J.P. 摩根-全球-电力设备行业-自动化产业：CSIA系统集成商调查-2019.5.1-43页.pdf

Global Equity Research01 May 2019Automation IndustryJ.P.Morgan/CSIA System Integrator SurveyElectrical Equipment&Multi-IndustryC.Stephen Tusa,Jr CFA AC(1-212)622-Bloomberg JPMA TUSA J.P.Morgan Securities LLCPatrick M.Baumann,CFA(1-212)622-J.P.Morgan Securities LLCAbhipsa Sahu(91-22)6157-J.P.Morgan India Private LimitedEuropean Capital GoodsAndreas Willi AC(44-20)7134-Bloomberg JPMA WILLI J.P.Morgan Securities plcSee page 37 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 that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Our latest proprietary survey of automation system integrators shows continued growth but some softening on net.Backlog visibility and capex expectations remain stable with order activity and B2B also solid.Interesting to us were responses on the impact of US/China trade friction where 14%of respondents cited no impact on near-term demand,down from 30%in prior survey and 29%cited significant negative impacts(vs 23%in prior survey)while on impacts from tax laws on capital expenditures,8%of respondents see materialization in the next 6 months(vs 10%in prior survey)and 29%see materialization in the next 6 months-2 years(vs 35%in prior survey).On MES,adoption continues but at a slower pace than hype would indicate,with ROIC tough to justify and a lack of awareness among manufacturers and consumers.ROK remains the leader here when it comes to IoT offerings,followed by Inductive Automation and Siemens.From a US stock perspective,we remain N on ROK(solid growth expectations baked into standing valuation)and OW on EMR(valuation seems undemanding with potential for upside in process fundamentals).In Europe,we prefer Schneider(OW)and Siemens(OW)over ABB(UW).While Siemens auto exposure holds back near term growth,we believe that it has the outstanding industrial software franchise in the automation industry.Schneider is well positioned with its stake in Aveva and the strong growth momentum,mainly in Energy Management.At ABB,we are concerned about the market share loss in process automation and the near term earnings risks in Robotics while the company also has a weaker position in industrial software.J.P.Morgan/CSIA automation survey.This note summarizes our latest proprietary survey of control system integrators,where we received 275 responses.System integrators are third-party firms focusing on delivering technically advanced capital projects,a proxy for upward of 70%of sales for automation suppliers.Responses are slanted toward North America,similar to the overall SI industry,but with some global representation as well.We are pleased to continue our partnership with CSIA(Control System Integrators Association),the leading professional association representing the industry.2Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622- Survey results show ongoing momentum in demand,but no longer accelerating as we move past recovery stage.Responses on demand were positive showing steady growth but not necessarily accelerating.Respondents continued to note strength in order activity,B2B,and revenue growth.The overall percentage of those reporting order strength versus weakness was slightly less favorable vs our prior survey(42%/24%strength/weakness vs 53%/21%prior),with expectation for order activity over the next 6 months higher at 66%/7%(strength/weakness)vs 60%/10%in our prior survey.On March trends specifically,43%noted stronger demand than in Jan/Feb vs 10%indicating weaker,implying a solid exit rate.On B2B,34%are 1.0 x and 17%are 1.0 x and 20%1x vs 33%prior.Auto/tire B2B was directionally better,with 34%seeing 1.0 x vs 25%in the prior survey.Growth expectations remain optimistic,which is typical,but not accelerating.66%of respondents anticipate growth in demand conditions over the next 12 months,lower than 70%in our prior surveys,with 23%expecting 10%growth vs 30%in the prior survey.Keep in mind,as always,responses are typically biased on optimism in forward expectations,and actual growth tends to fall below expectations as weve seen in prior surveys.On backlog visibility,52%said they were at normal levels and 25%at stronger than normal levels,worse than prior survey where 45%said they were at normal levels and 38%at stronger than normal levels.Lesser number of respondents were positive on capex expectations,57%expect it to be up in 2019 with overall 2019 weighed capex growth expectations showing LSD type growth,vs 73%expecting it to be up in the prior survey,showing MSD type growth expectations.For ROK,we assume organic growth of+4.4%in FY19 and+4.0%in FY20.At EMR,we model FY19 organic sales up 6.4%(up 7.8%for Automation),followed by+6.3%in FY20(+7.5%in Automation).At Schneider we look for+8.0%organic sales growth in the Industry Automation segment in FY19 and+4.0%in FY20.At ABB,for Robotics&Motion(former Discrete Automation)we look for+5%organic