1、Global Industrial Automation Industry Primer 21 May 2019 EQUITY RESEARCH DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with compa
2、nies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision European Capital Goods Team Andr
3、e Kukhnin,CFA +44 20 7888 0350 andre.kukhnincredit- Max Yates +44 20 7883 8501 max.yatescredit- Leo Carrington,ACA+44 20 7883 4532 leo.carringtoncredit- Iris Zheng,CFA+44 20 7883 5298 iris.zhengcredit- Artem Tokarenko+44 20 7888 2676 artem.tokarenkocredit- Specialist Sales:Andrew Bell+44 20 7888 045
4、9 andrew.bellcredit- US Electricals&Multi-Industry Team John Walsh+1 212 538 1664 john.walshcredit- Caroline Murphy+1 212 325 4096 caroline.murphycredit- Corey Shubiak+1 212 325 5068 corey.shubiakcredit- Links to key research on Industrial Automation Slide 2 Recent Publications EV vs ICE debate we a
5、sked experts 1 March 2019 Industrial IoT Platforms Teach-In&Market growth assessment 5 December 2018 Read across from Hexagon analyst meeting 22 November 2018 Rockwell Automation Fair takeaways 16 November 2018 GE and Microsoft IIoT partnership 17 July 2018 Rockwell Automation making$1bn equity inve
6、stment in PTC continuing the IT-OT convergence 11 June 2018 Schneider-AVEVA deal:A further solid step in digital and capital allocation strategy 5 Sept 2017 ABB Acquires B&R:Implications for global automation players/ROK 04 April 2017 Key research on Industrial Automation Power&Automation 07 Septemb
7、er 2015 China Industrial Automation Sector-Be Selective amid a world factory upgrade 17 Aug 2015 Industry software deep-dive US IA Vendors in danger of being left behind 15 July 2013 Global Industrial Automation The next growth phase 14 August 2012 Global Capital Goods Field Trip Notes Hannover Auto
8、mation Fair:2019 feedbacks 5 April 2019;2017 feedbacks 15 May 2017;2016 feedbacks 29 Apr 2016 IIoT Webinar 5 Dec 2018;SPS IPC Drives 30 Nov 2018;Automatica 21 June 2018;IMTS Show-Automation 14 September 2016;Automatica Fair 27 June 2016;Automation Fair 1 December 2015 Source:Credit Suisse research,C
9、ompany data Whats inside Slide 3 The primer contains the following:Global Industrial Automation Market Forecast slide 5 Global Industrial Automation Market Overview slides 6-8 Discrete vs.Process Automation Markets slides 9-10 Industrial Automation A structural Growth Story?slides 11-12 Peers:Compet
10、itive landscape and Financial benchmarking slides 13-14 Control Systems:Enterprise-level Controls&Plant-level Controls slides 15-20 Industrial 4.0:Internet of Things(IIoT)slides 21-29 Industrial Automation Software slides 30-31 Automation Instrumentation slides 32 Robotics slides 33-37 China Competi
11、tion Analysis slides 38 Key Industrial Automation players:Offerings Overview slides 39-44 Credit Suisse HOLT Analysis slides 45-53 Industrial Automation Comp Sheet slides 54-55 Company one-pagers slides 56-62 Source:Credit Suisse research,Company data Global Effort Slide 4 Source:Credit Suisse resea
12、rch,Company data In the analysis of the key end markets and production of this report,we collaborated extensively with our colleagues in the CS Global Equity Research department.In particular:Japan Industrials team:Shinji Kuroda,shinji.kurodacredit-,+81 3 4550 9994 Midori Kato,midori.katocredit-,+81
13、 3 4550 9968 China Industrials team:Edmond Huang,edmond.huangcredit-,+852 2101 6701 Zhao Zhang,zhao.zhangcredit-,+852 2101 6915 Michael Wang,michael.wangcredit-,+852 2101 7763 Credit Suisse HOLT team:Conchita Gonzalez de Castejon,conchita.gonzalezdecastejoncredit-,+1 212 325 2547 Brendan Munson,bren
