In today’s briefing:
- HD Merger: Overblown Policy Risk Creates a Convergence Play Opportunity
- Kawasaki Heavy (7012 JP): Recovery Done, Eyes on Hydrogen, Aerospace, and Margin Upside
- LIG Nex1 (079550 KS): Stock Soars; Momentum Stalls; Global Index Inclusion Next
- M&A of Hyundai Hyms – Who Will Buy Controlling Stake?
- Brambles Limited: Initiation of Coverage- Will Its Latest Investments in Technology & Data Analytics Help Disrupt the $10 Trillion Logistics Industry?
- Transurban Group: Initiation of Coverage- Surging Traffic & Smart Debt Moves Signal Improved Profitability Ahead!
- Hybridan Research: Northern Bear Plc (NTBR): Building Specialist Business
HD Merger: Overblown Policy Risk Creates a Convergence Play Opportunity
- NAV sets the floor under the proposed bill. That’d cut the swap ratio from 1:0.162 to 1:0.128 — meaning Infracore holders get fewer CE shares than under market pricing.
- Unlike the Doosan deal, this one’s unlikely to get walked back. With wide spreads and HD setting a 10% SO cap, the dislocation looks tradable despite appraisal right overhang.
- Top holders/NPS hold ~50%, local instos 20%, foreigners 15% and retail the rest. Sentiment’s cautious but not hostile; appraisal risk looks manageable, making this spread a potential convergence play.
Kawasaki Heavy (7012 JP): Recovery Done, Eyes on Hydrogen, Aerospace, and Margin Upside
- Past Performance: KHI has rebounded from FY21 losses to record-high revenues and profits in FY25, driven by aerospace recovery and energy systems strength.
- Future Growth: Orderbook visibility of ~¥3 trillion supports 5–6% annual growth, led by hydrogen, commercial engines, and automation.
- Valuations: At 7.6x EV/EBITDA and 14x PE (NTM), KHI trades at a discount to peers like MHI and Komatsu, reflecting lower ROE and execution risk on long-cycle capex bets.
LIG Nex1 (079550 KS): Stock Soars; Momentum Stalls; Global Index Inclusion Next
- LIG Nex1 Co (079550 KS)‘s stock price has doubled over the last 3 months, and the increased market cap could now result in a global index inclusion.
- LIG Nex1 Co (079550 KS) has outperformed most of its peers over the last few months and now trades expensive on a range of metrics.
- While momentum could take the stock higher, there is a risk of pullback as positioning in the stock is unwound.
M&A of Hyundai Hyms – Who Will Buy Controlling Stake?
- The management ownership stake of Hyundai Hyms is up for sale. J&P Private Equity firm which owns 52.88% stake in Hyundai Hyms has sent out teaser letters to potential buyers.
- Including a management premium ranging from 30% to 50%, the potential acquisition price (including management premium) could be worth about 481 billion won to 555 billion won.
- Since the second largest shareholder, HD Korea Shipbuilding & Offshore Engineering (HD KSOE) (20.89% stake), has the right of first negotiation, the selling side must first negotiate with HD KSOE.
Brambles Limited: Initiation of Coverage- Will Its Latest Investments in Technology & Data Analytics Help Disrupt the $10 Trillion Logistics Industry?
- Brambles Limited’s performance for the first half of 2025 presents a mixed picture, combining robust growth with specific challenges.
- The company demonstrated a 4% increase in sales, equally contributed by price realization and volume growth, along with a notable 10% uplift in underlying profit.
- This growth is largely credited to the U.S. pallets business, reflecting successful net new business wins.
Transurban Group: Initiation of Coverage- Surging Traffic & Smart Debt Moves Signal Improved Profitability Ahead!
- The latest financial results for Transurban display a mix of positive operational advances and some challenges that merit attention.
- The company reported a promising 6.2% increase in proportional toll revenue.
- Over the same period, cost-cutting measures contributed to a 3% decline in expenses, which translated into a 9.4% rise in operating EBITDA and a 220 basis point enhancement in the EBITDA margin.
Hybridan Research: Northern Bear Plc (NTBR): Building Specialist Business
- Strong finals to March 2025 are reported with a 13.7% increase in Revenue to £78.1m and a 42% increase in PBT of £3.1m compared to £2.1m.
- The jump in EPS from 9.5p to 16.8p was aided by the tender offer and cancellation of 5m shares.
- The dividend is increased to 2.5p from 2p and reflecting the strong performance, a special dividend of 1p will be paid to shareholders on the register on 29 August 2025.
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