Daily Brief Industrials: Hitachi Energy India, Bodycote, Cleanaway Waste Management, Toppan Printing, Hai Robotics, Arcadis NV, Intloop , ISDN, LanzaTech Global and more

• Since the last reshuffle (August 11), our Model Portfolio has appreciated 1.18%, against MXASJ’s 0.92% advance. Since inception on May 15, 2025, our portfolio is up 44.9%, against MXASJ’s 45.8%.
• The main drivers of our portfolio were Korea (contributed 2.77% return) and Taiwan (0.34%). The returns were dragged down by China (-1.14%) and India (-0.66%).
• We exclude Reliance Industries and include Hitachi Energy, reaffirming our preference for Indian industrials. Our overweight on HK/China, Korea, India and underweight on Taiwan (but preference for Taiwan technology) continues.

• Veritas’s recommended 940p offer provides the floor, while CVC remains a potential competing bidder after previously reaching 915p and completing confirmatory due diligence.
• Our LBO supports CVC’s 915p proposal under base-case assumptions; 975–1,000p requires a lower sponsor return, higher leverage or stronger exit valuation.
• At 963.5p, Bodycote trades above our 958p probability-weighted value, with the market already pricing a meaningful probability of a higher offer.

• The EQT Infrastructure proposal of A$3.13 per share (implying a A$9.4 billion enterprise value) represents a rich implied FY26 EBIT multiple of approximately 20x, which is a significant premium over historical Australian waste transactions that typically top out at 9x to 12x EBITDA for high-quality, scaled integrated platforms. However, activist shareholder Tanarra Capital (holding over 4% of Cleanaway) is opposing the board’s cooperative stance, claiming the valuation undervalues the company’s long-term infrastructure scarcity.
• Regulatory enforcement is becoming a major headwind for margins, exemplified by a A$27.5 million provision booked in July 2026. This provision followed a Victorian Supreme Court ruling that categorized quarry materials used as daily landfill cover at the Melbourne Regional Landfill (MRL) as “waste,” rendering them retroactively subject to the landfill levy. This decision significantly expands the legal definition of waste and exposes landfill operators to retroactive levy audits.
• Municipal collections remain a low-margin operational trap due to structural inflation in fleet maintenance and labor, which is governed by rigid Enterprise Agreements (EAs). While Cleanaway can pass through some of these costs, lag times in municipal price-escalation clauses create margin compression. Consequently, the company is shifting its capital allocation toward high-margin specialized segments, such as the A$377 million acquisition of Contract Resources in July 2025.

• Toppan Printing (7911 JP) is accelerating its strategic transformation from a conventional domestic printing house into a global high-value technology and packaging leader, driven by its high-margin Electronics segment (semiconductor photomasks and FC-BGA packaging materials) and proprietary GL Barrier sustainable packaging solutions.
• Financial performance over the past three years highlights steady top-line growth, with net sales reaching JPY 1,805.0B in FY2026 (a 3.27% 3-year CAGR), though ongoing aggressive capital expenditures in next-generation semiconductor lithography and overseas barrier capacity have temporarily suppressed Free Cash Flow (-JPY 42.7B in FY2026).
• Enhanced corporate governance reforms and Tokyo Stock Exchange capital efficiency mandates provide a powerful re-rating catalyst, as management actively divests strategic cross-shareholdings, enhances dividend distributions (JPY 58-60/share range), and optimizes ROE toward double-digit targets.

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• Hai Robotics, a warehouse picking robot solution provider, has filed its prospectus with the HKEX. GS and CITIC are the joint sponsors.
• We look at the company’s core segments: the distribution domain and the manufacturing domain.
• We then look at the company’s financial profile, loss-making status, pre-IPO valuation and investor backing.

• In this edition: • Arcadis | foundations circle the wagons as WSP deadline approaches • Ferrari Group | resilient 1H26; FY26 guidance range tightened • Kendrion | raises 2027-30 targets on secular industrial growth • Allegro | raises FY26 guidance following continued strong momentum in 3Q26

• Veritas Capital’s recommended offer of 940p per share implies an EV/EBITDA multiple of approximately 10.6x, which requires highly aggressive margin assumptions to meet typical private equity return thresholds. The underwriting relies on expanding the group-wide operating margin from 16.0% in H1 2026 to above 20.0% by 2028, driven by the expansion of Specialist Technologies and the realization of the remaining £15.0 million run-rate savings from the Optimise programme.
• The transaction will likely be executed via a Scheme of Arrangement under the UK Companies Act 2006, but significant minority concentration poses a blocking risk. Institutional shareholders Artemis and Fidelity collectively control over 20.0% of the register. If they hold out for a higher bid from CVC, Veritas may be forced to switch to a contractual Takeover Offer, lowering the execution threshold to a simple majority to secure control, though this complicates a full squeeze-out and delisting.
• Regulatory clearance under the UK National Security and Investment (NSI) Act 2021 is a critical hurdle rather than a rubber-stamp exercise. Bodycote’s heat treatment and Hot Isostatic Pressing (HIP) services are deeply embedded in mission-critical civil and military aerospace programs (e.g., F-35 joint strike fighter). While Veritas’ US-centric, defense-heavy portfolio is structurally aligned with Western security requirements, foreign ownership of sovereign metallurgical capability will trigger a detailed phase 1 review.

• To unlock earnings growth YoY – Q1-4 FY7/26 results were in line with guidance, with gross margin expansion YoY evident as management concentrated on winning work with higher pricing and improved profitability.
• With delivery capacity significantly expanded through senior hires, we believe the focus is now shifting toward raising utilization and deploying resources into higher-value-added projects, which will improve the sales mix and operating leverage.
• Continued investment in M&A, including the increased stake in DICS Holdings and acquisition of UNDERWORKS, is broadening sector exposure and service capabilities. 

• Retail investors net bought S$888 million of Singapore stocks, increasing 2026 net retail inflow from S$3.13 billion to S$4.02 billion.
• ISDN Holdings recorded the highest net retail inflow relative to market capitalisation, despite a 12.8% share price decline.
• REITs, SingPost, ComfortDelGro, and SATS were among top stocks for net retail buying relative to market capitalisation.