JPM Europe Equity Research | Today’s Morning Meeting

Europe First to Market 24 August 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting European Semiconductors (Sandeep Deshpande)

Inventory 2Q26: Benign inventories indicate continued strength in semi-conductor stocks

Inventory position indicates an environment that continues to be supportive of a continuing up-cycle in the sector: Semi-conductor inventory increased 5.6% QoQ in absolute dollar terms in 2Q26. However, inventory days were reduced to 136 days vs. 140 days at the end of Q1’26. On a seasonally-adjusted basis, overall semi-conductor days of inventory stood 1.5% below normal seasonal levels (three-year seasonal average) exiting 2Q26, higher than the 5.5% below average seen at the end of Q1’26. Semi-conductor ex-memory inventory increased by 4.8% QoQ in dollar terms, with days of inventory decreasing to 143 days vs. 147 days in 1Q26. On a seasonally-adjusted basis, semi-conductor ex-memory inventory stood 5.0% above the three-year seasonal average exiting 2Q26, compared to 4.5% above exiting 1Q26. Thus overall, despite the strong semi- conductor revenue growth, inventory in the sector remains in check and there is no indication of over-building, enabling the up- cycle to continue.

| Diploma PLC (Jane L Sparrow) (DPLM LN, OW)

High-quality, consistent compounder; upgrade to Overweight

We have underestimated the earnings upgrade capacity of Diploma in 2026, with organic growth, margins and M&A all sources of upside YTD. Looking forward, we expect organic growth to moderate in FY27 (closer to the LT average of c6% after two years of very strong growth) and margins to reduce from their FY26 peak (as spot pricing in Peerless is adjusted to position for continued volume growth); we see these trends reflected in both management commentary and consensus estimates, ie they should not be sources of negative surprises. While our forecasts include announced M&A only (in line with the approach across our coverage universe), our M&A upside scenario suggests Diploma can deliver a double-digit EPS CAGR out to FY30 (from a y/e Sep-26 base). Absolute valuation multiples are at elevated levels relative to history, but not so on a relative basis vs a peer group of other decentralised compounders and US distributors, with whom Diploma compares favourably on growth and returns. Our revised Dec-27 PT of 8250p (up from 5760p, Dec-26) is based on CY2027 EV/EBIT of 22x (prev a DCF), in line with the average of our chosen peer group. We increase our rating from Neutral to Overweight, reflecting our view that Diploma is a high-quality compounder, capable of sustaining double-digit EPS growth into the medium term.

EMEA Equity Research AC Europe Equity Research ( August 2026 JPMORGAN

Company Research European Employment Services (Jane L Sparrow)

European Employment Services: Improving top-line but further upside requires a more robust recovery accompanied by meaningful margin progress

MTU Aero Engines (David H Perry, CFA) (MTX GR, OW)

Pernod-Ricard SA (Celine Pannuti, CFA) (RI FP, N)

Debate into FY26 reporting: MT algo, DPS and Disposals - we cut FY28E/29E

Sector Research China Metals Activity Tracker (Dominic O'Kane)

China Copper buying cools; Macro signals mixed

EU SMID Technology Hardware (Craig A McDowell)

Q2’26 results wrap: Conviction remains with SemiCap

European Chemicals (Chetan Udeshi, CFA/Angelina Glazova, CFA)

European Staples (Celine Pannuti, CFA/Edward G Hockin)

Distilled and Packaged: Our take on the sector, Carlsberg, China data, and more...

Global Autos: J.P. Morgan Weekly Research & Events (Jose M Asumendi)

Strategy, Macro, Economics & Sustainable Investing Research FX Markets Weekly (Meera Chandan/Arindam Sandilya)

Currencies amid long-end UST shenanigans