Schindler Earnings: Buoyant Service Orders Offset Weak Demand for New Equipment in Late 2023

Demand for new elevator installations remains weak globally in late 2023. Nonetheless, wide-moat Schindler Holding pleased investors, growing new order intake by 3.8% in the third quarter, in local currency terms, spurred on by continued strength in service and modernization orders that offset ongoing cyclically weakened orders for new equipment. The resilience of service and modernization orders reinforces Schindler’s order book—which stood at a pleasing CHF 9.3 billion at the end of the third quarter. In turn, Schindler’s order book should continue to support robust sales growth through the remainder of 2023, having advanced at 8.5% in the first nine months of 2023 in local currency terms. Our 2023 estimates for Schindler are largely unchanged—we forecast full-year net profit of CHF 905 million, near the top end of Schindler’s upwardly revised CHF 880 million-CHF 910 million guided range. Investors warmed to the result with shares up 3% at the time of writing. Still, Schindler’s shares screen as undervalued, trading at an approximate 15% discount to our unchanged CHF 210 fair value estimate.