工業(yè)分銷行業(yè)展望

1、15 January 2019United StatesEQUITIESInside HYPERLINK l _bookmark0 AMZN Thought Process on Deal Activity2 HYPERLINK l _bookmark1 Which Distributor Gives Most Exposure to HYPERLINK l _bookmark1 Large Customers?5 HYPERLINK l _bookmark2 Who Has the Most Overlap with AMZN HYPERLINK l _bookmark2 Business?

2、 End Markets or SKUs?7 HYPERLINK l _bookmark3 Analysis of Potential DC synergies on a HYPERLINK l _bookmark3 Distribution Deal9 HYPERLINK l _bookmark4 Upgrade GWW, Reiterate HDS Outperform HYPERLINK l _bookmark4 and Stay on Sidelines on FAST/MSM20 HYPERLINK l _bookmark5 EPS Estimate and Target Price

3、 Changes27 HYPERLINK l _bookmark6 Macro Indicators28 HYPERLINK l _bookmark7 Appendices39AnalystsMacquarie Capital (USA) Inc. HYPERLINK /directory/people/details?analystId=4993 Hamzah Mazari, CPA +1 212 231 2442 HYPERLINK mailto:hamzah.mazari hamzah.mazari HYPERLINK /directory/people/details?analystI

4、d=5119 Mario Cortellacci, CFA +1 212 231 0465 HYPERLINK mailto:mario.cortellacci mario.cortellacci HYPERLINK /directory/people/details?analystId=2524 Benjamin Schachter +1 212 231 0644 HYPERLINK mailto:ben.schachter ben.schachter2019 Industrial Distribution Sector OutlookUpgrade GWW, Deal Flow Key f

5、or AMZNKey points Proprietary Job Scrap Data and work with Internet Team suggests AMZN likely does a deal in distribution longer term. DC, cost synergy and cash conversion analysis suggests GWW on AMZN platform could generate significant value (3x peer group). Upgrade GWW on margin self-help and def

6、ensive exposure. Remain positive on HDS and prefer sidelines on FAST/MSM/WCC (lower conviction on op leverage).Deal Activity Appears Critical For AMZN Market Share in DistributionIn Fig 4, we show that AMZN hiring in Amazon Business sales and account management roles is slower versus history which s

7、uggests that for AMZN to get bigger in industrial supply M&A would make sense (building a sales force organically does not look like a focus based on proprietary AMZN job scrap data). Our sense is AMZN is doing well with small and medium sized businesses (SMB) while on the larger enterprise side is

8、in the early innings of building a service component angle.GWW Has Most Synergy with AMZN PlatformWe believe AMZN does not care too much about brick and mortar in terms of freight hub and spoke unless it can be scaled up significantly. Exposure to larger accounts (key for Prime focus), higher online

9、 presence, greater product overlap enabling greater bundling all help GWW stack up as a best “fit” for AMZN (Fig 8). Moreover, based on DC mapping analysis, GWW DC network is more complementary in terms of coverage (DC synergies are less about capacity/redundant footprint). Although visibility is lo

10、w, in certain DCs capacity could likely increase 30% with use of robotics. In Fig 29, we show synergies for GWW on the AMZN platform could run$950mm (8% of sales) range vs other distributors in the $200mm (4.5% of sales) range based on transportation and COGS leverage followed by SG&A.Cash Conversio

11、n Cycle Upside Could Be SignificantOur Internet team believes AMZN cash conversion cycle will continue to be negative even with a large industrial distribution acquisition given buying power and ability to influence terms. Excluding WCC (direct ship model), GWW and HDS followed by MSM and FAST stack

12、 up best (Fig 27).Upgrade GWW Given Self Help on Margins + Defensive CharacteristicsWe are upgrading GWW shares from Neutral to Outperform on the back of: 1) continued medium customer share gains ($75/share long term value), 2) better Canadian business (7% of revenue down from 12% peak) and 3) great

13、er MRO exposure which tends to be much more defensive later in the cycle. Bottom line, unlike most peers, we think GWW gross margins could be up in 2019. Moreover, sale of certain European assets could increase return of cash. Lastly, we think a conservative 2019 guidance range on Q4 2018 (January 2

