电子设备与多产业季度审查：非住宅建设

1、EE/MIQuarterly Check-Up: Non-Residential ConstructionNorth America Equity Research14 January 2020US non-res construction PIP data showed improving growth in 4Q19 QTD through Nov, as compared to 3Q19 and 1H19 levels. Top-down indicators including ABI, Dodge, and credit metrics have displayed some slu

2、ggishness, overall pointing to a slowdown, similar to forecasts from industry experts, who, however, still call for growth. Bottom-up vertical specific indicators remain mixed on net, with some strength in particular verticals, mostly Institutional. 4Q saw a continuation of solid trends in Healthcar

3、e and Manufacturing, Office and Education showed accelerated positive growth, while Commercial remains negative, though also showing some gradual recovery. Finally, the overall tone from management teams on the state of the market remains cautiously optimistic with expectations for LSD-MSD type grow

4、th in 2020, solid but not necessarily differentiated vs the overall macro backdrop and other end markets, as labor shortage and tariff challenges pose risk for a slowdown. Within our coverage, companies with relevant non-res exposure overall include OWs HON, UTX, PNR, IR, HUBB and HDS, UW-rated LII

5、and WSO, and N-rated JCI and WCC.Non-res quarterly update. This quarterly report provides a detailed dashboard of macro data related to the US non-residential construction market, which is important to the EE/MI sector, with 15-20% of large-cap sales directly or indirectly related. In addition to th

6、e commonly followed top-down data, we look at bottom-up drivers of construction activity with macro data across the major non-res verticals such as office, retail, and education.EE/MI-related US non-res construction improved in 4Q19 above 1Q/2Q/3Q levels. Construction put-in-place in key verticals,

7、as measured by our JPM EE/MI Non-Res Index, was up 3.3% in Nov (-0.9% in Oct, -3.4% in Sept,-1.3% in 3Q19, -0.8% in 2Q19, +1.1% in 1Q19). Growth in public markets (up 11.4% in Nov, +10.1% in Oct, +4.7% in Sept) outpaced private markets (+0.6% in Nov, -4.4% in Oct, -6.1% in Sept). Among non-instituti

8、onal verticals, office continued to be strong and picked up to HSD in Nov vs LSD-MSD prior (vs double digits in 2H18), up 8.2% in Nov, vs up 3.2% in Oct, +3.1% in Sept, up 5.1% in 3Q19, up 7.1% in 2Q19 and up 8% in 1Q19. Commercial had a slower negative growth of -10% in 4Q19 QTD through Nov, vs -14

9、% in 3Q19,-15% in 2Q19 and -12% in 1Q19 after decelerating from MSD levels in 2H18. Among institutional verticals, Education showed a positive rise in 4Q19 to +7% in Nov (+5% in Oct, flat in Sept) vs flat in 3Q19, down 3% in 2Q19 and down 1% in 1Q19 while Healthcare remained steady in the LSD-MSD ra

10、nge in 4Q19 QTD through Nov, up 5% in Nov, vs up 1% in Oct, +4% in 3Q19, +3% in 2Q19 and +5% in 1Q19. Manufacturing maintained LSD growth mostly, with Nov up 2%, vs up 2% in Oct, +2% in 3Q19, up 3% in 2Q19, up 6% in 1Q19 after remaining negative for more than 2 years (down6% in 1H18 vs down low teen

11、s in 2H17). The total non-res index including all verticals like Power, Highway & Street and Transportation, is tracking up 5.1% in Nov vs 2.3% in Oct, 0.4% in Sept, +0.7% in 3Q19, +3.0% in 2Q19,+3.7% in 1Q19 and +3.4% in 2018.Electrical Equipment & Multi- IndustryC. Stephen Tusa, Jr CFA AC (1-212)

12、622-6623 HYPERLINK mailto:stephen.tusa stephen.tusa Bloomberg JPMA TUSA J.P. Morgan Securities LLCPatrick M. Baumann, CFA(1-212) 622-0160 HYPERLINK mailto:patrick.m.baumann patrick.m.baumannJ.P. Morgan Securities LLCAbhipsa Sahu(91-22) 6157-4230 HYPERLINK mailto:abhipsa.sahu abhipsa.sahuJ.P. Morgan

