In today’s briefing:
- Keisei Railway (9009) Gets Bad Advice from Activists, Which Is Good for The Rest of US
- StubWorld: Cheung Kong’s Geopolitics
- Sinfonia Technology (6507): A Strategic Asset in Japan’s Defence Ecosystem
- Hanwha Systems: Expand 3rd Party Allocation Capital Increase Limit from 20% to 30% of Issued Shares
- 10 in 10 with OKP Holdings – Charting Growth in Construction
- TWI: Titan reports 4th quarter and full year 2024 financial and operating results. The company also commented on recovery in its markets as well as the possible effects of tariffs.
- Verbrec Ltd – Discipline a saviour in macro headwind
- Zhejiang Sanhua Intelligent Controls A/H Listing – Strong Track Record
Keisei Railway (9009) Gets Bad Advice from Activists, Which Is Good for The Rest of US
- Activist investors, confusing market price with intrinsic value, have shot themselves in the foot by offering terrible advice to Keisei Railway’s management.
- When Keisei followed advice from the activist, selling just 1% of the shares of Oriental Land, Keisei’s share price collapsed, proving market price has nothing to do with intrinsic value.
- Keisei’s revenue growth and return on investment are stronger than most of its peers, and the crash in its stock price caused by activists might create an opportunity for others.
StubWorld: Cheung Kong’s Geopolitics
- CK Hutchison Holdings (1 HK) (CKH) is trading “cheap” as Panama’s Supreme Court agrees to consider a request to nullify CKH’s canal concessions.
- Preceding my comments on CKH, CK Infrastructure Holdings (1038 HK) (coming up cheap on my monitor), and Power Assets Holdings (6 HK) 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%.
Sinfonia Technology (6507): A Strategic Asset in Japan’s Defence Ecosystem
- Sinfonia Technology is strategically positioned to benefit from Japan’s rising defence and semiconductor investments, leveraging its expertise in precision motion systems and power electronics.
- The company holds a leading market share in aerospace and semiconductor handling, underpinned by robust financial performance and a well-defined strategy for future growth.
- Amid increasing geopolitical tensions, Sinfonia’s integral role in space and defence applications enhances its long-term growth potential, making it a noteworthy player in Japan’s industrial expansion.
Hanwha Systems: Expand 3rd Party Allocation Capital Increase Limit from 20% to 30% of Issued Shares
- In the past week, Hanwha Systems announced that it plans to expand third party allocation capital increase limit from 20% to 30% of issued shares in its articles of incorporation.
- This plan to significantly increase the amount of capital raise limit sets the stage for a major capital increase by Hanwha Systems in 2025, in our view.
- Unlike in 2021 when we were bullish on Hanwha Systems post a large-scale capital raise, we are more cautious on the company’s potential new large scale capital raise this year.
10 in 10 with OKP Holdings – Charting Growth in Construction
- OKP Holdings reported a 135.4% increase in gross profit for FY2024 to S$58.2 million, with a gross profit margin of 32.0%.
- The construction and maintenance segments generated revenues of S$114.0 million and S$61.7 million, respectively, in FY2024.
- OKP’s order book stands at S$600.7 million, supported by a strong balance sheet with S$124.3 million in cash.
TWI: Titan reports 4th quarter and full year 2024 financial and operating results. The company also commented on recovery in its markets as well as the possible effects of tariffs.
- Titan International is a global manufacturer of off-the-road tires, wheels and undercarriages.
- The company serves the agricultural, earthmoving / construction, and consumer markets.
- Long-term secular tailwinds exist in the global agricultural, infrastructure and construction markets.
Verbrec Ltd – Discipline a saviour in macro headwind
- Verbrec Limited (ASX:VBC) provides engineering, asset management, infrastructure services and training to the energy, mining, infrastructure and defence industries in Australia, New Zealand, PNG and the Pacific Islands.
- The company has released its H1 FY25 results delivering a profitable outcome for the third consecutive period, albeit below RaaS forecasts predominantly due to macro headwinds resulting in lower-than-forecast revenue on the back of project delays.
- Management cited that client feedback suggests “inflationary pressures, uncertainty prior to election results (both international and domestic) and shortage of qualified engineering resources caused deferrals of several notable prospective project opportunities that were expected to commence in H1 FY2025”.
Zhejiang Sanhua Intelligent Controls A/H Listing – Strong Track Record
- Zhejiang Sanhua Intellignt Controls Co., Ltd. (002050 CH) (ZSIC), a manufacturer of refrigeration and air-conditioning control components, aims to raise around US$1bn in its H-share listing.
- ZSIC is a market leader in a number of products, with commanding market share both domestically and globally.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
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