14、dan.munsoncredit-,+1 212 325 2784 Global Industrial Automation market forecast Slide 5 EBIT margin by automation application Indexed growth by automation application Market outlook Industrial Software rising adoption and increasing product complexity(all the way to mass-customisation)supports high s
15、ingle-digit growth outlook and we agree with Siemens 7%CAGR estimate.Software crosspollination of hardware is also becoming increasingly transparent.Industrial IoT Platforms the arms race continues with now 500 offerings by traditional automation,software and tech players,but also evidence of consol
16、idation(GE Predix,Rockwell FactoryTalk)and leadership emerging(AWS,Microsoft,Siemens MindSphere);closing the machine-to-machine loop is the ultimate goal.Discrete Automation cycle debate aside,we see re-shoring and generally rising adoption as positives but have concerns over 1)automotive shift to E
17、Vs where drivetrain BOM is of ICEs and 2)increasing efforts in PLC virtualisation(unlikely for auto,in our view,but possible for new applications).Process Automation as most mature segment,we expect growth closer to General IP(c3-4%pa).Robotics auto capex cycle headwind near term but overall rising
18、adoption remains a structural driver;market shift towards cobots to watch.Potential strategic moves 1)acquisitions of independent industrial software players;2)acquisitions of system integrators by lateral entrants to gain customer proximity;3)IIoT platforms consolidation;4)cloud and analytics vendo
19、rs to compete with IIoT platforms;5)traditional robot makers acquiring into cobots.Source:Company data,Credit Suisse research 50100150200250300200420052006200720082009201020112012201320142015201620172018Global IP IndexProcess AutomationDiscrete AutomationIndustrial Automation SoftwareRobotics-15%-10
20、%-5%0%5%10%15%20%25%30%35%20052006200720082009201020112012201320142015201620172018Average Software EBIT marginAverage PA EBIT marginAverage DA EBIT marginAverage Robotics EBIT marginCloud(AWS,Azure,Watson,etc.)Enterprise Level Systems Plant Level Controls Plant Instrumentation Industrial Automation
21、“Hardware x Software”Crossover Slide 6 Source:Credit Suisse research Discrete Hybrid Process ABB:Ability GE:Predix Rockwell Automation:PTC partnership(ThingWorx)Siemens:MindSphere Schneider:Ecostruxure Industrial IoT platforms Connectivity Industrial Automation Architecture Slide 7 Source:Credit Sui
22、sse research Major Players ERP:SAP,Oracle,Microsoft,Sage,Intuit,CDC Software Plant Design and Simulation:Aveva,Aspen,HON,SchneiderCAD(Computer Aided Design)PLM:Siemens,Dassault,PTC,SAP,Oracle,Autodesk CAD:Siemens,Dassault,PTC,Autodesk,BentleyvMES:Schneider,CDC Software,Aspen,Rockwell,HON,DassaultvvS
23、CADA:Siemens,Schneider,ABBvvvvComputerized Numerical Control(CNC)3D Printing SoftwareCNC:Fanuc,Siemens,Mitsubishi 3D Printing Software:MTLSvvHuman Machine Interface(HMI)vvvDrivesSensorsRobotsMachine VisionMotorsRelays and switchesMetrology:Hexagon,Faro,Renishaw,ZeissEnterprise Resource Planning(ERP)
24、3D Printer:XONE,SSYS,DDD Motors:ABB,EMR,RBC,Siemens,WEG,Mitsubishi,Teco Robots:ABB,Fanuc,KUKA,Yaskawa,KHI Drives:ABB,FTV,ETN,Mitsubishi,EMR,Siemens,ROK Machine Vision:Cognex,Keyence Machine Tools:DMG Mori,Amada,OkumaPlant Level ControlsProcessDiscreteDCS:ABB,HON,yokogawa,EMR,Schneider PLC:ETN,ROK,Si
25、emens,Omron,Mitsubishi,SchneiderDistributed Control System(DCS)Programmable Logic Controller(PLC)Supervisory Control and Data AnalysisSCADA-HMIMES/CPM/MOMIndustrial IoT platformIIoT platform:Microsoft Azure,IBM Waston,Google,Amazon,PTC ThingWrox,Intel,GE Predix,SAP,Siemens MindSphere,Schneider EcoSt
26、ruxure,ABB Ability Metrology(3D Inspection&Scanning)Enterprise Level ControlsIIoT data acquisition devicesPlant InstrumentationValvesSensorsMachine Tools3D PrinterEnterprise Resource Planning(ERP)Product Lifecycle Management(PLM)Plant Design and SimulationGlobal Industrial Automation Market Source:C
