Smartkarma Daily Briefs

• Since the US$260 million secondary placement announcement, Nippon Express Holdings (9147 JP) shares are down 5.3% from the undisturbed price of JPY8,039 per share (1 March).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Nippon Express shares have followed the pattern of previous large placements.
• The offering will likely be priced on 11 March. Investors who have participated in previous large Japanese placements tend to secure positive returns.

• COPRO-HOLDINGS. Co., Ltd., (COPRO) announced its 3Q FY24/3 (9 months) results.
• Key consolidated figures included net sales of ¥17,496 mn (+28.8% YoY), operating profit of ¥1,406 mn (+63.0% YoY), ordinary profit of ¥ 1,480 mn (+70.8% YoY), and profit attributable to owners of parent of ¥936 mn (+79.7% YoY).
• COPRO-CONSTRUCTION. Co., Ltd., (formerly COPRO-ENGINEERED), which operates the Company‘s core business of construction technician dispatching, proactively increased the number of recruits amid the chronically serious shortage of labor against the backdrop of regulations capping overtime work to start in April 2024 and big construction projects. 

• Shanghai Zhida Technology Development Co Ltd (SZTD HK) is looking to raise about US$130m in its upcoming Hong Kong IPO. Shenwan Hongyuan is the sole bookrunner.
• Shanghai Zhida Technology Development (SZTD) is a provider of electric vehicle (EV) home charging solutions.
• As per F&S, the firm was the world’s largest provider of EV home charging solutions in terms of sales volume of home EV chargers over its track record period.

• Plug Power’s Q4 earnings revealed both positive developments and challenges that the company faced during the quarter.
• Key highlights were its innovative green hydrogen projects and ongoing advancements in improving cash management, positively reflecting the company’s commitment towards a sustainable energy future.
• Plug Power’s most significant achievement during the Q4 period was the launch of their Georgia plant.

• The financial results were strong, as shown in the table below, and exceeded the company’s forecasts.
• The M&A Advisory Business was particularly strong in the 4Q, recovering from soft sales slightly down in the first 3 quarters, returning to 8% growth YoY in the 4Q.
• Sales by other main business segments remained firm, with the Management Consulting Business rising 17% YoY and the Revitalization Support Business up 174% YoY .

• The EMCOR Group reported an exceptional fourth quarter and a very strong 2023 overall.
• Revenue for the fourth quarter was $3.44 billion with an operating margin of 8.4%, significantly exceeding expectations and indicating 16.2% organic revenue growth.
• The total revenue for 2023 was $12.6 billion which demonstrates growth of 13.6% and was strictly organic in nature, with a 55% rise in operating income to $875.8 million for the year.

• kopi-C with BRC Asia’s CEO: “We’ve become the leader in Singapore’s reinforcing steel fabrication industry’” After becoming one of Singapore’s largest reinforcing steel fabricators through an acquisition, BRC Asia plans to extend its reach to other markets.
• Incorporated in 1938, BRC Asia Limited (“BRC”) is a leading Pan-Asia prefabricated reinforcing steel solutions provider headquartered in Singapore and listed on the Singapore Stock Exchange.

• Since the US$260 million secondary placement announcement, Nippon Express Holdings (9147 JP) shares are down 5.3% from the undisturbed price of JPY8,039 per share (1 March).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Nippon Express shares have followed the pattern of previous large placements.
• The offering will likely be priced on 11 March. Investors who have participated in previous large Japanese placements tend to secure positive returns.

• COPRO-HOLDINGS. Co., Ltd., (COPRO) announced its 3Q FY24/3 (9 months) results.
• Key consolidated figures included net sales of ¥17,496 mn (+28.8% YoY), operating profit of ¥1,406 mn (+63.0% YoY), ordinary profit of ¥ 1,480 mn (+70.8% YoY), and profit attributable to owners of parent of ¥936 mn (+79.7% YoY).
• COPRO-CONSTRUCTION. Co., Ltd., (formerly COPRO-ENGINEERED), which operates the Company‘s core business of construction technician dispatching, proactively increased the number of recruits amid the chronically serious shortage of labor against the backdrop of regulations capping overtime work to start in April 2024 and big construction projects. 

