In today’s briefing:
- NIFTY NEXT50 Index Rebalance Preview: 6 Changes & Big Turnover
- Fanuc (6954) | Not Out of the Woods Yet
- AviChina Industry (2357 HK): No Way Its Parts Are Greater than the Sum
- Introducing Monthly Tracking of Chinese X-Border Express Parcel Data | YTD Volume up +55%, ASPs -25%
- Danaher Corporation: Pioneering Global Health – The Road Ahead! – Major Drivers
- Equifax Inc.: Unlocking the Power of Cloud Transformation! – Major Drivers
- HNI Corporation – 3Q23 Margins Beat Expectations
- Lockheed Martin: Its Portfolio Is Setting the Stage For Potential Growth! – Key Drivers
- RTX Corporation: Navigating Turbulence in the Aerospace and Defense Industry! – Key Drivers
- United Airlines: European Routes
NIFTY NEXT50 Index Rebalance Preview: 6 Changes & Big Turnover
- Halfway through the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
- Estimated one-way turnover is 15.26% and that will result in a one-way trade of INR 24bn. There will be more than 2x ADV to sell on nearly all deletes.
- There is a possibility of an index methodology change, but no news for the last 4 months could indicate pushback from users or more stocks added to the F&O market.
Fanuc (6954) | Not Out of the Woods Yet
- Q2 2023 results for FANUC Group showed a 3.7% decrease in consolidated net sales, a 24.5% drop in consolidated operating income, and mixed performance in its divisions.
- Some positives: operating profit exceeding analyst expectations and an operating margin increase to 17.2%. However, declining robot orders, challenges in the US region, and high inventory remain concerns
- We believe that the stock is currently trading around fair value (20x EV/EBIT). However, we still see risks to the downside given macro concerns
AviChina Industry (2357 HK): No Way Its Parts Are Greater than the Sum
- The A-share subsidiaries of AviChina Industry & Technology (2357 HK) have mostly posted solid 3Q23 results – aggregate earnings growth has accelerated to 50.2%, from 26.8% in 1Q23.
- Their 9M23 result reached 64% of FY23 consensus forecast earnings for AviChina, vs. just 61% a year ago. This indicates the market is too conservative and suggests room for upgrade.
- Valuations are cheap at 8.7x and 7.0x PERs for FY23 and FY24. Its market capitalisation equals just 46% of the total attributable market capitalisation of these subsidiaries.
Introducing Monthly Tracking of Chinese X-Border Express Parcel Data | YTD Volume up +55%, ASPs -25%
- For certain companies now seeking IPOs, X-border volumes may serve as demand proxy
- In 2023, Chinese X-border volume growth has accelerated, up +55% Y/Y through September
- In developing X-border express market, lower ASPs are actually a good thing, in our view
Danaher Corporation: Pioneering Global Health – The Road Ahead! – Major Drivers
- Danaher Corporation delivered a positive result and managed an all-around beat last quarter.
- Transformative achievements and consistent performance marked the final quarter for Danaher Corporation despite a challenging operating environment.
- As a more focused life sciences and diagnostic innovator, Danaher is advancing human health through science and technology.
Equifax Inc.: Unlocking the Power of Cloud Transformation! – Major Drivers
- Equifax’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
- In Q3, Equifax reported revenue of $1.32 billion, representing a 6% increase on a reported basis.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
HNI Corporation – 3Q23 Margins Beat Expectations
- Before market open today, HNI reported 3Q23 adjusted EPS of $0.94, substantially ahead of our estimate of $0.64 and consensus of $0.63.
- Positive surprises on the gross margin line accounted for the beat. Sales were roughly in line with expectations at $711.7 million versus our $713 million estimate.
- Our pre-report concerns were answered with strong performance.
Lockheed Martin: Its Portfolio Is Setting the Stage For Potential Growth! – Key Drivers
- Lockheed Martin Corporation delivered an all-around beat and has shown resilience in an uncertain market environment with its strong financial performance in the third quarter of 2023.
- The company reported a 2% increase in sales year-over-year, reaching $16.9 billion, and delivered a robust free cash flow of $2.5 billion.
- Lockheed Martin’s solid backlog of $156 billion reflects the relevance and importance of its portfolio in the face of increasing global geopolitical tensions.
RTX Corporation: Navigating Turbulence in the Aerospace and Defense Industry! – Key Drivers
- RTX Corp managed an all-around beat in its latest result.
- Additionally, the defense segment is benefiting from increased defense spending globally, driven by the current threat environment.
- Furthermore, RTX is actively managing its portfolio by divesting non-core businesses, generating cash proceeds to support its strategic objectives.
United Airlines: European Routes
- United Airlines reported strong financial results in the third quarter of 2023, with total revenue increasing by 12.5% and capacity growing by 15.7% year-over-year.
- Looking ahead to the fourth quarter, United expects total revenue to be up approximately 10.5% on increased capacity, driven by strong demand in Atlantic and Pacific routes.
- United’s prudent capacity planning and focus on cost management have positioned the company for sustainable growth.
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