JPM | Industrial Strength Morning Messages: Quality Defensive Thursday: Revisiting Tyres, Elevators and cheering Novonesis

Research evidence excerpt

Specialist Sales

JPMORGAN

20 August 2026

JPM | Industrial Strength Morning Messages: Quality Defensive Thursday:

Revisiting Tyres, Elevators and cheering Novonesis

Sam Edmunds

Earnings: SXS LN, DWL LN, OCI NA

US All Stars Conference is taking place on the 22nd and 23rd of September. In Industrials we've got 3M, Carrier Global,

Deere & co, Eaton Corp, Equifax, Honeywell International, Howmet Aerospace, Quanta Services, Rollins, TransUnion

In Focus Today

Good Morning. Intervention is bolstering markets today with cash being put to work against perceived low valuations. SK

Hynix’s W40T buyback announcement as Europe opened yesterday was helpful and US Treasury Secretary Bessent’s decision

to doubt the size of the Treasury’s long bond purchases offered some respite to bond markets. Time will tell if this is a Draghi

type move or something more phyrric. For European industrials the move yesterday was some momo reversal (DC stocks

under pressure, A&D reversing recent gains) while potential SoH disruption lifted Chemicals. the rates move helped Building

Materials - except for Rockwool where readers know I was long - and now have a wounded leg from kicking myself.

My research colleagues have been busy and, coincidentally, have reports out on 2 of the higher quality and more

defensive sub-segments within autos and capital goods - Tyres and Elevators.

Elevators have been laggards this year due to a combination of low growth and some uncertainty over the timing and

potential remedies (and therefore M&A opportunities) from the Kone/TKE deal situation. This leaves valuation for the

group at trough. We have a CMD in the diary in November for Schindler where we see scope for higher medium term

margin targets - and alsop hope for some commentary on the potential Kone/TKE remedies - and any opportunities for

Schnindler to deploy its cash pile.

Within Tyres, Jose sees ongoing premiumisation driving margins while trade barriers going into place should protect

the domestic manufacturers (although Conti can benefit from greater (and higher margin) China production). I like the

Michelin upgrade to O/W.…