巴克莱-美股投资策略-美国多产业策略：2021年Q2催化剂与管理团队问题-2021.5.11正文版.doc

CORERestricted - InternalEquity Research11 May 2021U.S. Multi-IndustryQ221 Catalysts, and Questions for Management TeamsAhead of industrial conferences and company investor meetings in the weeks ahead, we provide a list of questions for US Multi-Industry management teams, and links to recent salient reports. Our questions tend to exclude near-term demand questions, as we assume those are asked anyway.Broad topics that we hope to hear more color on: (i) Is Q2 shaping up to be another quarter (it would be the fourth consecutive) of above average seasonality sequential revenue trends (consensus assumes this is not the case, but it clearly was very wrong in Q1)? (ii) Do we have any clearer picture of the extent of pre-ordering / double-orderingpull-forward ordering underway in the 1H21, as a result of customer/ distributor concerns around supply chain shortages? (iii) Many (but not all) companies think Q2 may be the peak of price / cost margin headwinds - is this view still intact, or does the ongoing rise in commodity and freight costs mean the 2H21 could actually yield a bigger headwind? (iv) How are inventory levels at channel partners / customers at present, vs normal seasonal trends? (v) What is the pace of the pickup in later-cycle markets such as US Non-residential buildings, Commercial Aero, and O&G? (vi) How quickly are Resi / Consumer markets losing momentum y-o-y in the face of tougher comps in mid-year? (vii) Acquisition appetites FLOW, FTV, IR, ROK will have minimal net debt at end'21, while APG, CFX, DOV, EMR, HON, ITW, JCI, NVT, PH, PNR, SWK, VNT are all on the M&A trail - can M&A deals generate HSD+ ROICs by Year 3 in the current environment? (viii) Does anyone else except GE, IR (such as CARR, DOV, EMR, ETN, MMM) want to sell assets amidst a market with exuberant bullishness?Who could offer interesting updates / news before Q2 earnings? (i) CARR: Further progress on divestments / simplifying the portfolio / number of JVs; (ii) FTVs Investor meeting should clarify progress in the software and healthcare build-outs; (iii) GE: Are Aviation commercial shop visits really only trending flat in Q2 q-o-q / for FY21 overall (as guided); (iv) MMM: Any newsflow / court pronouncements on the various major litigation items (earplugs, PFAS, Bair Hugger)? (v) PNRs Investor meeting may yield more detail on efforts to rejuvenate growth via higher investments, and to improve margins at I&FT; (vi) SWKs Investor meeting should update MT growth expectations, MTDs outlook (is adjusted EPS exc-amort. now more appealing?), and Security turnaround progress.Positioning: (i) Non-residential names (inc. ALLE, CARR, ETN, JCI, NVT, OTIS, TT) have become much more popular as a long-cycle/late-cycle play into late 21/22; (ii) There remains a strong debate about whether it is too late to be buying Short Cycle Industrial stocks given PMIs (where we lean), or too early to be selling them (PH encapsulates this debate); (iii) Consensus cannot make up its mind whether to worry about anyone with a 2H21 slowdown (per CARR, LII, PNR, VNT), or focus on simply FY numbers. Shorter-term investor positioning appears least favorably disposed towards LII, HON, ITW, ROK, ROP, and most favorably disposed towards CARR, ETN, JCI, NVT, PH.For our views on recently-concluded Q1 earnings, please see our report. We show inside (Fig. 1) the dates of upcoming catalysts and (virtual) Investor Days.Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 160.Barclays | U.S. Multi-IndustryTABLE OF CONTENTSMULTI-INDUSTRY RECENT HIGHLIGHTS LINKS TO NOTES4UPCOMING EVENTS / CATALYSTS5SECTOR PERFORMANCE: HOW DID THE COMPANIES / STOCKSPERFORM OVER THE MOST RECENT EARNINGS SEASON?6ALLEGION7API GROUP11CARRIER15COLFAX21DOVER24EMERSON ELECTRIC30EATON35SPX FLOW40FORTIVE45GATES INDUSTRIAL49GENERAL ELECTRIC52HONEYWELL58ILLINOIS TOOL WORKS INC64INGERSOLL RAND69JOHNSON CONTROLS72KENNAMETAL77LENNOX80MMM84NVENT90OTIS WORLDWIDE95PARKER HANNIFIN101PENTAIR10511 May 20212Barclays | U.S. Multi-IndustryROCKWELL AUTOMATION109ROPER TECH115STANLEY BLACK & DECKER120TRANE