13、India Private LimitedSee page 31 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan 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 th

14、at could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Top-down indicator trends point towards a slowdown in 4Q19. As always, there were some puts and takes in leading indicators. The ABI went dow

15、n below 50 in 3 out of the last 6 months in 2019, after remaining above 50 all of 2018, with Nov at 51.9 (52 in Oct, 49.7 in Sept, 47.2 in Aug), and Dodge new non-res contracts also moved towards negative growth in 4Q19 QTD through Nov (12- month rolling down 3% in Nov vs down 4% in Oct, flat in 3Q1

16、9, +5% in 2Q19/1Q19, +2% in 2H18) post high-teens growth in 2017. The Dodge Momentum Index demonstrated a lesser decline in 4Q19 QTD through Nov after steady deceleration until 3Q19, down 4% in Nov on a 3mo rolling basis, vs down 9% in Oct, down 15% in 3Q, down 10% in 2Q, +2% in 1Q, +21% in 2H18. Cr

17、edit conditions as measured by the FRB loan officer survey showed further tightening after recovery in tightening standards in 2Q19, with 13% showing tightening in 4Q19 vs 7% in 3Q, 11% in 2Q, 12% in 1Q and 4% in 4Q18, while net% of respondents indicating stronger demand still remained weak with som

18、e recovery at -5% in 4Q, vs -6% in 3Q, -17% in 2Q, -11% in 1Q and -11% in 4Q18.vertical-specific, bottom-up forward indicators mixed on net. The key index, non-res building construction employment, historically a good leading indicator for EE-MI vertical spending, showed further deceleration to nega

19、tive levels in Nov (-1.1%) after falling to 0 levels in 2Q19 from LSD-MSD growth in the last 5 years, (down 1% in Oct, down 0.9% in 3Q, +0.2% in 2Q, +1.5% in 1Q), possibly due to wage inflation still remaining a dominant factor, which was up 3.2% in 3Q19 (vs 4% in 2Q19, 3.5% in 1Q, 3.7% in 4Q18, 3.4

20、% in 3Q/2Q) vs 10- year average of 2.4% until 2017. Looking across verticals, in Education, property tax receipts remain solid, rising to MSD growth levels (vs MSD prior) with 3Q19 up 5.7%, vs 5.8% in 2Q19, 3.7% in 1Q19, 2.2% in 4Q18, with employment trends gradually accelerating to 0.8% in Nov/Oct

21、(vs 0.5% in 3Q, 0.3% in 2Q,0.5% in 1Q), while muni issuances continued lumpiness (12mo forward down 16% in Nov, vs -12% in Oct, -15% in 3Q, -21% in 2Q, -9% in 1Q). Across Healthcare, employment growth was steady (up 2.8% in 4Q QTD through Nov vs up 2.7% in 3Q/2Q, 2.4% in 1Q). In Retail, retail sales

22、 were solid at 3.2% in 4Q QTD through Nov, vs 4.3% in 3Q19, 3.4% in 2Q19, with employment growth still showing lumpiness, down 0.1% in 4Q QTD through Nov, vs down 0.4% in 3Q19/2Q19, down 0.1% in 1Q19. Finally, manufacturing indicators remain positive, with 12-month forward IP growing +2% in Nov/Oct

23、vs +3.1% in 3Q,+1.8% in 2Q, +2.1% in 1Q, while 12-month forward capacity utilization was up+1.3% y/y in Nov vs +1.5% in Oct, +2.7% in 3Q (+1.5% in 2Q, +1.9% in 1Q). Overall, our bottom-up index of all verticals is remain mixed on net.Company commentary points to a cautiously optimistic outlook into

24、2020, with strength across manufacturing and institutional verticals. Commentary from companies suggest a modestly cautious outlook into 2020, supported by macro indicators, with some challenging dynamics regarding labor shortage and tariffs. Among EE/MI companies, LII sees a flat unitary market and

25、 commercial shipments in 2020; HDS cited choppy C&I markets amidst labor shortage concerns; IR sees strength in Industrial and commercial HVAC, even in retail, with growth sliding towards applied vs unitary, while short cycle industrial spending is expected to show persistent softness; WCC expects C