• Shanghai Zhida Technology Development Co Ltd (SZTD HK) is looking to raise about US$130m in its upcoming Hong Kong IPO. Shenwan Hongyuan is the sole bookrunner.
• Shanghai Zhida Technology Development (SZTD) is a provider of electric vehicle (EV) home charging solutions.
• As per F&S, the firm was the world’s largest provider of EV home charging solutions in terms of sales volume of home EV chargers over its track record period.

• Plug Power’s Q4 earnings revealed both positive developments and challenges that the company faced during the quarter.
• Key highlights were its innovative green hydrogen projects and ongoing advancements in improving cash management, positively reflecting the company’s commitment towards a sustainable energy future.
• Plug Power’s most significant achievement during the Q4 period was the launch of their Georgia plant.

• The financial results were strong, as shown in the table below, and exceeded the company’s forecasts.
• The M&A Advisory Business was particularly strong in the 4Q, recovering from soft sales slightly down in the first 3 quarters, returning to 8% growth YoY in the 4Q.
• Sales by other main business segments remained firm, with the Management Consulting Business rising 17% YoY and the Revitalization Support Business up 174% YoY .

• The EMCOR Group reported an exceptional fourth quarter and a very strong 2023 overall.
• Revenue for the fourth quarter was $3.44 billion with an operating margin of 8.4%, significantly exceeding expectations and indicating 16.2% organic revenue growth.
• The total revenue for 2023 was $12.6 billion which demonstrates growth of 13.6% and was strictly organic in nature, with a 55% rise in operating income to $875.8 million for the year.

• kopi-C with BRC Asia’s CEO: “We’ve become the leader in Singapore’s reinforcing steel fabrication industry’” After becoming one of Singapore’s largest reinforcing steel fabricators through an acquisition, BRC Asia plans to extend its reach to other markets.
• Incorporated in 1938, BRC Asia Limited (“BRC”) is a leading Pan-Asia prefabricated reinforcing steel solutions provider headquartered in Singapore and listed on the Singapore Stock Exchange.

• Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
• The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback. 
• Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.

• Our base case valuation of Angel Robotics is target price of 20,277 won per share, which represents a 35% upside from the high end of the IPO price range. 
• We estimate sales of 9 billion won in 2024 (up 75.2% YoY) and 14.9 billion won in 2025 (up 65.3% YoY). Our estimates are more conservative than the company’s estimates.
• We like the strong sales growth of Angel Robotics. Many investors are likely to view this positively in this IPO. LG Electronics and Samsung Electronics are customers of Angel Robotics. 

• Shanghai REFIRE Group (SRG) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunner for the deal is CICC.
• SRG designs, develops, manufactures, and sells hydrogen fuel cell systems, hydrogen production systems, and related components, as well as provides fuel cell engineering and technical services.
• According to Frost & Sullivan (F&S), it ranked first in the hydrogen fuel cell system market in China, with a market share of 25.9%.

• This is our first report on transportation and fintech platform provider, Grab Holdings Inc.
• The company had a pivotal year in 2023, delivering on key goals and achieving profitability in adjusted EBITDA since the third quarter and earning a positive net profit in the fourth quarter.
• The company experienced a series of enhancements, including a successful rebuild of their mobility business which had been vastly impacted by the pandemic.

• The 72.5% decline in SITC International (1308 HK)‘s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  
• Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
• Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.

• Trex Company, the outdoor living products manufacturer reported solid performance for both the quarter and full year 2023, surpassing their revenue guidance.
• The strong results were credited to its mid-single-digit channel sell-through growth and new product offerings, demonstrating the strength and resilience of the Trex brand.
• In the fourth quarter, the company introduced numerous products that expanded its portfolio in existing categories and extended into complementary adjacencies.

• In its recent results, Heico is showing a significant growth trajectory in its recent financial results.
• This growth can be attributed to a couple of key factors, but there are also a number of risks and potential downsides that investors should be aware of.
• In terms of positives, HEICO’s first quarter of fiscal 2024 showed dramatic improvement over the first quarter of fiscal 2023.

• According to Expansion, the Hungarian Ganz-MaVag Euroe Zrt consortium is giving final touches to the offer for Talgo SA (TLGO SM) after obtaining verbal approval from the lenders.
• The Minister of Transport assured that the Spanish Government will do everything possible to prevent the consortium from taking over Talgo due to hidden interests of the Viktor Órban Government.
• However, the Government would need to justify its decision thoroughly to avoid potential legal challenges. For now, I would remain in the sidelines due to uncertainties about development and timing.