TECHNOLOGIES125VONTIER CORPORATION12811 May 20213Barclays | U.S. Multi-IndustryMulti-Industry Recent Highlights Links to NotesKey themes / topics we recently explored:Sector Notes:US Multi-Industry: Q1 21 LfE #7: Key Charts on Top/bottom-line/FCF guides, Margin & Px/Cost, Seasonality, End-market Trends; May 7, 2021 II. US Multi-Industry: Q1 21 Learnings from Earnings #5: Short cycle, Resi waves cresting; Stocking up; Mild supply chain headwinds; April 25, 2021III.US Multi-Industry: Transport Refrigeration March Orders down -14% y/y, Builds up +26%, per ACT preliminary data: Implications for CARR and TT; April 21, 2021IV.US Multi-Industry: Rising input costs Who could feel the impact soonest (LIFO, FIFO)?; April 14, 2021US Multi-Industry: US Imports Data: Reviewing near-term trends in Buildings and Tools markets; April 13, 2021VI.US Multi-Industry: Who may be most / least at risk from component shortages; March 30, 2021VII.US Multi-Industry: US Education Stimulus Implications: HVAC, Access Control, and Building Controls; March 24, 2021VIII.US Multi-Industry: Who might be most / least at risk from potential rising US corporate tax rates; March 16, 2021IX.US Multi-Industry: Taking a fresh look at SoTP Analyses; March 14, 2021US Multi-Industry: Semiconductors & electronics demand strength / potential US investments: Multi-Industry Implications; February 24, 2021XI.Global Multi-Industry: 2021 likely to be a busy year for Portfolio Change, Capital Deployment; Scenario Analysis; January 21, 2021XII.US Multi-Industry: Upstream O&G Spending Survey Implications; January 6, 2021XIII.US Multi-Industry: PFAS Liability Update: MMM, CC, DD, JCI, CTVA; December 22, 2020XIV.US Multi-Industry: Potential implications of rising input costs; December 11, 2020XV.US Multi-Industry: RESET, to Recovery; D/grade Industry View to Neutral, FTV, LII, ROK to EW; November 29, 2020XVI.US Multi-Industry: Post-Election Implications; November 8, 2020XVII.Global Multi-Industry: Amazon One launched implications for security hardware manufacturers; September 30, 2020XVIII.US Multi-Industry: AMZN making more of a push into industrial aftermarket / remote monitoring; Implications; September 16, 2020XIX.US Multi-Industry: Software M&A: EMR, HON, ROP have spoken, whither FTV and ROK?; September 16, 2020US Multi-Industry: Operating Margin Outlook PARADIGMS Framework; May 31, 2020XXI.US Multi-Industry: End-Market Outlook RESET Framework, Consensus disconnects; May 21, 2020XXII.US Multi-Industry: US 'onshoring' COF, US-China tensions - Implications (ROK in focus); May 17, 2020XXIII.US Multi-Industry: Two-year MI bear market may draw to a close; Upgrade Industry view, IR; March 30, 2020Short Cycle Industrials:XXIV.US Multi-Industry: US April ISM New orders level out; Short Cycle Traffic Light looking rather Red; May 3, 2021XXV.US Multi-Industry: Short Cycle Industrial Update: Sales momentum, but neutral Traffic light; December 29, 2020Rating Changes / Initiations:XXVI.ALLE: Upgrade to OW; Top-line outlook improving; Conservative '21 guide; April 6, 2021XXVII.CFX: Downgrade to UW; Spin limbo likely, FCF and cycle questions for 2022; April 6, 2021XXVIII.ROP: Upgrade to OW; An 'unfashionable' stock, but de-rating looks extreme; March 18, 2021XXIX.VNT: Initiation: High quality, low valuation, with Mobility eco-system upside; October 12, 2020APG: Self-help and M&A vehicle, at a low valuation; Initiate at Overweight; September 22, 2020XXXI.ITW: Strong sales & margin recovery loom, but seems priced for perfection; August 25, 202011 May 20214Barclays | U.S. Multi-IndustryUpcoming Events / CatalystsFIGURE 1Upcoming EventsCompanyTickerScope for major cap. deployment?New financial targets / new CEO update?Portfolio change / strategic review?AllegionALLEAPi GroupAPGCarrierCARROngoing JV / p'ship 'clean up'ColfaxCFXDoverDOVEmersonEMREatonETNHydraulics sale close (Q2 2021)SPX FlowFLOWUse of P&E sale proceedsFortiveFTVVNT spin/sale proceedsInvestor Day (May 19, 2021)GatesGTESGeneral ElectricGEGECAS sale close (Q4 2021); Ongoing exit from O&G (2021-23)HoneywellHONIllinois Tool WorksITWIngersoll-RandIRHPS, SV