26、IG markets to be up LSD for FY19 and current soft demand environment to continue in FY20; HUBBs outlook remains unchanged for non-res at LSD growth; JCI expects a little bit lower on MSD growth through 2020, with strength in Institutional at order rate of LSD- MSD. Among those who have provided guid

27、ance, expectations seem to point to LSD-MSD type growth in 2020, similar to that in 2019. Atkore expects KSD2growth in non-res commercial construction with strength in Healthcare, Infrastructure and Institutional verticals, while Acuity brands guided to LSD-MSD declines in lighting in private non-re

28、s construction and dont see an improvement before 2H20. Masonite sees strength in Architectural quick ship business, and repair/remodel market remains supported, as net inflation remains lower than their original expectations; Herc Holdings expects a slowing trend for industrial spending, in line wi

29、th top-down indicators; Watts Water sees steady repair/replace markets and orders in Education vertical, while commercial is expected to be slow. RXN sees favorable demand conditions in core non-res construction with stable Institutional and Office verticals, while non-res building construction spen

30、ding is seen pressured, particularly due to retail and construction verticals. Geberit sees weaker-than-expected Institutional construction market in NA and expects UK non-res markets to decline due to Brexit uncertainties. Beacon Roofing believes in room for growth in commercial through sales cente

31、rs; ETN sees slower growth in non-res construction. Allegion cited front-end weakness in non-res spending, in line with public data. SHW saw MSD growth in new commercial and property management while expecting a more disciplined commercial side. SWK cited weaker industrial emerging markets, supporti

32、ve of US construction DIY markets, LDD growth in retail and LSD growth in commercial channels. Assa Abloy sees a strong commercial market in North America, also supported by commentary from United Rentals, which cited strong downstream but negative midstream and upstream, leading to a flattish indus

33、trial end market.3Table of Contents HYPERLINK l _bookmark0 Non-Res Construction Quarterly Review5 HYPERLINK l _bookmark1 Summary of Put-in-Place Data6 HYPERLINK l _bookmark2 Overall Market Indicators9 HYPERLINK l _bookmark3 Bottom-Up Market Indicators16 HYPERLINK l _bookmark4 Company Growth Rates284

34、Non-Res Construction Quarterly ReviewThis is a quarterly report that provides a detailed dashboard of macro data related to the US non-residential construction market, which is important to the EE/MI sector, as 15-20% of large-cap sales are directly or indirectly related to activity here. In this re

35、port, we take a look at commonly followed top-down indicators such as the ABI, Dodge new contracts, Dodge momentum index, employment data, financial indicators such as the FRB loan surveys, the CRE Price Index as well as third-party forecasts. In addition, we look closely at the bottom-up drivers of

36、 construction activity with macro data across the major non-res verticals such as office, retail, education, healthcare, and manufacturing. In the end, we take a look at growth rates of relevant company segments and their correlation with US non-res spending as well as summarize some interesting tid

37、bits of news/comments related to non-res activity coming out of the quarter.Figure 1: EE/MI Non-Res Exposure%Other80-85%US Non-res 15-20%Figure 2: EE/MI Companies with Greatest Non-Res Related Exposure%80%70%60%50%40%30%20%10%0% US non-res relatedIntl Non-res relatedSource: J.P. Morgan estimates.Sou

38、rce: J.P. Morgan estimates.JPM aggregate non-res indicatorThe charts below highlight our aggregate non-res indicator as compared to our EE/MI non-res construction index. This indicator was directionally accurate through the 2002 downturn but failed to fully capture the cyclical downturn given noise

39、around the healthcare sector (the toughest to forecast with macro data).Our JPM aggregate non-res indicator was up 6.4% in Nov, vs up 6.9% in Oct, up 8.6% in 3Q19 and up 6.9% in 2Q19.5Figure 3: EE/MI Composite Non-Res Indicator Versus Construction in EE/MI Non-Res Verticals (Historical View)EE/MI No