Capita faced numerous cash drags in FY23, notably £20m in costs associated with a cyber incident, a £30m pension deficit contribution and a £20m increase in technology capex, which depressed the adjusted free cash outflow before disposals to £116m (£42.4m outflow in FY22). Despite these challenges, the implementation of a rigorous cost efficiency programme and the strategic divestment of non-core assets have the potential to fuel a turnaround. Some £160m of annualised cost savings are expected to be realised by mid-2025 (part reinvested for growth), aimed at bolstering a significant improvement in operating margins. As margins improve, shifting to faster-growing market segments with a more competitive cost base could catalyse a reduction in the valuation discount.

• Republic Services (RSG) had a strong finish to 2023 highlighting its successful strategy designed for business growth.
• The company’s revenue for the year grew by 11%, which includes a 5% increase from its acquisitions.
• RSG generated 13% adjusted EBITDA growth and margin expansion of 60 basis points, as well as reporting adjusted earnings per share of $5.61.

• Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
• The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback. 
• Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.

• Our base case valuation of Angel Robotics is target price of 20,277 won per share, which represents a 35% upside from the high end of the IPO price range. 
• We estimate sales of 9 billion won in 2024 (up 75.2% YoY) and 14.9 billion won in 2025 (up 65.3% YoY). Our estimates are more conservative than the company’s estimates.
• We like the strong sales growth of Angel Robotics. Many investors are likely to view this positively in this IPO. LG Electronics and Samsung Electronics are customers of Angel Robotics. 

• Shanghai REFIRE Group (SRG) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunner for the deal is CICC.
• SRG designs, develops, manufactures, and sells hydrogen fuel cell systems, hydrogen production systems, and related components, as well as provides fuel cell engineering and technical services.
• According to Frost & Sullivan (F&S), it ranked first in the hydrogen fuel cell system market in China, with a market share of 25.9%.

• This is our first report on transportation and fintech platform provider, Grab Holdings Inc.
• The company had a pivotal year in 2023, delivering on key goals and achieving profitability in adjusted EBITDA since the third quarter and earning a positive net profit in the fourth quarter.
• The company experienced a series of enhancements, including a successful rebuild of their mobility business which had been vastly impacted by the pandemic.

• The 72.5% decline in SITC International (1308 HK)‘s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  
• Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
• Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.

• Trex Company, the outdoor living products manufacturer reported solid performance for both the quarter and full year 2023, surpassing their revenue guidance.
• The strong results were credited to its mid-single-digit channel sell-through growth and new product offerings, demonstrating the strength and resilience of the Trex brand.
• In the fourth quarter, the company introduced numerous products that expanded its portfolio in existing categories and extended into complementary adjacencies.

• In its recent results, Heico is showing a significant growth trajectory in its recent financial results.
• This growth can be attributed to a couple of key factors, but there are also a number of risks and potential downsides that investors should be aware of.
• In terms of positives, HEICO’s first quarter of fiscal 2024 showed dramatic improvement over the first quarter of fiscal 2023.

• According to Expansion, the Hungarian Ganz-MaVag Euroe Zrt consortium is giving final touches to the offer for Talgo SA (TLGO SM) after obtaining verbal approval from the lenders.
• The Minister of Transport assured that the Spanish Government will do everything possible to prevent the consortium from taking over Talgo due to hidden interests of the Viktor Órban Government.
• However, the Government would need to justify its decision thoroughly to avoid potential legal challenges. For now, I would remain in the sidelines due to uncertainties about development and timing.

Capita faced numerous cash drags in FY23, notably £20m in costs associated with a cyber incident, a £30m pension deficit contribution and a £20m increase in technology capex, which depressed the adjusted free cash outflow before disposals to £116m (£42.4m outflow in FY22). Despite these challenges, the implementation of a rigorous cost efficiency programme and the strategic divestment of non-core assets have the potential to fuel a turnaround. Some £160m of annualised cost savings are expected to be realised by mid-2025 (part reinvested for growth), aimed at bolstering a significant improvement in operating margins. As margins improve, shifting to faster-growing market segments with a more competitive cost base could catalyse a reduction in the valuation discount.

• Republic Services (RSG) had a strong finish to 2023 highlighting its successful strategy designed for business growth.
• The company’s revenue for the year grew by 11%, which includes a 5% increase from its acquisitions.
• RSG generated 13% adjusted EBITDA growth and margin expansion of 60 basis points, as well as reporting adjusted earnings per share of $5.61.