Industrials

• MBK Partners plans to launch a tender offer for Makino Milling Machine (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership. 
• The key long-term investment case for Makino is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated.
• One could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final. 

• Keisei’s OLC stake distorts valuation optics, but is already transparently priced by the market.
• Activist criticism over “true” ROE reflects accounting semantics, not hidden inefficiency.
• Core business plus OLC stake offers modest returns; upside exists, but hardly suggestive of chronic long-term underperformance

• Over FY22–FY25, HAL’s revenue grew at a CAGR of ~8%, while PAT rose at ~15% CAGR, with the order book doubling to ₹1.89 lakh Cr, providing LT visibility.
• India’s defence indigenization drive, large platform rollouts (LCA Mk1A, LUH, AMCA, engines), positions HAL to address a Rs3–4 lakh Cr opportunity over the next 5–10 years, including exports.
• Despite strong earnings growth, zero debt, and long-term JV upside (e.g., Safran engine), HAL trades at a P/E of ~33–38×, below many peers, indicating room for re-rating.

• MBK Partners plans to launch a tender offer for Makino Milling Machine (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership. 
• The key long-term investment case for Makino is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated.
• One could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final. 

• Keisei’s OLC stake distorts valuation optics, but is already transparently priced by the market.
• Activist criticism over “true” ROE reflects accounting semantics, not hidden inefficiency.
• Core business plus OLC stake offers modest returns; upside exists, but hardly suggestive of chronic long-term underperformance

• Over FY22–FY25, HAL’s revenue grew at a CAGR of ~8%, while PAT rose at ~15% CAGR, with the order book doubling to ₹1.89 lakh Cr, providing LT visibility.
• India’s defence indigenization drive, large platform rollouts (LCA Mk1A, LUH, AMCA, engines), positions HAL to address a Rs3–4 lakh Cr opportunity over the next 5–10 years, including exports.
• Despite strong earnings growth, zero debt, and long-term JV upside (e.g., Safran engine), HAL trades at a P/E of ~33–38×, below many peers, indicating room for re-rating.

• MBK Partners plans to launch a tender offer for Makino Milling Machine (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership. 
• The key long-term investment case for Makino is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated.
• One could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final. 

• Keisei’s OLC stake distorts valuation optics, but is already transparently priced by the market.
• Activist criticism over “true” ROE reflects accounting semantics, not hidden inefficiency.
• Core business plus OLC stake offers modest returns; upside exists, but hardly suggestive of chronic long-term underperformance

• Over FY22–FY25, HAL’s revenue grew at a CAGR of ~8%, while PAT rose at ~15% CAGR, with the order book doubling to ₹1.89 lakh Cr, providing LT visibility.
• India’s defence indigenization drive, large platform rollouts (LCA Mk1A, LUH, AMCA, engines), positions HAL to address a Rs3–4 lakh Cr opportunity over the next 5–10 years, including exports.
• Despite strong earnings growth, zero debt, and long-term JV upside (e.g., Safran engine), HAL trades at a P/E of ~33–38×, below many peers, indicating room for re-rating.

• Bain Capital is looking to raise around US$440m via selling some of its stake in Virgin Australia Holdings (VAH AU).
• Virgin Australia is the second largest airline group operating in the Australian aviation market, with an average 32% domestic RPT capacity market share in CY24.
• In this note, we look at the company’s past performance and provide our thoughts on valuations.

• NAVA’s net profit doubled from ₹536 Cr in FY23 to ₹1,091 Cr in FY25, driven by strong power and mining earnings.
• Maamba Phase II will double Zambian power capacity to 600 MW by FY27 with $400M investment. Zambia agri projects in avocado and sugar aim for diversified, steady revenue from FY27.
• NAVA has become debt-free, strengthening its balance sheet. Improved credit ratings reflect steady profits, healthy cash flows, and low debt risk.

