霍尼韦尔（HON） RemainCo分拆后核心业务前景分析

Price Target HON: It's all about the Honey, Honey, Honey; key questionsbefore investor day + a recap of RemainCo. thesis As a quick recap, Honeywell is spinning off it’s Aerospace Technologies (AT) at the end of thismonth. AT had an investor day earlier this month, with automation-focused RemainCo. setto have theirs tomorrow.We estimate the value of each remainco. share at $107, basedon our individual valuation of PA&T, IA, and BA. Listed below are key themes to get a point ofview on. - Is Honeywell just a combination of three different automation businesses? What’s thethrough-line here - while spinning off aerospace does help narrow management bandwidth,each of these businesses already had CEOs, and they run relatively independently. What isgoing to change, if anything? - We’re genuinely worried about the outlook for PA&T. Catalysts and licensing technologyare not growth businesses (peers trade at HSD EV/EBITDA multiples) and refining capex hasalso been muted. Honeywell has limited exposure to natural gas, pharma, and power (that aredriving Emerson’s growth). What are they doing here that is structurally different? Or are theyat the mercy of the cycle? - Industrial Automation (IA) is really a collection of six (soon to be four) sub-scale businesses.While we like the spin of WWS and PPS, the question that remains unanswered is the rolethe remaining sensors business has in Honeywell’s broader portfolio. It’s not really a growthdriver and margins are OK - is that really what HON expects from this business? - The role of Forge is our last big question. Vimal has published multiple white papershighlighting Forge sitting at the heart of Honeywell’s strategy going forward. But we arestill unsure how it is different from OpenBlue or Building X (JCI and Siemens respectively),which are also brand agnostic optimization platforms. We’re especially interested tounderstand how this offers a throughline through all of Honeywell’s businesses, and why itisn't something a more digitally native 3P can develop on their own with AI. Investment Implications We rate Honeywell Market-Performwith TP - $233.00 DETAILS Thesis summary: We are Market-Perform on Honeywell’s stock. We think the spin-off is the right strategic move, and will allow mgmt. to focus onthe automation-focused RemainCo. With that said, thethree remaining BUs have very different types of automation withinthem(and competing outlooks). We’re most bullish on building automation (BA); there’s a clear use case for power efficiency as costs continue to riseand given BA is the largest, fastest growing, most profitable piece of RemainCo., it will receive the management attentionit deserves. While there are other competitors in the space (JCI, Siemens, etc.), they all have data center exposure that islikely more important for management,giving Honeywell a unique ability to focus on the space when competitors aresomewhat distracted. We are not optimistic about the Process Automation and Technology business; Honeywell is much more O&G focusedwhere CapEx is expected to be depressed (outside of LNG tailwinds), they do not have the exposure to life sciences or powerthat competitors like Emerson do. We also thinkHoneywell is overexposed to the ME in PA&T(26% vs. 9% for Emerson),which may be a good thing long term based on the resolution of ongoing conflicts but near-term creates a risk factor tovaluation. The UOP business (which is effectively a catalyst / tech. licensing play) in PA&T also doesn’t have a great outlook;refineries are running at lower util. which will lead to fewer or delayed catalyst recharges impacting growth. We’re not sure what to think about the Industrial Automation (IA business).It has been a bit of a “catch all” housingsome very different business units (ranging from warehouse software to combustion sensors). Honeywell is spinning off thewarehouse solutions (WWS) and ruggedized handheld equipment business that sits here (that have been drags on growth postCOVID) which will bump up growth a few points, but we don’t think we’ll see much beyond LSD given mgmt. focus will be on BAand PA&T. “Forge” is a wildcard.Management is talking about it as the heart of the company’s strategy going forward; while we see somepromising examples, we need to see more financial reporting on this similar to EMR / ROK beforewe know if it is truly havinglarge scale impact or is just wishful marketing. Comments on recent performance and company structure Honeywell has underperformed both the broader market and its peers post-COVID(across aerospace and automationnames). Growth has been tepid, at a time when aerospace in particular has had major tailwinds. The company hasundertakena range of portfolio streamlining actions- driven both organically and by activist investor pressure. In late 2024, thecompanyannounced they were spinning off its advanced materials business(now traded as Solstice); soon after, theyalso announced thespin of their aerospace business leavi