sales in FY19 and+1%in FY20,while for Industrial Automation(former Process Automation)segment we assume FY19 to be up 2.5%organically and up+3.5%organically in FY20.At Siemens Digital Factory,we look for+1.5%organic growth in FY19 and-3%in FY20 whereas Process is expected to be up+6.5%in FY19 and up+3%in FY20.Demand impacts from tax and tariff laws mixed.We asked respondents about expected changes in capital expenditures in the US due to the recently implemented tax laws and 8%of respondents indicated that they expect an increase within the next 6 months(vs 10%in prior survey),with 29%indicating 6 months to 2 years(vs 35%in prior survey),while 60%of the respondents do not see any new business(vs 52%in prior survey).This is somewhat surprising given the typically optimistic nature of demand expectations in our survey,historically.On the trade tensions surrounding US/China tariffs,57%of respondents see neutral impacts on near-term demand(vs 47%in prior survey)while 14%see no material impacts(vs 30%in prior survey)and 29%see significant negative impacts(vs 23%in prior survey).MES/IoT adoption picking up but gradually;ROK maintains healthy lead.Respondents continue to indicate that adoption of MES solutions is picking up,but the pace is gradual,similar to prior survey where the tone of response commentary was mixed as respondents cited a lack of manufacturer and customer knowledge 3Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622-and little justification of ROI,and didnt see MES capturing enough attention to be integrated into businesses.Roughly 22%of respondents described MES adoption as minimal(versus 26%/21%in prior two surveys)and 20%described it as improving materially(vs 18%/21%in prior two surveys).On internet of things offerings,Rockwell has traditionally been the lead in our survey,and continues to maintain this with 17%of respondents choosing Rockwell as the best offering(17%/19%in last two surveys),followed by Inductive Automation and Siemens at 11%/10%respectively.Offerings which seem to have gained some ground are Emerson and ABB(4%share).The US focus of the survey may skew responses to the domestic suppliers given their strong regional position.The stocks:Remain OW on Schneider,Siemens and EMR,N on ROK,and UW on ABB.Responses suggest strong demand momentum should continue through early FY19.For ROK,this means continued solid MSD type growth through early FY19 but we dont see material upside to estimates to justify a further re-rating(5%weighted premium),keeping us on the sidelines.For EMR,the fundamental profile continued to look solid particularly with strength in process end markets,that could likely drive upside to standing growth estimates,an attractive set up given valuation is not as demanding at current levels(5%weighted discount).In Europe,our preference order is for Siemens(OW)and Schneider(OW)and ABB(UW).The preference is largely driven by our assessment of the broader portfolio and earnings growth vs valuation while we recognize the strength of Siemens in discrete,well positioned for a potential futureconvergence of design and control.Siemens Digital Factory achieves around 1/3rd of sales with the auto industry.This market is now declining despite the support of new model introductions and the transition to EVs and Hybrids.We see a structurally declining auto capex market longer term post the transition.ABBs automation exposure is to Robotics(approximately 6%of sales),B&R and Process markets.We expect Robotics growth to slow and are concerned about pricing given the substantial capacity increased underway and announced in the industry.In Process Automation,ABB has so far not materially participated in the strong end market recovery,indicating market share losses and/or a less attractive business mix vs peers.On 2019E,Schneider trades on 11.5 2020 EV/EBIT vs Siemens at 11x and ABB at 13x.Except ABB,the valuations overall are low when compared to the highly rated US peers.4Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622-Table of ContentsBrief Background on System Integrators and Their Relation to Suppliers.5Control System Integrators:What They Do.5A Look at Rockwells Sales Channel.9Other Suppliers:EMR Most Exposed Among Process Players.12Recent Financial Results/Macro Update.16Detailed Review of Survey Results.23Demographics and Respondent Profile.23Business Trends and Expectations.26Software Trends.355Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622-Brief Background on System Integrators and Their Relation to SuppliersTo provide context around the survey results,the sections below give a brief background on what a“control system integrator”is and how its work relates to the automation revenues of the key suppliers in our coverage.Control System Integrators:What They DoWhat is a control system integrator?Control system integrators are engineering firms specializing