40、n-Res SpendingEE/MI Composite Indicator Figure 4: EE/MI Composite Non-Res Indicator Versus Construction in EE/MI Non-Res Verticals (Near-Term View)EE/MI Non-Res SpendingEE/MI Composite Indicator25%15%5%-5%-15%-25%Nov 00Nov 01Nov 02Nov 03Nov 04Nov 05Nov 06Nov 07Nov 08Nov 09Nov 10Nov 11Nov 12Nov 13Nov

41、 14Nov 15Nov 16Nov 17Nov 18Nov 19-35%25%15%5%-5%-15%-25%-35%25%15%5%-5%-15%-25%May 10Nov 10May 11Nov 11May 12Nov 12May 13Nov 13May 14Nov 14May 15Nov 15May 16Nov 16May 17Nov 17May 18Nov 18May 19Nov 19-35%25%15%5%-5%-15%-25%-35%Total EE/MI Non-Res SpendingEE/MI Composite IndicatorSource: U.S. Census,

42、J.P. Morgan.Total EE/MI Non-Res SpendingEE/MI Composite IndicatorSource: U.S. Census, J.P. Morgan.Summary of Put-in-Place DataRecent growth trends: The EE/MI non-residential construction indexTo better reflect exposures for non-residential construction suppliers in the EE/MI sector, we take the US C

43、ensus put-in-place data and narrow them down to verticals that are primarily commercial buildings. We include office, commercial, manufacturing, lodging, education, and healthcare. We exclude categories such as power, highway & street, and sewage & waste disposal given these are less relevant for bu

44、ilding suppliers.Table 1: Categories (Shaded) Included in EE/MI Non-Res IndexAug 2018, SAAR, $mmCategory$mmDescriptionFigure 5: EE/MI Non-Residential Index by CategoryTotal Nonresidential781,066Lodging31,966Hotels, motels, resort lodgingOffice80,040Administration buildings, office/professional build

45、ingsCommercial83,248Retail, supermarkets, restaurants, mini-storageHealth care43,662Hospitals, clinics, labs, nursing homesEducational102,029All public/private education, libraries, museumsReligious2,872Churches, chapels, mosques, synagogues, and templesPublic safety10,605Police/fire stations, priso

46、ns, armories/military structures Amusement and recreation27,206Stadiums, athletic clubs, movie theaters, meeting centers Transportation55,531Airports, runways, rail facilities, sea freight terminalsCommunication23,401Telephone, television, and radio, distribution structuresOffice 15%Manufacturing 14

47、%Educational 19%Power 18%Power97,323Generation, T&D, oil and gas storage and distribution Highway and street96,747Pavement, traffic lights, tunnels, bridges, retaining walls Sewage and waste disposal27,075Sewage treatment/disposal plants, drains, pump centers Water supply18,147Water treatment and fi

48、ltration centers, reservoirs, tanks Conservation and development9,708Dams, levees, docks, sea walls, bulkheads, tide gates Manufacturing71,506Any manufacturing facility including chemical/refineriesSource: U.S. Census.Commercial 16%Source: U.S. Census.Highway and Street 18%Recent growth trends Total

49、 y/y construction put-in-place for EE/MI verticals was up 3.3% in Nov (down 0.9% in Oct, down 3.4% in Sept). 3Q19 is down 1.3%, vs down 0.8% in 2Q19, up 1.1% in 1Q19, up 2.6% in 4Q18.6Figure 6: EE/MI Non-Residential Construction Index (Long-Term View)$ billionsY/Y ChgNov 18 Total387.8Private290.6Pub

50、lic 97.2Dec 18393.0292.8100.2Jan 19403.7302.7100.9Table 2: EE/MI Non-Res Index ($bn SAAR)40035030025020015010050Nov 95Nov 96Nov 97Nov 98Nov 99Nov 00Nov 01Nov 02Nov 03Nov 04Nov 05Nov 06Nov 07Nov 08Nov 09Nov 10Nov 11Nov 12Nov 13Nov 14Nov 15Nov 16Nov 17Nov 18Nov 190PrivatePublicTotal Y/Y30%Total of EE/