14、4) due to recent change in investor communication and conservatism is likely in the market already. Consensus guidance range is near the wide end of the range over the past 7 years. Expectations are also lower post MSM release. See page 27 for EPS and target price changes.Please refer to page HYPERL

15、INK l _bookmark8 42 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.AMZN Thought Process on Deal ActivityBased on conversations with our Internet team, past AMZN deal activity (Fig 2) has primarily been focused on increasin

16、g Prime members. There are 100 million members globally as of mid-April and when AMZN first threw out that figure. The historical data below are Macquarie estimates.Fig 1 AMZN Prime Metrics(millions)201320142015201620172018E 2019E 2020EWorldwide Prime Members2031466691114136155Growth53%51%43%38%25%1

17、9%14%US Prime Members (75% of Worldwide)1523334660728087Growth50%47%40%30%20%10%10%US Households123123125126126128130132US Prime, % of US Households12%18%27%37%48%56%61%66%Source: Macquarie Capital (USA), January 2019Fig 2 AMZN Select M&A HistoryClose DateDeal TitleTransaction ValueEV/SalesEV/EBITDA

18、IndustryPendingA offers to acquire PillPack$1,000Drugstore Chains12 Apr 18Ring$900Electronic Production Equipment23 Jan 18SQRRL DATA INC$40Packaged Software21 Dec 17Immedia Semiconductor$90Semiconductors03 Oct 17Body Labs$100Packaged Software20 Jul 17Graphiq$50Miscellaneous Commercial Services08 Jul

19、 17Game Sparks Technologies$10Media Conglomerates28 Aug 17Whole Foods Market$13,4880.7x7.8xFood Retail12 May 17S FZ LLC$580Catalog/Specialty Distribution09 Jan 17Four Zero Five Labs$19Packaged Software19 Oct 15Elemental Technologies$50010.2x-Electronics/Appliances29 Apr 15ClusterK$50Packaged Softwar

20、e22 Jan 15Annapurna Labs$370Semiconductors25 Sep 14Twitch Interactive$842Movies/Entertainment17 Apr 13Atakes a majority stake in Evi Technologies$26Internet Software/Services01 May 12Kiva Systems$7757.8x-Information Technology Services21 Jan 11LOVEFiLM International$3233.6x21.8xInternet Software/Ser

21、vices01 Apr 11Quidsi$5453.0 x-Internet Software/Services13 Dec 10BuyVIP SL$1101.1x-Catalog/Specialty Distribution02 Nov 09Z$8740.9x20.0 xCatalog/Specialty Distribution19 Mar 08Audible$2001.8x86.4xInternet Software/Services28 Mar 00A takes a minority stake in Eziba$18-Specialty Stores04 Oct 99Converg

22、ence Corp$20-Packaged Software18 May 99A takes a minority stake in HomeG$43-Catalog/Specialty Distribution14 May 99E-Niche$196-NMCatalog/Specialty Distribution09 Jun 99A$37356.4xNMPackaged Software11 Jun 99Alexa Internet$270728.7xNMInternet Software/Services14 May 99E$219-Internet Software/Services1

23、4 May 99L$75-Catalog/Specialty Distribution04 Aug 98PlanetALL$87-Information Technology Services04 Aug 98Junglee Corp.$170138.9xNMInternet Software/Services27 Apr 98Bookpages Telebook & Internet Movie Database$55-Catalog/Specialty DistributionDivestitures not included; transactions in US$mSource: Fa

24、ctSet, Macquarie Capital (USA), January 2019It appears that in terms of Prime members, smaller businesses can use their existing consumer Prime accounts, but thats for only single users. For the multi-user business memberships, the agreements are more bespoke with options for 3, 10, 100 and 100+ use

25、rs.Business Prime plansCost per yearUsersFig 3 Amazon Business Prime Essentials$179Up to 3 users Small$499Up to 10 users Medium$1,299Up to 100 users Enterprise$10,099Over 100 users Source: Company data, Macquarie Capital (USA), January 2019Recently, AMZN also launched new Business Prime member benef

