While EM exposure has long been a worry for investors, our bottom-up analysis shows now more upside than downside potential on LafargeHolcim EM portfolio. Source: Company data, Deutsche Bank estimatesĮM improvement drives upside to consensus Net debt/equity (LHS) Net interest cover (RHS) Kingspan serves all types of end-use property with 70% of sales coming from new-build construction. It operates globally but has a skew to developed markets where insulation tends to be outdated and more inefficient.
Kingspan is an insulation manufacturer with particular focus on panels, and so offers leverage to energy efficiency conversion. At a time where more investors have a cautious view on the longevity of the Europe / US construction cycles, this is in our view a key risk on the stock. The highest exposure to new-build construction has translated into more volatility across the cycle, with a more negative impact during the downturn vs. Kingspan construction peers which are much more leveraged towards renovation (just 28% for Geberit and 9% for Sika). Within the stocks under our coverage, Kingspan has the highest exposure to new-build activity (around 70%). High exposure to new-build construction is however a key risk
Source: Duetsche Bank, Company data, Euroconstruct With new acquisitions shifting Kingspan portfolio more and more towards low penetration geographies (Americas, South Europe) we believe Kingpsan is in a good position to continue to outperform its underlying markets over the next years.įigure 121: Kingspan overperformance vs. We remain confident on Kingspan ability to grow above construction markets Our 10y analysis based on Kingspan performance by market suggests that theĬompany has outperformed the construction markets by c3-4% on average over the cycle: c2.5% in high penetration rates markets (UK, half of Europe) and c6-7% in low penetration rates markets (Americas, other half of Europe).
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