• The company is expanding into EV motors, precision plastics, and exports to over 45 countries worldwide
• SPRL reported  Rs 36,612 million total income in FY25, with 15.3% YoY growth and a 22.8% EBITDA margin
• SPRL balances legacy ICE products with new EV, plastics, and non-auto segments for resilient growth

• Kilburn Engineering (KEL IN) achieved highest-ever standalone/consolidated revenue and EBITDA, completed two strategic acquisitions (ME Energy, Monga Strayfield), and secured record orders, particularly entering the Nuclear sector.
• The performance validates the company’s strategy of diversification and inorganic growth, providing strong visibility for future revenue with 50% growth target for FY26 .
• The strong execution, robust order book, and confident management guidance reinforce a positive outlook, suggesting significant growth potential building on recent strategic moves.

• Venus Pipes is a growing stainless-steel pipes and tubes manufacturer and exporter in India having over nine years of experience in manufacturing of stainless-steel tubular products. 
• With respect to forensics, we highlight several takeaways including steep increase in inventory days funded by creditors, expensive capex compared to peers, etc. 
• Weak governance practices are identified with respect to warrant issuance and non-disclosure of information on several fronts.

• In this edition: • dsm-firmenich | completes sale of its stake in Feed Enzymes Alliance • Arcadis | awarded digital asset management contract with the City of Calgary • Fugro | awarded major order to perform a site characterisation programme for a deepwater gas field development in Southeast Asia • Dutch CPI | consumer prices increased by 3.3% YoY in May, down from 4.1% in April • Dutch politics | coalition government may fall later today

Braemar has successfully grown underlying group revenue by c 10% per year since 2013 and the new growth strategy outlines initiatives and targets that are designed to continue top-line growth and improve the margin, such that operating profit is expected to almost double by 2030. This strategy is likely to see investment in new hires and/or M&A, which may be funded by short-term debt. Despite the growth targets, the company has guided to lower profits in FY26e due to external issues, but the fundamentals remain in place, and we expect a return to growth in FY27e. Accordingly, our short-term profit estimates are reduced, as is our valuation, from 535p to 462p, but this still offers c 100% upside.

• Bain Capital is looking to raise around US$440m via selling some of its stake in Virgin Australia Holdings (VAH AU).
• Virgin Australia is the second largest airline group operating in the Australian aviation market, with an average 32% domestic RPT capacity market share in CY24.
• In this note, we look at the company’s past performance and provide our thoughts on valuations.

• NAVA’s net profit doubled from ₹536 Cr in FY23 to ₹1,091 Cr in FY25, driven by strong power and mining earnings.
• Maamba Phase II will double Zambian power capacity to 600 MW by FY27 with $400M investment. Zambia agri projects in avocado and sugar aim for diversified, steady revenue from FY27.
• NAVA has become debt-free, strengthening its balance sheet. Improved credit ratings reflect steady profits, healthy cash flows, and low debt risk.

• The company is expanding into EV motors, precision plastics, and exports to over 45 countries worldwide
• SPRL reported  Rs 36,612 million total income in FY25, with 15.3% YoY growth and a 22.8% EBITDA margin
• SPRL balances legacy ICE products with new EV, plastics, and non-auto segments for resilient growth

• Kilburn Engineering (KEL IN) achieved highest-ever standalone/consolidated revenue and EBITDA, completed two strategic acquisitions (ME Energy, Monga Strayfield), and secured record orders, particularly entering the Nuclear sector.
• The performance validates the company’s strategy of diversification and inorganic growth, providing strong visibility for future revenue with 50% growth target for FY26 .
• The strong execution, robust order book, and confident management guidance reinforce a positive outlook, suggesting significant growth potential building on recent strategic moves.

• Venus Pipes is a growing stainless-steel pipes and tubes manufacturer and exporter in India having over nine years of experience in manufacturing of stainless-steel tubular products. 
• With respect to forensics, we highlight several takeaways including steep increase in inventory days funded by creditors, expensive capex compared to peers, etc. 
• Weak governance practices are identified with respect to warrant issuance and non-disclosure of information on several fronts.