27、redit Suisse research,Company data,Credit Suisse estimates Slide 8 Global Automation Market by Region 2018*Global Automation Market by End Markets 2018*Automation Product Mapping Global Automation Market By Product 2018*DrivesSensorsRobotsMachine VisionMotorsRelays and switchesProcessDiscreteDistrib
28、uted Control System(DCS)Programmable Logic Controller(PLC)Plant InstrumentationValvesSensorsProduct Lifecycle Management(PLM)Enterprise Resource Planning(ERP)MES/CPM/MOMHMI/SCADAEnterprise Level ControlsPlant Level ControlsWe estimate the market size of the global industrial automation industry to b
29、e slightly over 200bn in 2018,with around 100bn in both discrete and process industries.EMEA and APAC are the largest markets for automation at both at 36%-37%of the global market share,followed by the Americas at 27%.By end market,Automotive,General Industrials,Consumer Goods,Chemicals&Mining and O
30、il&Gas are the most important industries for automation demand.We break down the automation market by three layers:Enterprise Level Controls,Plant Level Controls and Plant Instrumentation.Control level products account for the bulk of the market at around 2/3 of the value,and instrumentation account
31、s for the rest 1/3.Note:Orange=Enterprise Level Controls;Green=Plant Level Controls;Blue=Instrumentation*Indicative splits from CS estimates*Indicative splits from CS estimates*Indicative splits from CS estimates Automotive15%General Industrials15%Consumer goods11%Chemicals&Minig10%Oil&Gas10%Power9%
32、Technology hardware8%Pharma&Biotech6%Water1%Other15%APAC36%EMEA37%Americas27%PLM19%ERP Software18%MES4%SCADA13%PLC4%DCS7%Other software2%Robotics8%Machine Vision4%Sensors7%Relays&Switches3%Motors&Drives10%Other1%Process Automation End Market Split 2018*Source:Company data,ABB,Credit Suisse estimates
33、 Discrete Automation End Market Split 2018*The Industrial Automation market is commonly split between discrete and process automation,while some industries have requirements for both,and a hybrid solution may be adopted.The largest end markets for discrete automation are Automotive and General Indus
34、trial,followed by Technology Hardware and Consumer Goods(such as Food&Bev).For process automation,resource industries are far more important,accounting for close to half of the overall demand,with the largest part coming from the O&G industry.Slide 9 Discrete AutomationProcess AutomationDescriptionM
35、anufacture&assemble parts,components to finished productContinued process converting raw materials to finished productsTypical industriesAutomotive,general manufacturing,consumer electronicsOil&gas,chemicals,pulp&paper,mining,metalsSupplierofferingProgrammable logic controllers(PLC),drives,robots,mo
36、tors,sensors,HMI,software/engineeringProcess controllers(DCS),measurement,actuators(e.g.,motors,drives,valves),sensors,electrification,software/engineeringIndustrypenetrationLow-to-moderate:More diverse markets&applications,customers with less expertise and investment capacityHigh:Long history,maxim
37、izereturn on large capexChannelsA mix of direct,distributors,OEMs and system integratorsMainly direct sales or throughEPCs and system integratorsHybrid AutomationDescriptionA combination of both Discrete and Process Automation Typical industriesFood&Beverage,Water,PharmaceuticalComparison of Discret
38、e,Process and Hybrid Automation Market Discrete vs.Process Automation Markets(i)*Indicative splits from CS estimates*Indicative splits from CS estimates Automotive28%General Industrial24%Technology hardware20%Consumer goods14%Oil&Gas1%Other13%Oil&Gas18%Power17%Pharma&Biotech12%Mining11%Chemicals7%Co
