瑞银全球汽车行业揭开轮胎零售定价的神秘面纱一季度定价环境健康201932829页

GlobalResearch28March2019DemystifyingtireretailpricingUBSEvidenceLabinside:healthypricingenvironmentinQ1Healthypricingenvironment:inlinetobetterthanexpectedInContinentalEurope,retailpricescontinuetobebroadlystableinQ1(vsQ4).IntheUS,themarketisveryhealthywithretailpricesincreasingfurther:6%higherthanQ218.Inotherwords,thepricehikesannouncedsinceSeptemberlastyeararestickingintheretailchannels.Further,ChineseandbudgetplayersarenottakingadvantageofthelowerinputcostsseeninQ418tomateriallycutprices.Allinall,EuropeisinlineandUSbetterthanourexpectations.Inthiscontext,weexpectastronglypositivepricevsrawmaterialimpact,whichshouldprovideavaluablesupporttoestimatesthisyear.Michelinremainsourmostpreferredtiremaker.Michelin(+)andNokian(-)arethetwokeyoutliersinQ119WithretailpricesflatsequentiallyinQ1(vsQ4)inEurope,Michelinstandsoutasthetier1playerbeingthemostdisciplined.Thestrengthwasdrivenby(1)highvaluewhereML'spricepremiumvspeershasexpandedfurtherinQ1and(2)positivepricingtrendsforitsintermediatebrands,morespecifically.Incontrast,Nokian'sretailpricesweredecliningthemostsequentiallywith-5%.Wenotethatallsegments(summer,winterandallseason)contributedtothedrop.Asinpreviousquarters,highvalueremainsthemostcompetitivesegmentwithmostplayersexperiencingdecliningretailpricingtrendssequentiallyrangingfromflat(ML)to-2%(Pirelli/Conti)/-6%(Nokian).Segmentview:nopricewar;medium/long-termprospectsremainattractiveFromatopdownperspective,wefindthetiresegmentattractive.ThedownsiderisktoearningsfortiremakersislowerthantherestofAutos.Nearterm,ourpricingdataisreassuring.Further,webelievethecashconversionofthesegmentshouldimprovewithdecliningcapexinthemediumterm.Our11,000+consumersurveyalsoshowedthatpriceisbecomingalessrelevantpurchasingfactorandqualityfeaturessuchassafetyandlongevitymattermore,whichshouldsupportproductmixgoingforward.Connectingourkeyfindingswithstocks:MichelinmostpreferredMichelinremainsatoppickwithaNTcatalyst(seecompanionnote).Pirelli(Buy)shoulddeliver(1)strongearningsgrowthand(2)highdeleveragingpotentialat(3)anattractivevaluation.ForConti(Neutral),salesgrowthinAutosshouldslowdownfurtherthisyear,tirepricingdataismixed,andthereisariskthePowertrainIPOcouldbedelayed.Figure1:Globaltirepreference(frommosttoleastpreferred)ShareUpside/UnderlyingEPS(lcl)ImpliedPE(x)RatingPTprice(lcl)downside2019E2020E2019E2020EMostMichelinBuy12410420%11.112.19.4x8.5xPirelliBuy7.06.016%0.570.6710.7x8.9xApolloTyresBuy27522025%14.821.914.9x10.1xContinentalNeutral130141-8%12.614.111.2x10.0xLeastNokianNeutral2931-8%2.081.9915.2x15.8xAverage12.3x10.7xMedian11.2x10.0xSource:UBSestimatesEquitiesGlobalAutomobilesDavidLesneAnalystdavid.lesne@ubs.com+44-20-75675815PatrickHummel,CFAAnalystpatrick.hummel@ubs.com+41-44-2397923JulianRadlinger,CFAAnalystjulian.radlinger@ubs.com+44-20-75681171SonalGuptaAnalystsonal.gupta@ubs.com+91-22-61556063KoheiTakahashiAnalystkohei.takahashi@ubs.com+81-3-52086172EugeneJungAnalysteugene.jung@ubs.com+82237028801ColinLangan,CFAAnalystcolin.langan@ubs.com+1-212-7139949BenediktBaumannAssociateAnalystbenedikt.baumann@ubs.com+41-44-2391398Demystifyingtireretailpricing28March20192GlobalTiresUBSResearchTHESISMAPMOSTFAVOREDLEASTFAVOREDMichelin,Pirelli,ApolloContinental,NokianPIVOTALQUESTIONSQ:Arerecentpricingtrendsbodingwellfortiremakers'neartermprofitability?Yes,retailpricingdataforQ1doesnotshowevidenceofapricewaryet.RetailpricesinContinentalEuropearecontinuingtoshowstabilisation.PremiumremainsthemostcompetitivesegmentbutChineseandBudget'sretailpricesareresilient.TheUSmarketisstillveryhealthyandrecentlyannouncedpricehikesthatarestickingintheretailchannels.WehavenoevidencethatbudgetorChinesearetakingofthelowerinputcostsinH218tocutaggressivelytheirprices.MOREQ:IsthecompetitionfromChinese/Budgetbrandsintensifying?Mixed.ThereisclearlylesscompetitionfromBudget/Chinesebrandsasweshifttowardshighvalue:largerrim-sizesandAll-seasontires.TheUBSEvidenceLabretailpricetrackerisnowmorethantwoyearsoldandwehavenoevidencethatBudget/Chinesebrandsareputtingpricingundersignificantpressure.ThediscountsvsPremiumbrandremainshigh(40-60%)butcontinuestonarrowby3-5%-ptssinceNov16.Michelinremainstheclearpriceleaderin19''inContinentalEuropewithapricepremiumofaround12%.MOREQ:Doconsumerscareabouttirebrands?Mixed.ThemainsurprisefromarecentUBSEvidenceLabconsumersurveywasthatpriceisnolongerthekeypurchasingfactors.Ourfindingsoverallarehighlysupportiveof(1)productmixand(2)thepremiumisationstrategyofmosttier-1producers.First,thelevelofbrandawarenessisimprovingwithhighincomeconsumers.Second,productquality(safetyandlongevity)isincreasinglyseenasawaytodifferentiate.However,wenotethatbran