US Electrical Equipment & Multi-Industry "EE/MI Morning Note - Data center..."

研报英文原文证据摘录

US Electrical Equipment & Multi-Industry "EE/MI Morning Note - Data center..."

Valuation Method and Risk Statement

Valuation: We use a combination of relative P/E, EV/EBITDA, and EV/sales to determine our

price targets.

Risk Statement: The Electrical Equipment and Multi-Industry sector faces a broad range of

risks. It is cyclical in nature with exposure to the underlying cycles inherent in everything from

aviation, auto, trucking and trains to construction and consumer electronics to mining,

power, oil and gas and more depending on the specific stock. EE/MI companies are subject to

risks associated with unexpected changes in the underlying global macro environment,

currency and interest rate movements, commodity price inflation as well as company-specific

execution, M&A, integration, labor relations and changes in the competitive or regulatory

environment. These changes can be in the form of product technology, ecommerce and other

digital disruption and/or channel disintermediation. Changes in the overall macro

environment can result from health emergencies such as COVID-19 and other pandemics.

Capacity and related pricing pressures are also a risk through the cycle. Finally, these

multinational companies are subject to policy changes taking place in the United States and

internationally, including those related to environmental regulation and tariffs.

We value GEV using an EV/EBITDA multiple. Company specific risks include GEV's high

valuation that leaves little room for error. Slower than expected sales growth or poor

execution (particularly around margins) is a risk to the share price and to our Buy thesis.

Slower growth could result from a major pullback in data center investment and plans for AI,

which would lower the outlook for electricity demand.

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