In today’s briefing:
- Canvest (1381 HK): Precondition Satisfied
- DN Solutions IPO: Index Inclusion Timing Depends on Lock-Up Expiry Schedule
- DN Solutions IPO: OC’s Out, but the Hit-And-Run Setup Post-Listing Is Still in Play
- StubWorld: Matheson Looks Stretched
- SATS: Integrating WFS –Key to Acquisition Success
- Tokyo Electron (8035 JP): Buy if You’re Not Afraid of Recession
- Arwana Citramulia (ARNA IJ) – Rectifying and Enlarging
- Verisk Analytics: A Value-Driven Pricing Strategy In Play But Is It Working?
- CBAT: Reasons for optimism are on the horizon as the company discusses new expansion plans.
- Sustainable Investing Surveyor: Focus on Electrovaya, Inc. (ELVA)
Canvest (1381 HK): Precondition Satisfied
- Grandblue Environment Co A (600323 CH) has satisfied the precondition related to its privatisation offer for Canvest Environmental Protection Group (1381 HK).
- The offer remains attractive despite the re-rating of peers since announcing the deal. The vote risk is low as the two shareholders holding blocking stakes will be supportive.
- This is a done deal. At the last close, the gross/annualised spread for a mid-June payment is 3.8%/13.0%.
DN Solutions IPO: Index Inclusion Timing Depends on Lock-Up Expiry Schedule
- DN Solutions (298440 KS) is looking to raise up to KRW 1,573bn (US$1.08bn), valuing the company at KRW 5.66 trillion (US$3.9bn) at the top end of the IPO price range.
- The highest probability of DN Solutions being added to the KOSPI200 Index is at the June 2026 rebalance. The stock needs to move 60% higher to be added in December 2025.
- Inclusion in global indices could commence in August/November and will depend on institutional investor lock-up schedules. Flows are small unless the stock moves higher and is included in bigger indices.
DN Solutions IPO: OC’s Out, but the Hit-And-Run Setup Post-Listing Is Still in Play
- Wild card here is the FSS—they’re eyeing a shadow listing risk for DN Automotive (007340 KS). If they push for a revision, a 2-week delay busts the 135-day limit.
- 14x PE looks cheap, but comps are shaky—LS Electric’s AI play, Fanuc’s scale advantage, and DMG MORI’s automation pivot all make direct comparisons a stretch.
- DN Solutions is a pure-play machine tool name, making comps shaky. This IPO’s shaping up like an LG CNS rerun—solid numbers, fair valuation, but a weak growth story.
StubWorld: Matheson Looks Stretched
- Jardine Matheson Holdings (JM SP) posted a 11% drop in FY24 underlying profit; but has promptly gained 9% since.
- 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%.
SATS: Integrating WFS –Key to Acquisition Success
- In September 2022, as the world began to rebound from COVID-era travel restrictions, Singapore-listed SATS Ltd. made waves with an audacious move.
- With a market cap of SGD 4.5 billion, SATS announced plans to acquire global air cargo giant Worldwide Flight Services (“WFS”) for up to €1.3 billion (S$1.9 billion), valuing the deal at an enterprise value (“EV”) of €2.25 billion (S$3.1 billion).
- The market reacted with skepticism, sending SATS’ share price plummeting by 35% as concerns over equity dilution and debt levels unsettled investors accustomed to steady dividends and strong returns.
Tokyo Electron (8035 JP): Buy if You’re Not Afraid of Recession
- After dropping by half, Tokyo Electron’s share price has bounced. But it is still vulnerable to cutbacks in AI-related investments and tariff-induced recession.
- A positive scenario has net profit rising by 8% in FY Mar-26. In a negative scenario, it drops by 25%. We take the positive view.
- Innovations in manufacturing point toward a big step up in profit margins by the end of the decade. But watch out for a cyclical downturn between now and then.
Arwana Citramulia (ARNA IJ) – Rectifying and Enlarging
- A call with Arwana Citramulia cleared up some lingering concerns from 2024, which was a year of reconfiguration of capacity to help differentiate and drive future growth and margins.
- The company has now fixed the gas price for its production, which is now set for five years, sustaining its cost advantage over Chinese imports, which now face anti-dumpoing measures.
- Arwana Citramulia is rapidly increasing its rectified capacity and increasing exposure to larger-sized tiles as well as raising prices, given that Chinese players face higher tariff-related costs. Valuations remain attractive.
Verisk Analytics: A Value-Driven Pricing Strategy In Play But Is It Working?
- Verisk Analytics, a leading data analytics company primarily serving the insurance industry, reported robust financial results for the fourth quarter and full year 2024.
- A key highlight of the quarter was an 11% growth in subscription revenues, driven mainly by a surge in demand for their analytics and software services and successful conversion of transactional contracts to subscription-based contracts.
- For the fourth quarter, Verisk achieved an 8.6% increase in organic constant currency (OCC) revenue, largely propelled by sales momentum and incidental benefits from storm-related activities, particularly hurricanes Helene and Milton.
CBAT: Reasons for optimism are on the horizon as the company discusses new expansion plans.
- CBAK Energy Technology’s core battery business has performed well during the prolonged industry downturn still generating over $20 million in operating income in 2024.
- Capacity expansions discloses were increased on the company’s conference call as the company now anticipates growing from 2.3 GWh of capacity to 7.6 GWh in 2026.
- Tariff concerns continue to weigh on the shares and the company’s raw material business remains very weak but for investors seeking exposure to the cylindrical cell market CBAK’s shares could represent a good value if expansion plans are successfully implemented.
Sustainable Investing Surveyor: Focus on Electrovaya, Inc. (ELVA)
- The WTR Sustainable Index was down 1.2% W/W versus the S&P 500 Index (down 2.3%), the Russell 2000 Index (down 1.5%), and the Nasdaq Index (down 2.5%).
- Energy Technology (12.9% of the index) was down 0.1%, while Industrial Climate and Ag Technology (45.6% of the index) was down 2.2%, ClimateTech Mining was down 1.1%, and Advanced Transportation Solutions (22.1% of the index) was up 0.4%.
- Top 10 Performers: PEV, ARVL, JEV, PEGY, ENG, AMMP, GRB, SX, NFI, KULR
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