In today’s briefing:
- PEC Ltd. (PEC SP): Privatisation Offer From Liberty Group
- Quiddity Leaderboard CSI 300/500 Jun 25: Positive Trade Performance; More to Come
- Resumption of Short Selling in Korea on 31 March and Potential Short Selling Candidates
- Quiddity Leaderboard ChiNext & ChiNext 50 Jun25: ~US$1.3bn One-Way; Some Changes to Expectations
- Duskin (4665 JP) – Entering a Critical Phase
- Japan Elevator Service Holdings (6544 JP) – Sustainable Margin Expansion
- MARUKA FURUSATO (7128 JP): Full-year FY12/24 flash update
PEC Ltd. (PEC SP): Privatisation Offer From Liberty Group
- PEC Ltd. (PEC SP), a plant and terminal engineering specialist, has (finally) announced an Offer from Allied Energy Services, an engineering entity under the Liberty Group.
- Liberty is offering S$0.84/share (not final) – including a AS$0.20/share special dividend – a 12.8% premium to undisturbed; but really more like a >35% premium.
- Irrevocables from the board of 63.38% have been secured. Looks pretty clean. Assuming late May payment, pay up to S$0.79/share for a 6%/15% gross/annualised spread.
Quiddity Leaderboard CSI 300/500 Jun 25: Positive Trade Performance; More to Come
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500 names.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
- Currently, we see 7 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.
Resumption of Short Selling in Korea on 31 March and Potential Short Selling Candidates
- The resumption of short selling in Korea will start again on 31 March. There has been a ban on short selling in Korea since November 2023.
- We provide some short selling candidates in Korea. Their sharply increasing share prices in the past five years have resulted in much more burdensome valuations.
- Despite their burdensome valuations and sharply higher share prices, the remains high risk of some of these stocks that could overshoot to the upside.
Quiddity Leaderboard ChiNext & ChiNext 50 Jun25: ~US$1.3bn One-Way; Some Changes to Expectations
- The ChiNext index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
- The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
- We see 10 changes for the ChiNext index and 5 changes for the ChiNext 50 index in the next index rebal event. Collectively, there could be US$1.3bn one-way flows.
Duskin (4665 JP) – Entering a Critical Phase
- Outperformance at the Food Group – Q1-3 FY3/25 results demonstrated the ongoing strength and outperformance at the Food Group, with the Mister Donut franchise maintaining high growth and sustaining margin expansion.
- The Direct Selling Group delivered a recovery in profitability YoY, which is a positive optic but derived from one-time events; with flat sales growth YoY, the underlying trend denotes a business making limited headway in delivering growth.
- With unchanged FY3/25 guidance, we expect no major surprises in Q4 FY3/25 but will pay close attention to the release of the new medium-term plan covering FY3/26-FY3/29, which will be a key event.
Japan Elevator Service Holdings (6544 JP) – Sustainable Margin Expansion
- Solid execution and high earnings visibility – The key takeaway from Q1-3 FY3/25 results is that JES is a robust business with strong fundamentals, with double-digit sales (+16.6% YoY) and OP growth (+28.2% YoY).
- Quarterly Q3 FY3/25 OPM reached a historic high of 17.9%, driven by operating leverage with recurring revenue volume from growing maintenance contracts and improving the productivity of its in-house engineers while not introducing any price hikes.
- The resultant gains in market share from OEMs and sustainable margin expansion position the company to continue generating value, especially in an inflationary environment that drives demand for cost-effective and high-quality service.
MARUKA FURUSATO (7128 JP): Full-year FY12/24 flash update
- FY12/24 revenue declined 6.5% YoY, with operating profit down 32.3% and recurring profit down 30.0% YoY.
- FY12/25 forecasts show revenue at JPY170.0bn (+5.1% YoY) and operating profit at JPY4.5bn (+16.6% YoY).
- FY12/26 targets revised to JPY180.0bn revenue, JPY5.8bn operating profit, and 5.7% ROE due to market challenges.
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