26、its including spend visibility, guided buying, extended payment terms and upgraded shipping options among other items (see HYPERLINK https:/r.macq.co/MTUxMDc4Nw AMZN HYPERLINK https:/r.macq.co/MTUxMDc4Nw Coming Out with New Business Prime Benefits).Moreover, in the exhibits below we show that AMZN h

27、iring in Amazon Business sales and account management roles is slower versus history, and not ramping, which suggests that for AMZN to get bigger in industrial supply M&A would make sense. Building a sales force organically does not look like a focus based on AMZN job scrap data.Our sense is AMZN is

28、 doing well with small and medium sized businesses (SMB) while on the larger enterprise side is in the early innings of building a service component angle. Aside from building out infrastructure for same day delivery, account managers are likely spread thin (not being able to provide the same level

29、of service as the publicly traded distributors). Having said that, AMZN has a clear advantage in value selection and convenience in order to bundle other products on top of industrial (office supplies, etc.).Bottom line, we think AMZN could do a large industrial distribution deal in order to increas

30、e prime business memberships.Fulfillment & Operations ManagementSales, Advertising, & Account Management12%10%8%6%4%2%0%Fig 4 AMZN Job Category, % of totalJul-17Sep-17 Oct-17 Oct-17 Oct-17 Oct-17 Nov-17 Nov-17 Nov-17 Nov-17 Dec-17 Dec-17 Dec-17 Dec-17 Dec-17 Dec-17 Jan-18 Jan-18 Jan-18 Jan-18 Feb-18

31、 Mar-18 Apr-18 May-18 Jun-18 Jun-18 Jul-18 Jul-18 Nov-18 Jan-19Dashed lines indicates gap in data in August 2017, February-March 2018 and August-October 2018 Source: Company data, Macquarie Capital (USA), January 201940%35%30%25%20%15%10%5%0%Sales, Advertising, & Account ManagementFig 5 AMZN Busines

32、s Job Category, % of totalJul-17Sep-17 Oct-17 Oct-17 Oct-17 Oct-17 Nov-17 Nov-17 Nov-17 Nov-17 Dec-17 Dec-17 Dec-17 Dec-17 Dec-17 Dec-17 Jan-18 Jan-18 Jan-18 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jun-18 Jul-18 Jul-18 Nov-18 Jan-19Dashed lines indicates gap in data in August 2017, February-March

33、2018 and August-October 2018 Source: Company data, Macquarie Capital (USA), January 2019Fig 6 AMZN - Job AnalysisJuly 17,2017June 29, 2018July 29,2018November29, 2018January3, 2019% change since% changeAmazon Jobs% of TotalCount% of TotalCount% of TotalCount% of TotalCount% of TotalCountDeltaJuly 20

34、17m/mSoftware Development32%6,43727%4,82828%5,09230%6,33030%6,7262894%8%Operations, IT, & Support Engineering7%1,3998%1,3768%1,3957%1,5427%1,53313410%(1%)Solutions Architect5%9327%1,3167%1,3247%1,4507%1,48355159%3%Project/Program/Product Management-Technical6%1,1816%1,1016%1,0906%1,3366%1,35617515%2

35、%Sales, Advertising, & Account Management5%9776%1,0085%9866%1,2266%1,25928229%3%Project/Program/Product Management-Non-Tech6%1,2185%9275%9256%1,2036%1,35713911%17%Fulfillment & Operations Management5%9354%7424%7723%5693%647(288)(31%)11%Finance & Accounting3%5933%6173%6063%7363%74615326%2%Business &

36、Merchant Development2%4183%5723%5483%5473%57215437%4%Human Resources4%8193%5623%5534%9254%9068711%(3%)Systems, Quality, & Security Engineering3%6793%5083%4993%6333%689101%11%Marketing & PR3%6093%4913%4852%4752%502(107)(18%)5%Business Intelligence3%5782%4172%4162%5262%549(29)(5%)6%Buying, Planning, &

