In today’s briefing:
- SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits
- SATS Agrees to Acquire WFS for an EV of S$3.1 Billion
- Biffa Accepts Lowered Bid from Energy Capital Partners
- WCP IPO Trading – Peer Correction Means Price Cut Still Wasn’t Enough
- AKR Corporindo (AKRA IJ) – Multiple Drivers Ahead
- Southwest Airlines: Improving Airline Macro & Other Drivers
SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits
- SATS (SATS SP) has announced that it is buying Worldwide Flight Services (WFS) from an affiliate of Cerberus Capital Management at an Enterprise Value of €2.25bn (S$3.107bn).
- The cash consideration is €1.187bn (S$1.639bn) and will likely be financed by an equity fund raising. This could be a rights issue and could be combined with a private placement.
- Expect the stock to drop once it resumes trading. A significant drop from current levels could provide a buying opportunity as the rights issue could be backstopped.
SATS Agrees to Acquire WFS for an EV of S$3.1 Billion
- SATS (SATS SP) agreed to acquire Worldwide Flight Services (WFS), the world’s largest air cargo handling firm, from Cerberus Capital for a cash consideration of S$1,639 million.
- The base funding plan is based on a S$1.7 billion equity raise. The uncertain structure and timing of the equity raise will be a short-term overhang.
- The acquisition is conditional on shareholder and regulatory approvals. Assuming no synergies, our pro-forma price per share is S$4.97, a 28.5% upside to the last close.
Biffa Accepts Lowered Bid from Energy Capital Partners
- ECP lowers its initial offer to 410p/share in cash plus the final dividend of 4.69p/share (28% premium, implied equity value is €1,269 million, implied EV is €1,847 million).
- The offer represents 1.2x EV/Fwd revenue, 8.3x EV/Fwd EBITDA and 32.1x Fwd P/E. Suez was taken at similar multiples: 1.5x, 8.1x and 27.4x respectively. My updated fair value estimate (DCF-based) is 410.6p.
- The equity value prior to approach was undemanding. The offer price seems fair. Gross spread (including final dividend) is 2.1%. Reiterate Long BIFF LN.
WCP IPO Trading – Peer Correction Means Price Cut Still Wasn’t Enough
- WCP raised around US$314m via selling a mix of primary and secondary shares in its Korean IPO.
- WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
- In this note, we will talk about the demand for the deal and other trading dynamics.
AKR Corporindo (AKRA IJ) – Multiple Drivers Ahead
- AKR Corporindo (AKRA IJ) continues to see strong sales momentum in July and August after releasing a strong set of 1H2022 results previously with strong momentum expected to year-end.
- Both petroleum distribution and chemical distribution are seeing strong tailwinds and its gas station business should be a beneficiary of the fuel price hike.
- AKR Corporindo‘s JIIPE estate booked a large 37-hectare plot sale in August with a potential for more smelter-related buyers to come. Valuations look fair but there are potential catalysts ahead.
Southwest Airlines: Improving Airline Macro & Other Drivers
- Southwest Airlines delivered a positive set of results in the quarter, surpassing Wall Street expectations on all counts.
- The rise in demand and limited capacity led to a favourable yield environment and recorded operating revenues of $6.7 billion for the quarter.
- Despite increasing fuel and inflationary cost pressures, the revenue performance resulted in quarterly net profitability, excluding special items, of $825 million.
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