51、MI vertical s20%Feb 19401.5301.5100.010%Mar 19405.1304.5100.6Apr 19401.3298.0103.3May 19395.6293.3102.3-10%Jun 19393.4296.097.4-20%Jul 19398.9297.7101.2-30%Aug 19Sep 19398.8403.4295.8296.9103.0106.5-40%Oct 19404.4295.9108.50% Nov 19400.8292.5108.3Source: U.S. Census.Source: U.S. Census.EE/MI Non-Res

52、idential Construction Index (Short-Term View)Table 3: EE/MI Non-Res Index (% Y/Y)$ billionsY/Y ChgTotalPrivatePublicTotal of EE/MI vertical s40035030025020015010050Nov 19May 19Nov 18May 18Nov 17May 17Nov 16May 16Nov 15May 15Nov 14May 14Nov 13May 13Nov 12May 12Nov 11May 11Nov 10May 100Source: U.S. Ce

53、nsus.PrivatePublicTotal Y/Y30%0%-10%-20%-30%-40% Y/YY/YY/YNov 181%2%-3%20%Jan 193%4%3%10%Feb 19-1%-2%2%Dec 181%1%1%Mar 191%1%2%Apr 191%1%2%May 19-3%-4%0%Jun 190%0%0%Jul 19-1%-2%4%Aug 190%0%1%Sep 19-3%-6%5%Oct 19-1%-4%10%Nov 193%1%11%Source: U.S. Census.Public versus private Private verticals within

54、the EE/MI index (+0.6% in Nov, down 4.4% in Oct, down 2.8% in 3Q19) were slower than public verticals (+11.4% in Nov, +10.1% in Oct, +3.2% in 3Q19) in 4Q19 QTD.7Figure 7: EE/MI Construction Put-in-Place IndexPublic vs. Private (Historical View)% Y/YFigure 8: EE/MI Construction Put-in-Place IndexPubl

55、ic vs. Private (Recent View)% Y/Y40%30%20%10%0%-10%-20%-30%Nov 19Nov 18Nov 17Nov 16Nov 15Nov 14Nov 13Nov 12Nov 11Nov 10Nov 09Nov 08Nov 07Nov 06Nov 05Nov 04-40%40%30%20%10%0%-10%-20%-30%-40%40%30%20%10%0%-10%-20%-30%-40%40%30%20%10%0%-10%-20%-30%Nov 19May 19Nov 18May 18Nov 17May 17Nov 16May 16Nov 15M

56、ay 15Nov 14May 14Nov 13May 13Nov 12May 12Nov 11May 11-40%Private Y/YPublic Y/YPrivate Y/YPublic Y/YSource: U.S. Census.Source: U.S. Census.Total non-res constructionGiven below is the total non-residential construction for all verticals (as reported by the U.S. Census). As noted previously, many of

57、these categories are less relevant for building suppliers given the inclusion of power/communication/water infrastructure. The number is more relevant as a general macroeconomic indicator, or for non- EE/MI companies serving a broader range of construction verticals. Total US non- residential constr

58、uction was up 5.1% in Nov (vs up 2.3% in Oct, up 0.4% in Sept, up0.7% in 3Q19 and up 3% in 2Q19).Figure 9: Total Non-Residential Construction Index (Long-Term View)$ billionsY/Y ChgTable 4: EE/MI Non-Res Index ($bn SAAR)900800700600500400300200100May 05Nov 05May 06Nov 06May 07Nov 07May 08Nov 08May 0

59、9Nov 09May 10Nov 10May 11Nov 11May 12Nov 12May 13Nov 13May 14Nov 14May 15Nov 15May 16Nov 16May 17Nov 17May 18Nov 18May 19Nov 19040.0%Total Non-Res30.0%20.0%10.0%0.0%-10.0%-20.0%-30.0%Nov 18 Total743Private448Public 295Decan 19768466302Feb 19776465311Mar 19787471316Apr 19795462333May 197

60、88459329Jun 19779460320Jul 19780458322Aug 19781458323Sep 19786457328Oct 19783455329Nov 19781449332Source: U.S. Census.PrivatePublicTotal Y/YSource: U.S. Census.8Overall Market IndicatorsArchitecture Billings Index (ABI)The ABI is a survey of architects (50 indicates growth) and has historically been