• In this edition: • dsm-firmenich | completes sale of its stake in Feed Enzymes Alliance • Arcadis | awarded digital asset management contract with the City of Calgary • Fugro | awarded major order to perform a site characterisation programme for a deepwater gas field development in Southeast Asia • Dutch CPI | consumer prices increased by 3.3% YoY in May, down from 4.1% in April • Dutch politics | coalition government may fall later today

Braemar has successfully grown underlying group revenue by c 10% per year since 2013 and the new growth strategy outlines initiatives and targets that are designed to continue top-line growth and improve the margin, such that operating profit is expected to almost double by 2030. This strategy is likely to see investment in new hires and/or M&A, which may be funded by short-term debt. Despite the growth targets, the company has guided to lower profits in FY26e due to external issues, but the fundamentals remain in place, and we expect a return to growth in FY27e. Accordingly, our short-term profit estimates are reduced, as is our valuation, from 535p to 462p, but this still offers c 100% upside.

• There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
• We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
• Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).

• Makino Milling Machine Co (6135 JP) announced a preconditional tender offer from MBK Partners at JPY11,751, a 4.8% premium to last close and a 6.8% premium to Nidec’s withdrawn JPY11,000 offer.
• The offer is broadly in line with the midpoint of the IFA DCF valuation range. The tender offer is expected to commence in early December.
• Despite the offer resulting from an auction, there remains a medium probability that Nidec Corp (6594 JP) or a spurned white knight bidder (Candidate A) emerges with a higher offer.

• Jardine Matheson (JM SP)‘s 77.8%-held DFI Retail Group (DFI SP) has sold its entire 22.2% stake in Robinsons Retail Holdings (RRHI PM) for ~US$283mn to “support its capital allocation strategy“.
• Preceding my comments on Matheson are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Wuxi Lead Intelligent Equipmen (300450 CH)  aims to raise around US$400m in its H-share listing.
• WLIE is a global platform-based intelligent equipment enterprise, offering intelligent equipment and solutions to a wide range of emerging and high-end manufacturing industries.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• Action Construction Equipment (ACCE IN) achieved record revenue and profits in FY25 and Q4, demonstrating strong execution and margin expansion.  
• Secured single largest order from Ministry of Defence, boosting future defense contribution and supporting Make in India.
• Management is cautiously optimistic for FY26 due to temporary factors like BS5 price impact, but confident in medium to long-term growth prospects.

• There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
• We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
• Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).

• Makino Milling Machine Co (6135 JP) announced a preconditional tender offer from MBK Partners at JPY11,751, a 4.8% premium to last close and a 6.8% premium to Nidec’s withdrawn JPY11,000 offer.
• The offer is broadly in line with the midpoint of the IFA DCF valuation range. The tender offer is expected to commence in early December.
• Despite the offer resulting from an auction, there remains a medium probability that Nidec Corp (6594 JP) or a spurned white knight bidder (Candidate A) emerges with a higher offer.

• Jardine Matheson (JM SP)‘s 77.8%-held DFI Retail Group (DFI SP) has sold its entire 22.2% stake in Robinsons Retail Holdings (RRHI PM) for ~US$283mn to “support its capital allocation strategy“.
• Preceding my comments on Matheson are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Wuxi Lead Intelligent Equipmen (300450 CH)  aims to raise around US$400m in its H-share listing.
• WLIE is a global platform-based intelligent equipment enterprise, offering intelligent equipment and solutions to a wide range of emerging and high-end manufacturing industries.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• Action Construction Equipment (ACCE IN) achieved record revenue and profits in FY25 and Q4, demonstrating strong execution and margin expansion.  
• Secured single largest order from Ministry of Defence, boosting future defense contribution and supporting Make in India.
• Management is cautiously optimistic for FY26 due to temporary factors like BS5 price impact, but confident in medium to long-term growth prospects.

• Pasona Group (2168 JP) is a “value stock.” It has loads of cash (but less than you think) and significant ongoing governance issues, but they are doing a TINY buyback. 
• Several weeks ago we got an announcement which was odd. Not completely odd, just odd. Now in the past week we have market activity/announcements which make one wonder. 
• This piece attempts to interpret some of the recent data/info points. One is odd. Another is odd but meaningful (but different than people think). A third is just technical. 

• The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 363bn (US$12.1bn).
• Following a change in methodology, there could be 16 adds and 6 deletes in June with an estimated one-way turnover of 39% and a round-trip trade of US$9bn.
• We expect the adds to outperform the deletes over the next few days, following which reversion could set in.

