How to profit off Global Warming: HVAC Market Research with Due Dilligence on 5 Air-Conditioner brands.

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by StonksArthur


With the change and progressing to extremer climates, global warming is coming our way. It has been shown world governments are incapable of properly taking action against this threat. Since it seems like global warming won’t be stopped, we will have to start adapting to the new extreme climates. One way of ensuring a comfortable living/working space in this grim future is by making use of HVAC (Heating Ventilation & Air Conditioning). And that’s what got me thinking. My family has been hell bent on NOT getting air-conditioning. But with the summer temperatures ever more frequently reaching +40c with a humidity of +70%(Hup Holland Hup) it’s becoming unbearable. Sleepless nights, overheated pets, fainting, old people dying and just losing your will to live. These are all issues more people around the world are starting to face. Every place on earth is getting more extreme. Every place on earth is getting more need for Climate control. And every company is looking to profit of that! This is why my next play is in the HVAC industry.

Finding our compatible companies.

I only want to invest in the best companies. Living in The Netherlands I personally don’t know the best brands, luckily, I’ve got great internet. So, after spitting through some review sites these are the 5 public companies that came out best when looking for “Best HVAC/Air-conditioning companies/brands”. (Not ranked)

  1. Carrier (Day&Night, Bryant, Toshiba & 15 more)
  2. Trane (American Standard, Thermo King & 7 more).
  3. Daikin (Goodman, Amana).
  4. Lennox (Service Experts, Allies Air Enterprises).
  5. Johnson Controls (Hitachi, York)

Understanding the HVAC market.

Before we continue to further analyze the companies, we first need to understand the HVAC market.

Some facts:

  1. The HVAC business has been valued at $91.30B in 2020 and is expected to reach $173B by 2024 and $367B by 2030. That’s a Compounded Annual Growth Rate (CAGR) of +/-15%.
  2. The most popular countries for Air Conditioning (AC) per household are: Japan 91%, USA 90%, Korea 86%, Saudi Arabia 53%, China 60%.
  3. Global stock of AC is expected to grow to 5.6B by 2050, up from 1.6B in 2018. (This is 1 AC sold every second for the next 30 years).
  4. Less than a third of the global households own an AC.
  5. 8% of the 2.8B people living in the hottest parts of the world own an AC (Brazil, Indonesia, India, African countries).
  6. AC demand is increasing every year going from 97,60M in 2012, up 111M in 2018.

As can been seen in the above statements the HVAC business is very well integrated in some large countries. But the most exciting prospects are those of the developing countries. In Mexico, Brazil, Indonesia, South Africa and India only 16%, 16%, 9%, 6% and 5% respectively of the households have AC. This is a MASSIVE market just waiting to be exploited.

– The Indian AC market stood at $4,3B in 2017 and is expected to surpass 11B by 2023, that’s a CAGR of over 17%. This rising growth is led by rising infrastructure development, growing demand for housing and the constantly rising temperatures and consumers purchasing power.

– The Middle Eastern and African market is expected to have an CAGR of 4,9% during 2019-2024.

– The Indonesian market is currently experiencing a 2% CAGR in AC demand over 2012 till 2018.

– The US is expected to have a CAGR of 3.1% from 2020 to 2030.

– Europe is expected to have a CAGR of 6% from 2019 to 2025.

– The global HVAC market is expected to grow with a CAGR of 5.5% from 2018 till 2024.

Market share.

This was actually really really difficult to find free sources on and I can’t really make a clear picture out of it so here are the numbers:

– 2013 North America market: Carrier 17%, Daikin 15%, Trane 10%, Johnson 9%, Lennox 6%, LG 5%.

– 2013 Global AC market: Daikin 13%, Carrier 10%, Johnson 8%, Trane/LG 4%.

– 2018 Indian market share: LG 17,7%, Hitachi 7,9%, Daikin 7,4%.

– HVAC Used by construction firms in USA: Carrier 29%, Lennox 17,3%, Daikin 8,2%, Trane7,3%, LG 1,8% Johnson 1,8%.

– 2020 global “Wall-Mounted Fan Coil Units” market: Daikin 29%, Trane 26%, Carrier 12%, Johnson 7,5%

My conclusion from this and other information found online is that globally Daikin is the biggest followed by Carrier, Johnson, Trane, LG and Lennox. I accounted for all known acquisitions since 2013 in the market share.

An introduction to the Companies


Carrier products and related services include HVAC and refrigeration systems, building controls and automation, fire and special hazard suppression systems and equipment, security monitoring and rapid response systems, provided to a diversified international customer base principally in the industrial, commercial and residential property and commercial transportation sectors.

Employees: 53,000+

Countries active: 160+

Market Cap: 25,959B

Key points:

– 85% of sales are in the USA or Europe, they are however planning to expand globally.

– 51% HVAC, 29% Fire and Security, 20% Refrigeration.

