global elevator industry.