• There has been an increasing speculation of HD Hyundai increasing its stake in HD Korea Shipbuilding & Offshore Engineering (HD KSOE) in 2025. 
• There are two main reasons why HD Hyundai could increase its stake in HD KSOE. 
• They include HD KSOE contributing higher percentage of dividend income and continued full-fledged recovery of the operating profits of the HD HHI and HD Hyundai Mipo. 

• The recent earnings of Grab Holdings Limited for the first quarter of 2025 presented a mixed picture of the company’s performance and strategic outlook.
• On the positive side, Grab reported robust growth, with a 17% year-over-year increase in on-demand Gross Merchandise Value (GMV) and a record number of monthly transacting users.
• This growth translated into another quarter of record revenues.

• Listed companies trading below 0.8x P/B may be taxed like unlisted ones—based on book value, with a floor set at 80% of NAV regardless of calculated valuation.
• Momentum is spreading beyond holdcos, with local desks eyeing low-PBR, high treasury share names. Attached is an Excel with Q1 PBRs and Q4 treasury ratios for all listed stocks.
• We could target direct succession names like SK Inc. or go broader, screening by treasury share % and P/B discount—likely the preferred route given Korea’s post-election momentum playbook.

• This insight provides an update on the inheritance tax payment requirement by the Samsung Electronics Chairman Lee Jae-Yong and his family members. 
• Lee Jae-Yong has a final installment of 480 billion won in inheritance taxes to be paid in April 2026.
• Once Lee makes the final inheritance tax payment next year, he can start to  reinvest his dividend income in various Samsung Group affiliates including Samsung C&T.

• Fortive (FTV) will spin off 100% of Ralliant on June 28, 2025.

• Ralliant will trade under the ticker RAL. When issued trading will begin on June 25th. Ralliant will host an investor day on June 10, 2025.

• Ralliant (Precision Technologies) will be a $2.2B revenue company (2024) focused on Test & Measurement and Sensors & Safety Systems.

• Vesuvius India has a strong track record of double-digit revenue and profit growth, supported by robust return ratios like 32% ROCE and a debt-free balance sheet.
• With ongoing capacity expansions and rising contribution to the parent’s revenue and EBITDA, India is now a key growth engine for the group.
• Despite premium valuations, the company’s execution strength and industry tailwinds make it a compelling long-term play.

• Voyager Technologies will be offering 11 million shares at a $26-$29 range equating to a $1.4b-$1.65b valuation.
• The deal is anticipated to price on Tuesday (6/10) for a Wednesday (6/11) debut on the Nasdaq.
• Janus Henderson Investors and Wellington Management have indicated an interest in purchasing up to an aggregate of $60 million in shares of Class A common stock.

• The first-quarter 2025 earnings report for Old Dominion Freight Line presents a nuanced picture reflecting both achievements and challenges rooted in the prevailing economic environment and strategic corporate decisions.
• During the period, Old Dominion faced a 5.8% year-over-year decrease in revenue, totaling $1.37 billion.
• This decline was primarily attributed to a 6.3% drop in less-than-truckload (LTL) tons per day, slightly offset by a 2.2% increase in LTL revenue per hundredweight.

• Pasona Group (2168 JP) is a “value stock.” It has loads of cash (but less than you think) and significant ongoing governance issues, but they are doing a TINY buyback. 
• Several weeks ago we got an announcement which was odd. Not completely odd, just odd. Now in the past week we have market activity/announcements which make one wonder. 
• This piece attempts to interpret some of the recent data/info points. One is odd. Another is odd but meaningful (but different than people think). A third is just technical. 

• The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 363bn (US$12.1bn).
• Following a change in methodology, there could be 16 adds and 6 deletes in June with an estimated one-way turnover of 39% and a round-trip trade of US$9bn.
• We expect the adds to outperform the deletes over the next few days, following which reversion could set in.

• There has been an increasing speculation of HD Hyundai increasing its stake in HD Korea Shipbuilding & Offshore Engineering (HD KSOE) in 2025. 
• There are two main reasons why HD Hyundai could increase its stake in HD KSOE. 
• They include HD KSOE contributing higher percentage of dividend income and continued full-fledged recovery of the operating profits of the HD HHI and HD Hyundai Mipo. 