37、 Instock Management2%4682%3612%3632%4602%485174%7%Customer Service1%2532%3192%3261%2571%252(1)(0%)(2%)Machine Learning Science1%2762%2822%2822%3572%3568029%(0%)Design2%3591%2631%2681%3041%313(46)(13%)3%Facilities, Maintenance, & Real Estate1%2681%2611%2571%2481%282145%13%Editorial, Writing, & Conten

38、t Management1%2501%2461%2541%2181%236(14)(6%)7%Supply Chain/Transportation Management1%2841%2161%2101%2741%28621%6%Research Science1%2281%2161%2271%2491%2825424%15%Hardware Development1%1861%1901%1951%2711%2799350%4%Leadership Development & Training1%1501%1571%1561%1491%161117%8%Medical, Health, & S

39、afety1%2361%1381%1400%1031%128(108)(46%)18%Administrative Support1%1701%1311%1291%1301%131(39)(23%)1%Fulfillment / Warehouse AssociateNANA1%1271%1311%1780%51NAnm(100%)Legal1%1631%1081%991%1231%116(47)(29%)(6%)Investigation & Loss Prevention1%1431%1051%1061%1091%123(20)(14%)13%Data ScienceNANA0%540%5

40、91%1291%139NAnm19%Audio / Video / Photography Production0%640%430%440%530%49(15)(23%)(9%)Public Policy0%300%300%310%180%19(11)(37%)3%Database Administration0%480%270%270%360%37(11)(23%)4%Economics0%430%210%210%360%42(1)(2%)29%Total100%20,394100%17,760100%18,016100%21,200100%22,092(2,378)4%0%Source:

41、Company data, Macquarie Capital (USA), January 2019Fig 7 Amazon Business Job AnalysisAmazon Business JobsSoftware DevelopmentJuly 17, 2017% of TotalCount29%79June 29, 2018% of TotalCount19%14July 29, 2018% of TotalCount23%20November 29, 2018% of TotalCount35%64January 3, 2019% of TotalCount35%66Delt

42、a% change since July 2017% change m/m 14%(13)(16%)Sales, Advertising, & Account Management25%6718%1320%1825%4623%43(24)(36%)(23%)Project/Program/Product Management-Non-Tech14%3914%1013%119%1610%18(21)(54%)20%Project/Program/Product Management-Technical7%198%69%87%128%14(5)(26%)33%Marketing & PR3%912

43、%99%82%32%4(5)(56%)11%Systems, Quality, & Security Engineering2%63%22%22%43%5(1)(17%)50%Buying, Planning, & Instock Management4%117%55%43%54%7(4)(36%)40%Design3%93%25%44%84%8(1)(11%)-%Business Intelligence6%155%45%42%34%7(8)(53%)100%Editorial, Writing, & Content Management-%03%25%43%51%22nm(150%)Dat

44、a Science-%03%21%12%3-%-nm(150%)Solutions Architect-%01%11%12%32%33nm-%Operations, IT, & Support Engineering-%01%11%11%11%11nm-%Machine Learning Science1%41%11%11%21%2(2)(50%)-%Business & Merchant Development1%33%21%11%21%2(1)(33%)-%Economics-%0nmNA-%01%21%22nmnmAdministrative Support1%2-%-%02%41%1(

45、1)(50%)nmHuman Resources0%1-%-%0-%-%-(1)(100%)nmLeadership Development & Training1%3-%-%01%11%1(2)(67%)nmResearch Science1%2-%-%0-%-%-(2)(100%)nmTotal100%269100%74100%88100%184100%186(181)(32%)1%Source: FactSet, Macquarie Capital (USA), January 2019Which Distributor Gives Most Exposure to Large Cust

46、omers?Exposure to larger accounts would be one key factor in doing a deal in industrial distribution.In the exhibit below we show large customer or national account exposure by distributor where GWW stacks up best followed by FAST and MSM. GWW is also growing with multi-site medium customers now tha

47、t it repriced its book of business as of last year.Keep in mind, the definition used for large customers is based on potential annual spend for industrial supplies. Large customers tend to spend $60K, medium customers spend $10-60K and smaller customers spend $10k annually.Fig 8 Industrial Distribut