39、nsumer goods7%Marine6%Pulp&Paper6%General Industrial4%Water1%Other11%Typical Hybrid/Batch industries include Food&Beverages,Water,Pharmaceutical and Cement industries.Discrete vs.Process Automation Markets(ii)Mapping of Discrete(green)vs Process(red)Automation Segments Source:Credit Suisse research,
40、Company data,ABB,Schneider Electric The global industrial automation market looks somewhat disaggregated at first glance,as the largest players have only about 10-15%market share within the process and discrete automation markets,respectively.However,the market in reality comprises a myriad of sub-s
41、egments of controls and instruments,most of which are complementary,but not overlapping.Therefore,market share within each product category is much more consolidated,which should be supportive of price discipline.CR8(concentration ratio)for both process and discrete automation market is about 60%.Sl
42、ide 10 2018 revenue(US$bn)of top players in Industrial Automation (Products,Software,Solutions,Services)23.816.511.46.96.86.75.95.04.43.63.3SiemensABBEmersonSchneiderGERockwellFanucHoneywellYaskawaKukaYokogawaIndustrial Automation a Structural Growth Story?(i)Source:Company data,Credit Suisse estima
43、tes Slide 11 Process&Discrete Automation Companies Average Growth Index vs.Global IP 2004=100 2004-2018 CAGR of Process,Discrete Automation Market and Global IP,2004-2017 CAGR of Global PA/DA Capex We compare the growth rates of PA and DA companies with global IP growth over 2004-2018 and find that
44、both the PA and DA markets have clearly outgrown global IP.Over the last 14 years,global IP has grown at a CAGR of 3.1%while PA players have grown at 5.2%and DA at 6.4%.During 2013-2017,the outperformance of DA over PA was fundamentally driven by the higher CapEx growth in the discrete industries.Th
45、e process industries were dragged by the pressure,especially in the Oil&Gas sector.However,the Process industry recovered in 2018 and outgrew Discrete as the downturn in semiconductors weighed in H2 2018.Global PA Capex grew by a CAGR of around 7%between 2004 and 2017(capex data not yet available fo
46、r 2018).O&G Capex outgrew PA Capex in 2006-2007 and 2012-2013 when oil prices were high,until a significant depression in O&G Capex since 2015.PA players sales showed less volatility compared with CapEx,which can be more driven by increasing spending on EPC projects.Moreover,we believe part of the s
47、pending on process automation instruments are also driven by OpEx decisions rather than CapEx,which has likely shown less growth over the past 10 years.On the other hand,we found that the DA players have slightly outgrown Global Discrete Automation Capex.DA players growth led Capex spend by about a
48、year historically but the relationship appears to have reversed in recent years,potentially suggesting more Capex-driven DA investments(for more detail see the charts on next slide).n/an/an/a-8%-6%-4%-2%0%2%4%6%8%10%Global IPPADASoftwarePACapexPACapex(ex-O&G)DACapex04/18 CAGR15/17 CAGR2018 growth100
49、150200250300350200420052006200720082009201020112012201320142015201620172018Global IP IndexPA market growth IndexDA market growth IndexGlobal PA Capex growth indexGlobal DA Capex growth index*Note:Capex data not yet available for 2018 Source:Company data,Credit Suisse estimates Slide 12 PA Sales Grow
50、th vs.Market CapEx Growth Average Process vs.Discrete EBIT Margin Indexed Process vs.Discrete vs General Industrials vs SKF Revenue Growth Industrial Automation a Structural Growth Story?(ii)DA Sales Growth vs.Market CapEx Growth*Note:Capex data not yet available for 2018-20%-10%0%10%20%30%200520062