• The recent earnings of Grab Holdings Limited for the first quarter of 2025 presented a mixed picture of the company’s performance and strategic outlook.
• On the positive side, Grab reported robust growth, with a 17% year-over-year increase in on-demand Gross Merchandise Value (GMV) and a record number of monthly transacting users.
• This growth translated into another quarter of record revenues.

• Listed companies trading below 0.8x P/B may be taxed like unlisted ones—based on book value, with a floor set at 80% of NAV regardless of calculated valuation.
• Momentum is spreading beyond holdcos, with local desks eyeing low-PBR, high treasury share names. Attached is an Excel with Q1 PBRs and Q4 treasury ratios for all listed stocks.
• We could target direct succession names like SK Inc. or go broader, screening by treasury share % and P/B discount—likely the preferred route given Korea’s post-election momentum playbook.

• This insight provides an update on the inheritance tax payment requirement by the Samsung Electronics Chairman Lee Jae-Yong and his family members. 
• Lee Jae-Yong has a final installment of 480 billion won in inheritance taxes to be paid in April 2026.
• Once Lee makes the final inheritance tax payment next year, he can start to  reinvest his dividend income in various Samsung Group affiliates including Samsung C&T.

• Fortive (FTV) will spin off 100% of Ralliant on June 28, 2025.

• Ralliant will trade under the ticker RAL. When issued trading will begin on June 25th. Ralliant will host an investor day on June 10, 2025.

• Ralliant (Precision Technologies) will be a $2.2B revenue company (2024) focused on Test & Measurement and Sensors & Safety Systems.

• Vesuvius India has a strong track record of double-digit revenue and profit growth, supported by robust return ratios like 32% ROCE and a debt-free balance sheet.
• With ongoing capacity expansions and rising contribution to the parent’s revenue and EBITDA, India is now a key growth engine for the group.
• Despite premium valuations, the company’s execution strength and industry tailwinds make it a compelling long-term play.

• Voyager Technologies will be offering 11 million shares at a $26-$29 range equating to a $1.4b-$1.65b valuation.
• The deal is anticipated to price on Tuesday (6/10) for a Wednesday (6/11) debut on the Nasdaq.
• Janus Henderson Investors and Wellington Management have indicated an interest in purchasing up to an aggregate of $60 million in shares of Class A common stock.

• The first-quarter 2025 earnings report for Old Dominion Freight Line presents a nuanced picture reflecting both achievements and challenges rooted in the prevailing economic environment and strategic corporate decisions.
• During the period, Old Dominion faced a 5.8% year-over-year decrease in revenue, totaling $1.37 billion.
• This decline was primarily attributed to a 6.3% drop in less-than-truckload (LTL) tons per day, slightly offset by a 2.2% increase in LTL revenue per hundredweight.

• The June 2025 index review results for China’s CSI 1000 index were announced after market close on Friday 30th May 2025.
• There will be 100 ADDs/DELs for CSI 1000 in the June 2025 rebalance.
• The CSI 1000 index rebal event could trigger US$2.2bn in one-way flow.

• Aegis Vopak Terminals Ltd (1902844D IN) raised about US$328m in its upcoming India IPO.
• It is the largest Indian third-party owner and operator (in terms of storage capacity) of tank storage terminals for liquified petroleum gas (LPG) and liquid products.
• In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we talk about the trading dynamics.

• Deere & Company’s latest earnings report highlights both accomplishments and challenges in a complex market environment marked by global uncertainties and macroeconomic pressures.
• The company’s second quarter performance exceeded expectations, with a commendable 18.8% margin for equipment operations amidst significant headwinds, including heightened tariff impacts and global trade volatility.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Elbit Systems’ financial results for the first quarter of 2025 displayed strong growth and stable operational performance, continuing a trend from the past few quarters.
• The company reported revenues of $1.896 billion, marking a significant increase from $1.554 billion for the same quarter in 2024.
• This growth reflects a substantial demand across key markets, with Europe, North America, Asia Pacific, and Israel contributing 24%, 21%, 18%, and 32% of revenues, respectively.