Deutsche Bank Analyzes Industrials Heading Into The Winter Months

• Caterpillar Inc. CAT shares are down 24 percent year-to-date, while shares of Eclipse Resources Corp ECR have plunged 69 percent.
• Deutsche Bank analysts reported on the latest developments at majors in the Industrials segment.

October China Excavator Sales Down; Market Share Stable

Caterpillar reported that its October excavator sales in China was 3,126 units, representing a decline of 37 percent y/y, versus a 36 percent decline in September and a 33 percent decline a year ago.

Analyst Vishal Shah mentioned that the company’s market share had remained stable at 12.2 percent, versus 12.0 percent in September and 12.4 percent in 2014. He added, however, that Caterpillar’s sales had gone down by 38 percent y/y in September, as compared to a decline of 13 percent a year ago.

Industry sales were down 41.0 percent YTD, marking a slight improvement over the 41.2 percent YTD decline recorded a month ago.

“Channel checks made by our China Construction Equipment team suggest that most dealers saw monthly sales growth in Oct from demand in small reform projects in rural areas and municipal engineering projects,” the Deutsche Bank report stated.

Although there may be a significant decline in sales in Nov-Dec, dealers were projecting an improvement in performance on a monthly basis. “Most dealers expect sales demand to continue to drop in 2016 although at a lower rate compared to 2015 levels,” Shah added.

Rigs Move To FL For The Winter

Eclipse Resources continues to delineate the Utica acreage position and liquidity remains healthy, after the 1H15 equity and senior note issuances. Analyst Josh Silverstein mentioned that the competitive landscape of the Northeast had changed.

“Well performance has been positive and resource upside is evident, but ECR’s forward outlook continues to be challenged by larger basin peers who are driving volumes higher and can sustain the lower regional gas prices better than a producer with a smaller balance sheet and production base,” Silverstein stated.

He added that since no rigs were currently running, Eclipse Resources’ stock would need natural gas prices to improve in order to gain positive momentum.