Daily Brief Industrials: Keppel Corp, China Boqi Environmental Hol, Sarla Performance Fibers Ltd and more

In today’s briefing:

Keppel – Is There More to the Keppel O&M Deal than Meets the Eye?
Boqi Env (2377 HK): Takeaways From The Partial Offer
Sarla Performance Fibers – India’s Prominent Player in Man Made Textile Yarn – Key Growth Drivers

Keppel – Is There More to the Keppel O&M Deal than Meets the Eye?

This report aims to examine the rationale and structure of the transformative deal in February 2023 when Keppel spun out its Offshore and Marine (“O&M”) division.
This AssetCo transaction was selected because (1) The substantial size, at S$4.4bn, was equivalent to 14% of Keppel’s assets or 37% of its shareholder equity as of Dec 2022.
(2) Highly complex transaction with extremely generous financing terms granted by Keppel, which received no cash for selling legacy rigs at its carrying cost.

Back on the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
The Offer Doc was dispatched on the 28th November, and the Offer closed on the 3rd January.
304.6mn shares tendered against the buyback of 150.858mn shares, or a pro-ration of 49.53%. However, how the public shareholders tendered may provide a gauge for future Hong Kong Partial Offers.

Sarla Performance Fibers Limited is engaged in the manufacturing and export of high-performance polyester and nylon yarns.
Increasing capacity utilisation towards higher value-added products, such as Nylon 6 & 66 and high-tenacity yarn, is expected to boost revenue and improve operating margin.
A valuation re-rating is also possible if the return metrics (RoE, RoCE) improve as the utilisation level rise.

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