Smartkarma Daily Briefs

• An undisclosed seller is looking to raise around US$520m via selling 0.5% of its stake in Recruit Holdings (6098 JP) .
• We have covered a number of placements in the stock over the past few years, most of which have ended up doing well.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• To avoid a political landmine, on the 4th March CK Hutchison Holdings (1 HK)  announced a deal with Blackrock to offload its entire port ops, including the contentious Panama ports.
• It’s an astute deal selling to a buyer, ostensibly backed by the Trump administration, at the top of the market, knowing global trade could fall under a new tariff regime.
• The risk to the transaction is one of timing. US/Panama approvals are a shoo-in. But it’s a complex deal, which will take time to work through the system.

• With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
• We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
• The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.

• The street suspects NPS is fast-tracking its reference portfolio in local equities, not just rebalancing to cover last year’s underweight in its Q1 2025 adjustment.
• The passive-to-active shift is on—starting with enhanced passive, then an early ramp into event-driven and high-conviction active plays.
• We traders should expect outsized swings in leaders and restructuring plays as NPS flows amplify moves.

• In this insight, we discuss a new catalyst on the share price of LS Corp (006260 KS) which is the purchase of its shares by the Hoban Group. 
• Hoban Group has recently purchased shares of LS Corp. Although the exact percentage of shares has yet to be made public, it is estimated to be less than 3%. 
• LS Corp could improve shareholder returns. Plus, the ongoing litigation between Taihan Electric Wire and LS Cable may be the real reason why Hoban decided to invest in LS Corp. 

FY24 was a transformative year for Capita Group. With a new CEO and CFO, the company made good progress on its ‘Better Capita’ strategy. Capita is at the forefront of the significant opportunity arising from leveraging modern technologies, such as AI, to improve operational efficiencies, scalability and profits. During FY24 Capita began leveraging leading hyperscalers within AI, enabling it to lead the shift to a ‘service-as-software’ business model, redefining the support services industry. Capita also delivered £140m of annualised cost savings through its accelerated cost reduction strategy in 2024, to create better efficiencies across the wider group. Management confirmed in December 2024 that it had increased its total cost reduction target to £250m by end-December 2025, up from £160m by end-June 2025 previously, primarily driven by increases in the use of AI and generative AI, fundamentally improving its operating model.

Melrose continues to build on its track record of delivering to expectations. Indeed the Engines division has achieved FY25 target returns a year early. This provides confidence in management’s new medium-term guidance (to FY29): a minimum EPS CAGR of 20% and acceleration to £600m of annual free cash flow, benefiting from the maturing of the risk and revenue sharing partnerships (RRSPs). With further potential from additional military spend not factored in, the shares offer interesting value.

GlobalData’s results were as flagged, with the first year of its transformation plan setting the foundations for management’s goal of £500m of annualised revenue by end 2026. To get there it has to accelerate from its underlying 4% revenue growth rate to at least high single digits. It plans to do this by leveraging its platform with ever-greater customer focus and increasing use of AI, already well embedded, alongside continuing M&A. The Inflexion deal has given the financial resource, with a year-end net cash balance of £10m. The dividend has been rebased to reflect the transformation plan priorities, with a further £50m share buyback announced for the current year. GlobalData is planning to transition across to LSE’s Main Market, allowing investment from a broader cohort of potential shareholders.

ADS-TEC reported record revenue, albeit below previous guidance, despite 2024 being a more challenging period for EVs and associated infrastructure-related companies and some revenue deferrals into FY25. Strategic progress has laid the foundation for some potentially significant roll-out programmes. In addition, the company has announced plans to develop longer-term, more stable business revenues through value-added services, aimed at helping customers operate their infrastructure and maximise commercial potential. We will update our forecasts on publication of the detailed FY24 results.

Metlen’s FY24 results are scheduled for release on 20 February. We are expecting the conference call discussion to focus on the medium-term growth outlook, given the company’s recent announcement of an additional €300m investment in bauxite, alumina and gallium production, as well as its progress towards a listing on the London Stock Exchange (expected in H225).