– Since April 2020 carrier has split off from Raytheon Technologies, allowing them to focus fully on the HVACR market.

– Carrier is planning on cutting 600million in costs by 2022 (4% of current COGS)

– Carrier has recently launched its “BlueEdge” platform, providing aftermarket service to customers and minimizing machinery downtime & costs. The platform will offer 3 different plans of service to customers. Currently 82% of all Carrier’s revenue comes from products, this is a clear move to increase its services revenue.

– As stated above, Carrier is planning to move more towards (digital) services.


– Well established brand within USA and Europe.

– Leader of the HVAC market.

– Very efficient products.

– Diversified

– 500+ patents and 115y of experience.

– Owns cheaper sub-brands.

– #1 HVAC brand for 10 consecutive years according to Builder Magazine

– Increased focus on smart systems and apps.


– Trying to enter markets with well established competitors (Johnson Controls, Daikin)

– Excessive dependence on the American market.

– No lifetime warranties

– No concrete plans for taking over the Asian market.


Trane Technologies Public Limited Company manufactures industrial equipment. The Company offers central heaters, air conditioners, electric vehicles, air cleaners, and fluid handling products. Trane Technologies serves customers worldwide.

Employees: 50,000+

Countries active: 100+

Market Cap: 28,189B

Key Points:

– Since February 2020 Trane has split from Ingersoll Rand allowing it to fully focus on its HVAC business.

– Revenue: 73% Americas, 12% Asia/Pacific, 15% EMEA.

– Revenue: 79% Climate, 21% Industrial


– 120y of experience.

– Known as reliable, efficient and silent.

– Major investments in reducing carbon emissions for its systems.

– Opportunity for expanding to Asia and the Middle East.

– Reduced product emissions by more than 50%


– Heavy dependency on the American market.

– No concrete plans on expansion in the Asian/Middle Eastern market.

– No strong focus on apps/smart systems.


DAIKIN INDUSTRIES, LTD. manufactures air conditioning equipment for household and commercial use. The Company also operates chemical, oil hydraulics, defense system, and electronics businesses.

Employees: 76,000+

Countries active: 150+

Market Cap: 53,273B

Key points:

– Japan sales rose 7% YoY

– Americas sales rose 13% YoY

– EMEA sales rose 7% YoY

– Asia/Oceania sales rose 10% YoY

– Revenue: 89,6% HVAC, 8,1% Chemicals, 1,7% Oil Hydraulics, 0,6% Defense

– Daikin creates Semiconductor-etching products. Making them well positioned for the “new” tech boom. With the sales of chemicals almost increasing 10% YoY.

– Daikin provides warheads for the Japanese military.

– Owns Goodman.


– Leader of the Indian AC market, creating products that can withstand the extreme conditions in the country. Being able to operate at temperatures as high as 54c, creating AC’s that do not corrode due to sulfuric acid. and also, being able to be dropped from 1m height, to withstand the rough roads.

– Grew its profit in FY2020 while all others decreased in revenue.

– Produces products used for Semiconductors.

– Has a clear plan to expand it’s influence in emerging markets such as India and the Middle East.

– Creates the full supply line for HVAC products, from refrigerants to AC-units.

– Heavy R&D expenses.


– China-Us frictions.

– Slowdown of the Japanese economy.

– Does not have trailer refrigeration.

– Outdated apps.

Lennox International

Lennox International Inc. provides climate control solutions. The Company designs, manufactures, and markets heating, ventilation, air conditioning, and refrigeration equipment. Lennox markets its products worldwide.

Employees: 11,000+

Countries Active: 70+

Market Cap: 10,617B

Key Points:

– Revenue: 60% Residential, 25% Commercial, 15% Refrigeration.

– Mainly present in America.

– Increasing net profit margin.


– Currently has the most efficient split system.

– Launching the Better Air initiative, focused on increasing indoor air quality, a Covid play.


– No concrete plans for expanding into emerging markets.

– Not known for the best reliability.

– Stagnating revenue and negative shareholders equity.

– Unreliable apps.

Johnson Controls

Johnson Controls International plc operates as a diversified technology and multi industrial company worldwide. The company operates through Building Solutions North America, Building Solutions EMEA/LA, Building Solutions EMEA/LA, and Global Products segments. The company designs, sells, installs, and services heating, ventilating, and air conditioning systems, controls systems, integrated electronic security systems, and integrated fire detection and suppression systems for commercial, industrial, retail, small business, institutional, and governmental customers

Employees: 105,000+

Countries Active: 150+

Market Cap 32,898B

Key Points:

– Launch of its open blue system. Giving customers total control over their building, temperatures, facial recognition ventilation, security, contact tracing and more all in the palm of your hand. (Seriously check the videos, really impressive). This is a clear Covid play and very well timed.

– Owner of York and a joint venture with Hitachi.

– Strong plans for Asian expansion.