in bringing together component subsystems and providing a broader automation solution for the end user.A typical job would involve taking general requirements or specifications from a customer,then designing and executing the delivery of that specific manufacturing capability,including the required hardware,software,documentation,and installation.Approximately 40%of a typical systems integrators revenue would be the pass-through of equipment purchased from a supplier,which is given a small mark-up,while a control system integrators“value add”is the engineering/service provided(typically represents 60%of revenue).Role in the sales channelAs background,the primary channels for automation equipment include 1)direct sales to end users,2)sales through distributors,and 3)various independent sales representatives,including integrators.Suppliers often prefer to use direct sales for large or captive accounts,while distributors may stock multiple brands or may be retained on an exclusive basis by a supplier for a certain region.System integrators are part of this third category of independent reps and are typically employed when applications are complex and products need specialized programming or design.Although there are a handful of larger players with$25-100mm in sales,there are thousands of system integrators globally,with most having revenues in the sub-$5million range.A brief history on the development of systems integrationPrior to the 1980s,instrumentation and control projects were typically handled by a combination of OEM representatives,electrical/mechanical contractors,large architecture and engineering(A&E)firms,and internal engineers employed by the end user.The automation OEMs were generally accustomed to handling basic integration projects such as programming a system to interface with specific sensors or valves.As control technology developed through the 1980s/1990s,automation systems became both(a)more complex,and(b)increasingly“open”in the ability to combine components from various vendors into a customized system for the end user.This created a natural opportunity for highly advanced firms that could bring together the technology in a value-added way.Simultaneous to this was a trend toward consolidation in the industry,with end users reducing their internal engineering head count and increasingly relying on outside expertise.Therefore,it is not uncommon for a control system integrator to have worked for either an OEM supplier or an end user before moving to either join a firm or start his or her own.Relationship to end usersEnd users vary in the size of their internal engineering staff and their use of outside system integrators.Some manufacturing companies prefer to do all their own project integration,while others handle only small projects internally,and some outsource 6Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622-nearly everything.This choice would depend on the size of the company and the technical requirements associated with a particular project.We believe there is a trend toward the greater use of independent system integrators.Relationship to suppliersThe interaction with suppliers is more nuanced,as system integrators can be both a customer and/or a competitor.From the perspective of equipment sales,system integrators are a key sales channel(we estimate these firms account for$5-10B in equipment purchases globally),and automation vendors have made increasing efforts to market their products to them.Although the equipment brand used on a given project is sometimes dictated by the end user,an integrator can play an important role in selecting the equipment used and may lead with the technology of a preferred supplier.At the same time,however,the internal engineering arms of OEMs will sometimes compete head-to-head with system integrators on bids,typically on larger projects where there is a significant amount of equipment revenue to be won.End market and product focusSystem integrators are present across every automation end market,and nearly every sector of the industrial economy.Although there is no widely accepted data on the end market breakout of system integrators revenue,Control Engineering Magazineprovides an estimate that we reference below.Importantly,the end markets here utilize a broad range of discrete,process,and batch/hybrid applications.7Global Equity Research01 May 2019C.Stephen Tusa,Jr CFA(1-212)622-Table 1:Estimated Control System Integrator Revenue BreakoutApproximate%of industry sales(2014)End Market%of salesOil&Gas(including refining,pipelines)11%Food&Beverage9%Automotive6%Water&Wastewater6%Chemicals&Petrochem5%Metals(including mining/processing)4%Power generation&distribution4%Agricultural3%Processing3%Material handling(robotics,conveyors,elevators)3%Manufacturing3%Pharmaceuticals manufacturing3%Packaging3%Government&Defense3%Pulp&paper3%Building automation&faci