In today’s briefing:
- Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
- An Update on the Potential KOSPI 200 Rebalance Candidates in June 2025
- SITC International (1308 HK): Another Strong Year, with Excellent Yield
- Sodick (6143 JP) – Signalling a Positive Shift
- What’s New(s)) in Amsterdam – 10 March (Philips | Corporate agenda)
- Institutional Investors Book Highest Net Weekly Inflows Since December
- Hydrofarm Holdings Group, Inc: 4Q24 Results Reflect Prevailing Industry Headwinds..
- HLA Chair Kwek Leng Peck Increases Stake After 35% Rise in FY24 Net Profit
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
- My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
- Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.
CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
- There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
- We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
- There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.
An Update on the Potential KOSPI 200 Rebalance Candidates in June 2025
- We discuss the potential KOSPI 200 rebalance candidates in June 2025. In recent years, there have been some alpha generating stocks arising from the KOSPI 200 rebalances.
- We include eight companies as potential inclusion candidates including LG CNS, HD Hyundai Marine Solution, Shift Up, and Hanwha Engine.
- The top 5 potential deletion candidates for KOSPI 200 rebalance in June 2025 include Iljin Hysolus, Hansae, Foosung, Sam A Aluminum, and TKG Huchems.
SITC International (1308 HK): Another Strong Year, with Excellent Yield
- SITC International (1308 HK)‘s 93.5% profit growth in FY24 is at the top-end of the positive profit alert. A final DPS of HK$1.4 put it on a 7.3% dividend yield.
- The FY25 long-term contract rate is expected to rise 10%, with volume growing at least 5% and lower costs. The consensus forecast of a 23.1% earnings decline is too conservative.
- Having an ROE of 32% for FY25F, its 12-month forward P/B of 2.46x (vs. average of 2.59x) with net cash equals 5.4% of market capitalisation are inexpensive.
Sodick (6143 JP) – Signalling a Positive Shift
- A turnaround in progress – Q1-4 FY12/24 results were significantly ahead of guidance and a positive surprise, showing a solid recovery YoY with 9.7% sales growth YoY and a return to positive earnings territory.
- This indicates solid execution of structural reforms, with fixed costs being reduced by streamlining overseas staff and internalizing parts production that were previously outsourced.
- An uptick in demand in Q4 FY12/24 for both Machine Tools and Industrial Machinery was driven by connectors used in high-density fiber optic connections in the data center and telecommunications sectors.
What’s New(s)) in Amsterdam – 10 March (Philips | Corporate agenda)
- In this edition: • Philips | large Dutch pension funds refrain from seeking financial compensation in apnea affair • Corporate agenda | week 11 – 15
Institutional Investors Book Highest Net Weekly Inflows Since December
- Singapore stocks recorded S$39 million in net institutional inflows, marking the first net buying since January’s last week.
- Industrials and Consumer Non-Cyclicals sectors reversed previous net outflows with significant inflows, led by ST Engineering and Wilmar International.
- ISDN Holdings’ share price rose 12.9% after reporting a 72% increase in FY24 attributable net profit.
Hydrofarm Holdings Group, Inc: 4Q24 Results Reflect Prevailing Industry Headwinds..
- HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).
- The company’s products consist primarily of consumable products, such as nutrients and growth media, grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.
- Meeting full-year 2024 guidance despite weaker 4Q24.
HLA Chair Kwek Leng Peck Increases Stake After 35% Rise in FY24 Net Profit
- Institutions were net sellers of Singapore stocks, with a net outflow of S$117 million from Feb 28 to Mar 6.
- DBS Group Holdings led share buybacks with 700,000 shares at S$46.15 each, totaling S$39,960,047 across 23 companies.
- Hong Leong Asia’s Executive Chairman increased his stake to 1.29% by acquiring 767,000 shares at S$0.989 each.
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