– Very good smart systems and mobile apps.

– Launch of it’s OpenBlue system. A digital platform to connect every part of your building.

– Using Covid to their advantage in launching products and services.

– Well aware of the need to expand in China/Asia

– Build a state of the art headquarters in China.


– Many negative reviews on its Hitachi brand

Comparing the companies their financials.


Million $ Carrier Daikin Trane Johnson Lennox
Share Price 34,93 18,85 129,22 44,40 288,09
Div Yield 0,94% 0,79 1,64% 2,34% 1,07%
R&D Expenses 402 652,8 237 319 69,60
Revenue 18,173 23,526 15,957 22,637 3,605
Net Income 1,812 1,351 965 802 358
Cash 2,704 3,559 1,303 2,805 37
Debt 12,029 5,316 5,573 7,219 1,354
FCF 1,982 1,877 1,182 1,459 633

TTM Carrier Daikin Trane Johnson Lennox
P/E 26,70 30,32 25,32 42,33 31,05
EPS 2,09 4,62 4,05 1,05 9,28
Payout Ratio 15% 3,25% 52% 99% 33%
Debt/Equity 0,55 0,82 1,80 1,03 1,03
Term Cash/Debt 2,39 2 5,49 5,49
Current Ratio 1,33 1,88 1,28 1,36 1,36
ROE 12,5% 9,6% 13% 3,8% 3,8%
Net Margin 9,97% 5,74% 6,05% 8,39% 8,39%
R&D/Revenue 22,12% 27,74% 14,85% 14,09% 14,09%
Interest Coverage Ratio 28 23,63 7,09 2,64 2,64

Revenue 2015 2016 2017 2018 2019 2020 TTM CAGR
Carrier 16,709 16,853 17,814 18,914 18,608 18,173 2%
Daikin 18,384 19,619 19,622 21,989 23,818 24,482 23.526 5%
Trane 13,300 13,508 14,197 15,668 16,589 15.957 2%
Johnson 17,100 20,837 22,835 23,400 23,968 22.637 7%
Lennox 3,467 3,641 3,839 3,883 3,907 3.605 5%

Net Profit 2017 2018 2019 2020 TTM
Carrier 1,227 2,734 2,116 1,812
Daikin 1,447 1,814 1,814 1,639 1,351
Trane 1,302 1,337 1,410 964
Johnson 1,611 1,128 1,076 802
Lennox 305 360 408 341

NPM 2017 2018 2019 2020 TTM
Carrier 7% 14% 11% 10%
Daikin 8% 8% 8% 7% 6%
Trane 9% 9% 9% 6%
Johnson 7% 5% 4% 4%
Lennox 8% 9% 11% 9%


First of all, I should start with saying that Lennox really shouldn’t have been included, they are on a completely different level than these 4 other companies. Also, Johnson had some fuckery going on in all their 10k’s so these numbers might not add up, let me know if you found something.

Looking at the company’s financials and numbers it’s a tough decision to make, all companies a pretty close to each other. There are however some things that stand out:

– Carrier has a significantly higher NPM then the competitors.

– Lennox might be in financial trouble.

– Daikin spends the most on R&D relative to its revenue, I see this as a big plus.

– Johnson their revenue is growing the fastest on a 5Y CAGR.

– Johnson their P/E is much higher than the competition.

– Johnson their Dividend is the higher % wise

– Daikin has increased sales in 2020 while other companies have seen a drop.

– Daikin’s NPM is stable at around 8% while Carrier’s NPM has grown explosively.

– Trane has a high debt/equity ratio

– Both Carrier and Daikin have a very strong Interest coverage ratio.

– Johnson’s TTM would be better without an irregular expense of 602M

Now on to the less financial aspect of the data.

I really like the way Daikin presents their annual report, they have clear strategies on how to better engage the Indian market. They are also showing that they know where their market growth protentional lays and are willing to act on it. Furthermore, what really strikes me as interesting is that Daikin produces materials for semiconductor testing, this might be a goldmine in the upcoming tech revolution and Daikin has shown to be well aware of this upcoming trend. Carrier on the other hand has not properly breached the Asian/Middle eastern market yet, they have stated to expand their geographical presence but I have found no conclusive strategies in how to do so. What is impressive about carrier is their high net profit margin and willingness to act on a more digital environment, an area where Daikin is currently lacking.

To conclude this research properly, if I had to choose a company right now, I’d being going for Daikin. Their well-presented data and goals for emerging markets, combined with their semiconductor products make me believe they are most suited for rapid growth. Their geographical location also puts them in a better position for Asian dominance. And their Goodman sub brand is well known in America and a direct competitor to Carrier. Carrier is a close second, with impressive brand recognition and attractive financials. One thing carrier does well that Daikin does not is transport refrigeration. In my opinion trucking is going to play a much larger role when self-driving trucks start to appear.


Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.


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