• An undisclosed seller is looking to raise around US$520m via selling 0.5% of its stake in Recruit Holdings (6098 JP) .
• We have covered a number of placements in the stock over the past few years, most of which have ended up doing well.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• To avoid a political landmine, on the 4th March CK Hutchison Holdings (1 HK)  announced a deal with Blackrock to offload its entire port ops, including the contentious Panama ports.
• It’s an astute deal selling to a buyer, ostensibly backed by the Trump administration, at the top of the market, knowing global trade could fall under a new tariff regime.
• The risk to the transaction is one of timing. US/Panama approvals are a shoo-in. But it’s a complex deal, which will take time to work through the system.

• With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
• We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
• The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.

• The street suspects NPS is fast-tracking its reference portfolio in local equities, not just rebalancing to cover last year’s underweight in its Q1 2025 adjustment.
• The passive-to-active shift is on—starting with enhanced passive, then an early ramp into event-driven and high-conviction active plays.
• We traders should expect outsized swings in leaders and restructuring plays as NPS flows amplify moves.

• In this insight, we discuss a new catalyst on the share price of LS Corp (006260 KS) which is the purchase of its shares by the Hoban Group. 
• Hoban Group has recently purchased shares of LS Corp. Although the exact percentage of shares has yet to be made public, it is estimated to be less than 3%. 
• LS Corp could improve shareholder returns. Plus, the ongoing litigation between Taihan Electric Wire and LS Cable may be the real reason why Hoban decided to invest in LS Corp. 

FY24 was a transformative year for Capita Group. With a new CEO and CFO, the company made good progress on its ‘Better Capita’ strategy. Capita is at the forefront of the significant opportunity arising from leveraging modern technologies, such as AI, to improve operational efficiencies, scalability and profits. During FY24 Capita began leveraging leading hyperscalers within AI, enabling it to lead the shift to a ‘service-as-software’ business model, redefining the support services industry. Capita also delivered £140m of annualised cost savings through its accelerated cost reduction strategy in 2024, to create better efficiencies across the wider group. Management confirmed in December 2024 that it had increased its total cost reduction target to £250m by end-December 2025, up from £160m by end-June 2025 previously, primarily driven by increases in the use of AI and generative AI, fundamentally improving its operating model.

Melrose continues to build on its track record of delivering to expectations. Indeed the Engines division has achieved FY25 target returns a year early. This provides confidence in management’s new medium-term guidance (to FY29): a minimum EPS CAGR of 20% and acceleration to £600m of annual free cash flow, benefiting from the maturing of the risk and revenue sharing partnerships (RRSPs). With further potential from additional military spend not factored in, the shares offer interesting value.

GlobalData’s results were as flagged, with the first year of its transformation plan setting the foundations for management’s goal of £500m of annualised revenue by end 2026. To get there it has to accelerate from its underlying 4% revenue growth rate to at least high single digits. It plans to do this by leveraging its platform with ever-greater customer focus and increasing use of AI, already well embedded, alongside continuing M&A. The Inflexion deal has given the financial resource, with a year-end net cash balance of £10m. The dividend has been rebased to reflect the transformation plan priorities, with a further £50m share buyback announced for the current year. GlobalData is planning to transition across to LSE’s Main Market, allowing investment from a broader cohort of potential shareholders.

ADS-TEC reported record revenue, albeit below previous guidance, despite 2024 being a more challenging period for EVs and associated infrastructure-related companies and some revenue deferrals into FY25. Strategic progress has laid the foundation for some potentially significant roll-out programmes. In addition, the company has announced plans to develop longer-term, more stable business revenues through value-added services, aimed at helping customers operate their infrastructure and maximise commercial potential. We will update our forecasts on publication of the detailed FY24 results.

Metlen’s FY24 results are scheduled for release on 20 February. We are expecting the conference call discussion to focus on the medium-term growth outlook, given the company’s recent announcement of an additional €300m investment in bauxite, alumina and gallium production, as well as its progress towards a listing on the London Stock Exchange (expected in H225).