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EPA finalizes vehicle emissions standards
We have delved into the importance of regulations on accelerating electric vehicle (EV) adoption in the US. The stricter standards reinforce our view that automakers’ EV initiatives will now be required in the coming years to comply with regulations. We estimate the new rules require close to 20% EV penetration to meet EPA compliance by 2026.
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More Tower Deals on Tap for US Tower Companies?
Most deals will keep tower sites in European hands, but we believe US TowerCos could expand further in Europe, supported by their M&A and financing capabilities.
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ESG Telco shake series – EU Telcos' energy exposure
Energy cost and efficiency have become a growing area of focus following the recent spike in energy costs. We estimate energy costs are around 2% of opex for telcos. In the short term, we see little impact on opex for most telcos given widespread hedging of costs. But if prices remain high, it could ultimately take 10% off sector Free Cash Flow (FCF).
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Key Trends Driving Beverages Beyond Reopening
The three key trends our analysts are watching: 1. Price/mix-led earnings upgrades as pricing power to manage inflation and Europe channel mix recovery comes through in Q1/H1.
2. A margin upgrade narrative should build into FY23 as commodity costs roll over in Q2/Q3.
3. Re-rating potential as investor focus switches to medium-term organic growth towards the year-end (post-re-opening and inflation), which we think has accelerated versus pre-pandemic following growth-accretive M&A, accelerated premiumisation, geographical, and category shifts. -
Five Key US Auto & Auto Parts Themes in 2022
Inventory improved m/m for a third consecutive month. We appreciate investor concern regarding declining SAAR (Seasonally Adjusted Annual Rate) despite easing inventory constraints. We see this likely as a function of continued cuts in incentives / rising prices. It reminds us that prices will need to decline somewhat to trigger volume recovery. Yet the most critical development we saw was the continued rebuild of inventory, which should eventually drive recovery in SAAR.
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Shaken but not Deterred – Digital Health Tech
Sentiment and valuations have been reset, but the underlying themes driving digitization in Health Care remain intact. 2021 was a tough year for most of the publicly traded digital health/HCIT companies. The promise of clinical and financial benefits to the healthcare ecosystem from these disruptors was more than offset by shifting investor focus (from just top-line growth to revenue growth coupled with a realistic path to profitability, favorable unit economics, and attractive LT margin profiles), increasing competition (including increased interest and investment from traditional insurers, tech giants, etc.), and the lack of visibility into a “normalized” environment. However, this did not stop the digital health space from continuing a massive transformation that started almost two years ago. In addition to rollouts of new products/services, the digital health consolidation wave also continued.
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With the semiconductor cycle in its later innings, can demand strength continue?
Accelerating adoption of semiconductors is driven by increasing digitisation, increasing content within every end market, growing amounts of data that needs processing and storage, and new applications, such as artificial intelligence and metaverse. Increasing use of semiconductors will drive almost all major trends within electronics.
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Hands Down, Bottles Up
We see reasons for optimism in the China beer sector following a year of de-rating. We believe the secular premiumisation trend should support a solid profit outlook, while potential upside surprises in 2022 could stem from price hikes and normalised input costs.
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Even in Unprecedented Times, Semiconductors Have Continued to Perform
It is essential to highlight that multiple expansions have fueled much of the performance of Semis over recent years. A less accommodating Fed could affect multiple expansions. In contrast, data would suggest that the SOX index outperforms during periods of rising rates, likely a function of Semis' historically pro-cyclical bias.
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Disruptive Innovations for Net Zero
Our latest report leverages the efforts of multiple global teams. We estimate the potential impact of 14 innovations across solar/wind supply chains and what we believe the market may not fully appreciate.
