Otis Worldwide: Capitalizing on Urbanization with Smart Elevator Innovation

The rapid urbanization of Southeast Asia, driven by growing populations and booming real estate markets, has positioned Otis Worldwide (OTIS) as a critical player in the region's infrastructure transformation. The company's advanced elevator and escalator systems—particularly its AI-integrated SkyRise and Gen3 technologies—are not only enabling the construction of record-breaking skyscrapers but also creating recurring revenue streams through long-term service contracts. As projects like Vietnam's 39-story The Kross near completion in 2026, investors are poised to benefit from a confluence of rising demand for smart buildings, energy-efficient infrastructure, and Otis' undervalued stock.

The Kross Project: A Showcase of Otis' High-Rise Tech Leadership

The Kross, a mixed-use tower in Ho Chi Minh City, epitomizes Otis' strategic advantages in Southeast Asia's urbanization boom. Equipped with 7 SkyRise® elevators and 9 Gen3™ systems, the project leverages Otis' cutting-edge solutions to address the unique challenges of high-rise construction:

• SkyRise® Technology: Designed for buildings over 500 meters, this system features double-deck elevators that maximize rentable space while reducing hoistway requirements. Its SkyMotion® 800 machine and ReGen® energy-efficient drives cut energy use by up to 70%, aligning with Vietnam's sustainability goals.
• Gen3™ AI Integration: These elevators use real-time monitoring and predictive maintenance to optimize traffic flow, reducing wait times by up to 50% during peak hours. The Compass® 360 destination management system dynamically groups passengers by floor, minimizing downtime and enhancing safety.

Tech-Driven Growth: Why Otis is Outpacing Competitors

Otis' advantage lies in its vertically integrated ecosystem, combining hardware innovation with software-driven services:

1. Predictive Maintenance as a Profit Engine:
   Otis' IoT-enabled systems generate data streams that predict equipment failures before they occur. For example, its 2023 predictive maintenance solution reduced elevator downtime by 50%, a feature now standard in projects like The Kross. This reduces operational costs for building owners while creating sticky, recurring revenue for Otis through multiyear service contracts.

1. AI-Enhanced Urban Mobility:
   Otis' Gen3 elevators and SkyRise systems are designed to integrate with smart-building platforms, enabling seamless connectivity with security systems, HVAC, and energy grids. In Singapore's upcoming Punggol Digital District or Thailand's Eastern Economic Corridor (EEC), such systems are becoming mandatory for green certifications.

2. Global Scale, Regional Focus:
   While competitors like KONE and ThyssenKrupp are expanding, Otis' early foothold in Southeast Asia—securing contracts for Malaysia's 68-story Dawn KLCC and Indonesia's Gen3 platform rollouts—gives it a first-mover advantage.

Valuation: A Stock Undervalued Ahead of Catalysts

Despite its strong fundamentals, Otis trades at a 18.5x forward P/E, below its five-year average and in line with peers like KONE (20x) and Mitsubishi Electric (22x). Key catalysts ahead include:

• The Kross Completion (2026): This project's 10-year maintenance contract (through 2028) will add ~$2M annually to Otis' service revenue.
• Rising Demand for Retrofitting: 60% of Southeast Asia's buildings are over 20 years old, creating opportunities for Otis' Gen3 retrofits, which cost 30% less than full replacements.

Risks and Mitigation

While labor shortages and supply chain delays remain risks, Otis' Bengaluru manufacturing hub (serving 19 countries) and long-term material agreements reduce exposure. Its 5-year backlog of $6.3B, including projects like the 69-story Westin Residences Penang Tower, provides visibility.

Investment Thesis: Buy Ahead of the Boom

Otis is a best-in-class play on urbanization and smart infrastructure, with a 20% upside potential over five years as Southeast Asia's elevator market grows at 3.87% CAGR to 46,579 units by 2030. Investors should consider adding OTIS to portfolios now, ahead of 2026's project milestones and the surge in maintenance revenue.

Recommendation:
- Buy OTIS at current levels, targeting a 12-month price target of $140 (based on 22x 2026E earnings).
- Hold for 5+ years to capture recurring service revenue and the tailwinds of regional urbanization.

As cities across Asia rise, Otis' smart elevators are the engines lifting profitability—and investor returns—to new heights.