Global Quality Growth
Know What You Own
Kone is a well-managed company operating in an attractive global industry with a good mix of defensive and growth characteristics. Due to its annuity-like stream of revenues, the maintenance business demonstrates resilience across the business cycle, and the company continues to grow its installed base through the sale of new equipment.
Looking forward, we expect the company to generate mid-single-digit revenue and high single-digit earnings growth. Our top-line forecast is based on new equipment sales in Asia-Pacific, improved maintenance attachment rates in China due to an increasing emphasis on service quality, and global elevator modernization efforts. Additionally, we expect margin gains based on growth in high profitability services, such as predictive maintenance, as well as economies of scale and normalization in
In summary, we view Kone as a high-quality business with a robust financial profile and attractive prospects for future business value creation. We are pleased to have added the company to the Global Quality Growth portfolio.
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1 “Kone as an Investment: Equity 2020,” Kone Corp., 4, 7.
2 Ibid, 3.
3 Ibid, 22.
The company discussion in this article is solely intended to illustrate the application of our investment approach and is not to be considered a recommendation by Jensen. The specific security identified is taken from a representative account of the Jensen Global Quality Growth Strategy and does not represent all of the securities purchased and sold for the Strategy. Our views expressed herein are subject to change and should not be construed as a recommendation or offer to buy or sell any security and are not designed or intended as a basis or determination for making any investment decision for any security. Our discussions should not be construed as an indication that an investment in a security has been or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of any security discussed herein.
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