sale proceedsSV sale close (Q321)Johnson ControlsJCIInvestor Day (September 8, 2021)KennametalKMTLennoxLIIMMMMMMnVentNVTOtisOTISParker HannifinPHInvestor Day (March 2022)PentairPNRInvestor Day (June 10, 2021)Rockwell AutomationROKPTC standstill expires July 2021Roper TechROPStanleySWKMTD buy-out in 2H21/'22?Investor Day (May 13, 2021)Decision on Security pendingTrane TechnologiesTTVontierVNTSource: Barclays Research11 May 20215Barclays | U.S. Multi-IndustrySector Performance: How did the companies / stocks perform over the most recent earnings season?FIGURE 2Q1 21 Earnings Heat MapY-o-Y Organic Growth inY-o-Y Gross MarginY-o-Y EBIT MarginY-o-Y EPS Growth in Q1,EPS GuidanceGrew CapexBeat BarclaysBeat BarclaysBeat BarclaysPrice Perf. Relative to S&PPrice Perf. AbsoluteGrowth in Q1, comparedRaised / LoweredEstimates on Op.Q1, compared to Q4Perf.to Q4compared to Q4/ ReiterateY-o-YEstimates on SalesProfitEstimates on EPSALLECARRCFXDOVEMRETNFLOWFTVGTESGEHONIRITWJCIKMTLIIMMMNVTOTISPHPNRROKROPSWKTTVNTGreen = Outperf. S&P*Green >0% *Green = AcceleratedGreen = ExpandedGreen = AcceleratedGreen = AcceleratedGreen = RaisedGreen = YesGreen = BeatGreen = BeatGreen = BeatRed = Underperf. S&P*Red <0% *Red = SlowedRed = CompressedRed = SlowedRed = SlowedRed = LoweredRed = NoRed = MissedRed = MissedRed = MissedBlank = Held /*During Earnings Period*During Earnings PeriodBlank = FlatBlank = N/ABlank = NAInitiated /Blank = SameBlank = In-lineBlank = In-lineBlank = In-lineWithdrawn% 'Green'81%96%100%65%65%73%85%58%88%96%100%Source: Barclays Research, Bloomberg11 May 20216Barclays | U.S. Multi-IndustryALLEGIONALLEStock RatingOVERWEIGHTIndustry ViewNEUTRALPrice TargetUSD 150.00Price (07-May-2021)USD 141.25Potential Upside/Downside+6.2%Recent Key Reports:ALLE: Non-resi bottoming; Guide embeds substantial margin headwinds; April 22, 2021ALLE: Upgrade to OW; Top-line outlook improving; Conservative 21 guide; April 6, 2021ALLE: Implications from Latch IPO filings, documents; January 25, 2021GeneralWhat does the company use to track the next 6-12 months outlook in end-market demand? Clearly conversations with customers are important, but given that ALLE products are installed late into a construction projects life-cycle, does management have more forward looking reports that are tracked? Is the backlog now building again, after falling to a 3-year low in late 2020?ALLE experienced a rather sluggish recovery following the last downturn, taking >5 years for sales / EBITDA to return to prior peaks. How fast a recovery should we see this time?Is the company seeing any difference in behavior post-Covid (pricing, uptake of post-Covid remedial solutions, budgetary pressure) among its customer base depending on vertical (Multi-family residential vs. Office vs. Hospitality vs. Retail, et al.) or geographic region?How are negotiations going with customers regarding the upgrades they are making to commercial buildings as a result of Covid-19? Is there an opportunity for the company to benefit from these?What opportunities is Covid creating sales wise in terms of the increasing focus on contactless access control, thermal imaging, etc.? Could there be substantial medium-term tailwinds from these trends?How does management think Covid is affecting, and will affect, the demand for Residential Security structurally / in the next few years, assuming more work from home in general in the US?Does management see any significant potential impacts from the policies of the new Administration in the US regarding stimulus in Education for instance, or corporate tax rates?How confident is management that it can offset higher cost inflation with pricing, and how have its practices on pricing improved in recent years?Should we expect electro-mechanical lock growth to return to a +DD for the medium-term (similar to the growth rate over 2016-2018) or could it slow as penetration rises? Is pricing pressure increasing in electro-mechanical, due to new entrants / market maturity / e-commerce becoming a larger channel to market?Management in February 2021 noted that electromechanical locks could repres