It’s arguably too early to call a winner in the battles among elevator and escalator manufacturers to establish the top digital platform, but KONE (Kone) (OTCPK:KNYJY) (KNEBV.HE) has made it abundantly clear that is where they intend to be. Not only are digital capabilities increasingly important on the hardware side, they are driving meaningful changes on the service side, and as companies like Kone, Schindler (OTC:SHNDY) and Otis (OTIS) upgrade their integrated digital service offerings, I believe it will be harder and harder for independent service providers to hold their place in the market.
Kone has upgraded its guidance for 2020 on stronger performance in China, but also seemed to make a point of tamping down expectations for 2021 at its recent Capital Markets Day. Given efforts by China to tamp down property development and a shakier global outlook for certain commercial building categories, that seems prudent. Although I continue to be impressed with Kone’s execution, and I like its leverage to both digitalization in this sector and its leading position in China, the valuation remains difficult to reconcile with financial realities.
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KONE Makes Its Case For Digital Leadership Amid Shaky Markets
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