48、ion Sector SnapshotSales Outside USand Canada% MROEnd MarketsVMIPrivate Labele-Commerce VendingLarge customer / BranchesNational accountexposureSalespeopleNumber of DCsGWW334,907+66775%46%WCC104,500+5005%Transportation 6%Commercial 14% Heavy Manuf. 16%Government 14%Contractor 8%Light Manuf. 12%Retai

49、l 5%Natural Resources 5% Reseller 4%FAST1413,688+2,29051%Man8%NonOthMSM122,2859342%60%2ManNon14,000MRHDS50Employees (9,00050080%136%3Infr hourly & 5,000 onNonsalary)ResOther 16%ufacturing 50% -Resi Constr. 23%er 27%ufacturing 70%-Manufacturing 30%O 36%astructural 21%residential Construction 25% iden

50、tial Construction 18%Industrial 37%Construction 33%Utility 15%12%100%4%60%2%50%nm36%5%35% CIG 14%1: HDS: We estimate 80% of HDS sales are covered by some sort of agreement (could be national, regional or individual count) with preferential pricing arrangement. Company does not disclose pure national

51、 account exposure.2: MSM includes e-commerce, vending and VMI in e-commerce.3: HDS: About 65% of sales in FM come through the mobile or online channels, C&I online platform is in its infancy, Waterworks had almost no online presence. So total online for HDS should be 65% x 55% = 36%.Source: Company

52、data, Macquarie Capital (USA), January 2019Fig 9 Amazon Business vs Industrial Distribution Sector SnapshotCompanySKUsShipping DetailsGWW1.7mmShip all items as they become available. Ship in as few shipments as possible. Shipping from Grainger. Shipping from a Third Party Vendor; 2-Day Express Order

53、s placed by noon CST will be delivered in 2 business days. Next Day Air Orders placed by noon CST will be delivered by the end of the following business day; Free freight $1500. Pre-paid freight was negotiated into the customers contract with Grainger; Same Day Delivery PossibleMSM1.1mmShip the same

54、 day; Same Day Shipping Guarantee; Regular Ground Shipping; Air Shipping; Get It Next DayWCC565KDisplayed shipping costs will be prepaid and added to your invoice. If the material is of excessive weight or size,someone will contact you prior to shipping to notify you ofshipping costs.Order Cutoff Ti

55、mes for In Stock, Same Day Shipping, Monday through Friday (5:00 PM Central Standard Time);UPS Ground (within 2-6 Business Days);UPS 2 Day (within 2 Business Days);UPS Next Day Air (next Business Day);Common Carriers Truck (LTL) will be used for large items, heavy loads and items requiring special h

56、andling. Any shipment weighing less than 100 pounds will be charged at the carrier minimum rate;UPS Next Day should be delivered by 10:30 AM, 12:00 Noon or the end of the next business day, depending on location; Delivery times are estimates only and WESCO Distribution, Inc. shall not be liable for

57、delays.;UPS 2 Day Should be delivered by end of the second business day. Delivery times are estimates only and WESCO shall not be liable for delays;Hazardous materials (including Limited Quantity and ORM-D) cannot be shipped via any method except UPS Ground or LTL (Less Than Truckload).; Hazardous m

58、aterials (including Limited Quantity and ORM-D) may be boxed and shipped separately from all other items in your order. A Hazardous handling charge may be added to the shipping charges of the order.FAST1.5mmBlue Global: Fastenal is a licensed common carrier that can provide Less-Than-Truckload servi

59、ce in specific lanes at extremely competitive rates.HDS850KFree Delivery Coast to Coast; Most orders of $50 or more are delivered free; Call Ahead for Will-Call Pickup; Customers in 2-day & 3- day shipping areas can receive priority overnight service by asking for a quote on this service.; Extended

60、inventory items, custom products, and a few items marked freight charges may apply may have delivery charges, quoted on request. Orders less than $50 are subject to a $10 handling charge.AMZN2012 AmazonSupply 500k, 2015 AmazonSupply 2.25mmPrime shipping can be same day or within four hours based on