Jefferies cautious on new elevator demand outlook in China

Schindler Holding AG

28/03/2025 09:47

** Jefferies notes signs of optimism on the China construction market in recent months, but says it is "not out of the woods yet"

** It sees optimism particularly in home sales in China's largest cities, but adds that important metrics for the elevator market are still declining and remains cautious on the outlook for new elevator demand there

** The broker expects both European OEMs, Kone KNEBV.HE and Schindler SCHP.S, to leave 2025 outlooks largely unchanged, but a higher chance of the companies slightly reducing the expectations for Americas new elevator demand to flat for 2025, down from slight growth

** It sees more self-help potential at Schindler than at Kone in 2025, hence reiterates "buy" on the former and downgrades the latter to "hold" from "buy"

** Jefferies sees 90bps margin development at Schindler, while only 30bps margin improvement at Kone, with this likely to be back-end loaded

** Moreover, it sees the intensification of pricing pressure, lack of savings in the first part of the year, and higher wage headwinds likely to constrain Kone's margin progression in H1

 (Reporting by Marta Frackowiak; Editing by Amanda Cooper)

 ((marta.frackowiak@thomsonreuters.com))