In today’s briefing:
- Nidec Goes Hostile On Makino Milling at ¥11,000/Share
- Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000
- China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express
- China Logistics (Part 1): ZTO Has a Unit Economics Problem
- Watts Water’s Smart Solutions Revolution: How Nexa is Solving Critical Industry Challenges! – Major Drivers
- Applied Industrial Technologies (AIT): Emerging Market Growth & Margin Expansion To Change The Game! – Major Drivers
- Federal Signal’s Bold Capacity Expansion: Why New Facilities Will Dominate the Competition! – Major Drivers
- Boeing’s Bold Comeback: Inside The $36 Billion Deal, 787 Ramp-Up & Cultural Overhaul
- ESAB Corporation: Geographic Expansion & Market Penetration & Other Major Drivers
- Avis Budget Group: Its Efforts Towards Fleet Optimization & Other Major Drivers
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
- This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
- The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
- But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000
- Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share, an 18.9% premium to the last close.
- The offer is preconditioned on several regulatory approvals. It is scheduled to start on 4 April, even if the Board does not recommend it.
- The Board has three options: engage to facilitate a friendly offer, find a white knight bidder and launch an ambitious MTM plan to thwart the offer.
China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express
- Despite being breakeven just quarters ago, JD Logistics (2618 HK) has achieved profitability on par with global peers nearly 3x its size. Margin still has upside with further subsidiary integration;
- JDL is still positioned to accelerate revenue by taking share from S.F. Holding (6936 HK) in untapped opportunities, including domestic B2C (Taobao/Tmall), cross-border B2C (Kuayue acquisition), and B2B;
- JDL’s stock price rose 60%+ while it was our top pick for 2024. We reiterate the company as our TOP buy idea in the China logistics space for 2025;
China Logistics (Part 1): ZTO Has a Unit Economics Problem
- ZTO’s market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;
- ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss.
- We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act.
Watts Water’s Smart Solutions Revolution: How Nexa is Solving Critical Industry Challenges! – Major Drivers
- Watts Water Technologies, Inc. reported a mixed performance for the third quarter of 2024, with some regions and product lines experiencing growth, while others faced challenges.
- The company’s results exceeded expectations in general, though organic sales were down 4% overall.
- This was primarily due to strong growth in Asia-Pacific, Middle East, and Africa (APMEA) offset by declines in the Americas and Europe.
Applied Industrial Technologies (AIT): Emerging Market Growth & Margin Expansion To Change The Game! – Major Drivers
- Applied Industrial Technologies reported their fiscal 2025 first-quarter results, indicating a mixed performance amid ongoing economic uncertainties and strategic investments.
- The company experienced a moderate decline in organic daily sales of 3% compared to the previous year, though this was somewhat offset by a robust September performance, surpassing initial expectations.
- On the positive side, the company achieved a record first quarter for free cash flow generation, nearly doubling compared to the prior year, and maintained steady EBITDA performance, consistent with internal targets.
Federal Signal’s Bold Capacity Expansion: Why New Facilities Will Dominate the Competition! – Major Drivers
- Federal Signal Corporation reported on its third-quarter 2024 performance, demonstrating a combination of year over-year growth in sales, margin expansion, and improved earnings.
- Consolidated net sales grew by 6% to $474 million, marking a $28 million increase purely from organic growth.
- This growth was primarily driven by their Environmental Solutions Group (ESG), whose sales increased by 7%, and the Safety and Security Systems Group (SSG), which saw a 4% rise.
Boeing’s Bold Comeback: Inside The $36 Billion Deal, 787 Ramp-Up & Cultural Overhaul
- Boeing, a global aviation giant, is making waves as it navigates a pivotal turnaround after facing a tumultuous period marred by operational lapses, financial strain, and reputation challenges.
- The company has recently demonstrated notable progress across several fronts.
- On December 18, Boeing resumed production of its 737, 767, and 777/777X airplane programs, signaling an operational revival after a three-month machinists’ strike.
ESAB Corporation: Geographic Expansion & Market Penetration & Other Major Drivers
- ESAB Corporation’s third quarter of 2024 depicts a nuanced picture of the company’s performance amid challenging market conditions.
- The results highlight a blend of strategic decisions and market dynamics that, collectively, present a mixed outlook for potential investors.
- On the positive side, ESAB posted record third-quarter margins and robust cash flow, setting adjusted EBITDA margins at an impressive 19.6%, marking a 130 basis point expansion.
Avis Budget Group: Its Efforts Towards Fleet Optimization & Other Major Drivers
- Avis Budget Group’s third quarter of 2024 earnings report highlighted a mixed performance amid challenging conditions.
- The company reported quarterly revenue of nearly $3.5 billion and adjusted EBITDA of $503 million.
- The focus remains on aligning fleet size with demand to improve utilization, driven by high fleet carrying costs and vehicle interest expenses.
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