【出版时间及名称】：2010年3月欧洲电力设备行业研究报告
        【作者】：法国农业信贷银行
        【文件格式】：pdf
        【页数】：76
        【目录或简介】：
Hares and tortoises looking for
growth – ABB and SKF stand out
􀁑 Revenue rebound candidates for 2010E
Capital goods companies are in reasonably good shape after
surviving a protracted period of collapsing revenues and drastic
cost-cutting; but which company's revenue mix is best positioned to
rebound first? Overall, the sector is mid- to late-cycle: even if some
segments, such as low voltage or industrial control products, appear
to have reached the trough, many are still declining. As candidates
for a rebound in 2010E, we identify: SKF, Sandvik, Atlas Copco,
Schneider Electric and Andritz, as the most promising cyclical
stocks among the 20 mid and large caps in this report.
􀁑 Growth potential over the next decade
In order to determine each stock's mid-term growth potential after
the rebound, we analyse end-markets and positioning for each
company, including geomix factors as well as specific features like
niche segments, pricing power, service, etc. The best positioned
stocks turn out to be ABB, Areva, Alfa Laval and Metso. In terms of
valuation, we calculate that these stocks merit a 10% to 20%
premium in the mid-term solely on the growth criterion, all else being
equal.
􀁑 Prefer ABB and SKF. We upgrade Areva
On the above two stock criteria, we select one mid-term growth play
(ABB) and one rebound champion (SKF) as our Top Picks. For ABB
(1/Selected List), we currently calculate around 25% upside (target
price CHF28.0/USD26.0/SEK187). We are convinced that margins
are well protected through drastic cost cuts (new target USD3bn)
and that demand will bottom out soon. The stock is cheap
compared to its comparables. Our target price on SKF (1/Selected
List) is SEK150 (also ca. 25% upside). Our positive stance is based
on a call on the cyclical recovery, of which SKF is an early
beneficiary. We are around 10% above consensus on 2010-11E
EPS. The valuation is attractive, our SEK150 TP implies a 2011E P/E
of only 12.5x. We also upgrade Areva to 2/Outperform (new target
price EUR460): the outlook is gradually improving, and the group
has one of the biggest mid-term growth potentials.
Summary
The quest for growth is the next big theme
The sector's good performance since Q4 2008 is most of all due to its surprisingly high
cost cuts and cash generation. We think that this investment logic has now reached its
limit and that the sector is no longer a value play; investor expectations are high. A new
theme needs to enter the stage – the quest for revenue growth.
End market outlook and 2010E rebound potential
For 20 mid and large cap electrical and engineering stocks, we have analysed their
positioning and current revenue outlook. Most end-markets look rather weak in 2010E
for capital goods vendors (average organic revenue decline estimated at 2%), since this
sector is by nature mostly mid- to late-cyclical. Investors have attempted to apply several
different rationales, e.g., betting on a demand rebound in mining or energy exposed
stocks in the past 12 months, but this trend has reverted again in the last quarter. In a
bottom-up approach, we find that the stocks best positioned to rebound early are SKF,
Sandvik, Atlas Copco, Schneider Electric and Andritz: they recently mentioned first
signs of improving demand in some end-markets (e.g. mining or IT).
Mid-term growth potential by company
Starting with each group's end-market exposure, we estimated an average growth
potential in mature economies. We then added the growth potential derived from
emerging market exposure, and completed our analysis with company-specific
adjustments due to niche positioning, product development, pricing power, etc. We
ended up with revenue growth potentials for the next decade (labelled 'mid-term')
between 3.5% and 6.9% p.a. The best positioned groups are ABB, Areva, Alfa Laval and
Metso.
A significant impact on valuations. Our Top Picks are ABB and SKF
Finally, we combined this mid-term growth analysis with each company’s DCF sensitivity
to growth in order to assess the potential relative valuation impact; the best positioned
groups could command a valuation premium of 10% to 20% thanks to the sole growth
factor. Here, we supposed that all other factors are equal (margin improvement potential
at constant revenue, current relative valuations, etc.), which obviously is never actually the
case. Nonetheless, the conclusions seem very useful to assessing relative valuations once
the sector gets out of the crisis and earnings growth will mostly be driven by revenue
growth.
Our Top Picks in the sector are ABB, a mid-term growth champion with a huge cost
cutting programme, and SKF, a discounted early recovery play; both show approximately
25% upside. We also upgrade Areva (new target price EUR460): the business outlook is
gradually improving, and the group will be a key beneficiary of the nuclear revival.

CONTENTS
Summary 3
I— Only growth can generate more upside now 5
􀁑 A Neutral stance on the Capital Goods sector 5
􀁑 Valuations are no longer attractive 5
􀁑 Advance indicators have already been played 6
􀁑 Growth is THE key topic for 2010 8
􀁑 Summary of most recent company guidance 8
II— Digging for growth by end-market 10
􀁑 The major end-markets for our capital goods companies 10
􀁑 Outlook for the building construction end-market 11
􀁑 The rail tech equipment market goes steady 12
􀁑 Our end-market capex analysis model 12
􀁑 Conclusion: market growth estimate for capital goods 19
III— Finding companies with the best rebound potential 20
􀁑 Our end-market and mix analysis 20
􀁑 The end-market matrix by company… 21
􀁑 …but groups' specific positioning must be taken into account 21
IV— Mid-term growth potential is valuation upside 25
􀁑 The average end-market growth potential 25
􀁑 Mid-term growth potential by company 25
􀁑 A significant impact on valuations 27
􀁑 Conclusion: the quest for growth has started 30
Appendices 31
V— Company profiles 35
􀁑 ABB 36
􀁑 Alstom 40
􀁑 Areva 44
􀁑 Assa Abloy 48
􀁑 Atlas Copco 52
􀁑 Legrand 56
􀁑 Sandvik 60
􀁑 Schneider 64
􀁑 Siemens 68
􀁑 SKF 72