SBGSF - Schneider Electric: Looking Ahead To Q3 Results

Summary

• In the Q3 results, we expect a Chinese sales rebound and an overall margin improvement.
• Higher energy costs are a clear growth driver across the company's portfolio.
• Schneider Electric's valuation is still compelling. The buy rating is confirmed.

As we already performed in the past , today we provide an overview of Schneider Electric's expectations for the Q3 performance ( OTCPK:SBGSF ; OTCPK:SBGSY ). The company's next catalyst is planned for the 27th of October. In a recessionary environment, our internal team has always tried to provide companies with a good balance between growth & value. Benefitting from the recent market stock performances, Schneider Electric was back at an interesting valuation. Our buy-case recap was also based on the following consideration (supported by Macro and Micro factors):

1. Manufacturing onshoring due to higher supply chain constraints and logistic costs. This means less globalization in global production capacity and is equal to higher top-line sales growth for Schneider Electric's automation division;
2. EV and residential building efficiency consideration and we should also add that the Russia/Ukraine conflict could be a key catalyst in energy transition and independency for Europe. Schneider Electric's low and medium voltage sector might benefit from the EU's RePower Act;
3. Digitalization and IoT endorsement (even at the public administration level) will support Schneider Electric's EcoStruxure platform with a clear aim to build a hybrid digital company ;
4. Solid financial indicators with an outlook raised and maintained in 2022.

Today, we also emphasize how:

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