Daily Brief Industrials: SK Square , Mitsubishi Heavy Industries, MTAR Technologies, Leonardo DRS , JL Mag Rare-Earth , Shenzhen Megmeet Electrical , GFL Environmental , Boeing Co, Asahi Kogyosha, BYD Company and more

• The “10% Rule” and the SK Hynix Surrogate Play: SK Square’s stock price—which peaked at an all-time high of 2,189,000 KRW on June 22, 2026, before consolidating around 1,025,000 KRW in August 2026—is structurally supported by Article 8 of the Capital Markets Act. Because domestic equity funds cannot invest more than 10% of their assets in a single stock, and SK Hynix’s massive market cap weighting on the KOSPI sits near 25%, institutional funds are forced to buy SK Square (which holds a 20.1% stake in Hynix) as a proxy, narrowing the NAV discount to 39.9% in May 2026.
• Resolution of the 11Street (11st) Dispute: In October 2025, SK Square resolved its two-year deadlock with financial investors (FIs like the National Pension Service) over 11Street. The board approved an internal transaction where SK Square’s subsidiary, SK Planet, acquired 100% of 11Street’s equity for 467.3 billion KRW, allowing FIs to recover their principal in full and shielding SK from fiduciary duty lawsuits under the amended Commercial Act.
• The Operational Hard Law of Corporate Value-up: Sweeping reforms passed under the Lee Jae-myung administration—specifically the July 22, 2025 amendment to Article 382-3 expanding directors’ fiduciary duty of loyalty to include “shareholders as a whole” and the February 2026 amendment making cancellation of acquired treasury shares mandatory—have forced SK Square’s board to pivot from voluntary targets to hard structural compliance, pushing executive KPIs to target an NAV discount of under 30% by 2028.

• 1Q results comfortably beat expectations, with 65% profit growth and record order intake highlighting sustained momentum across Energy Systems and Defence.
• Management raised order guidance but left earnings forecasts unchanged, suggesting meaningful upside as the record backlog converts into revenue.
• Despite recent gains, MHI remains attractively valued, supported by the gas turbine supercycle, margin expansion, and accelerating defence spending.

• Q1FY27 revenue rose 130% YoY to INR 360.7 crore, EBITDA nearly tripled to INR 85.1 crore and PAT increased 365% to INR 50.2 crore.
• MTAR’s post-quarter order visibility reached INR 5,943 crore, about 3.8x the revenue implied by its FY27 growth guidance shifting the bottleneck from demand to execution.
• Bloom’s record Q2 and higher 2026 outlook validate MTAR’s fuel-cell expansion, but customer concentration and a INR 500 crore capex programme keep the thesis execution-sensitive.

• Leonardo DRS has moved to deepen its role in defense software through a definitive agreement to acquire Raft LLC for $450 million in cash.
• Announced on July 28, 2026, the transaction would add open-architecture mission software, multi-domain data fusion, and artificial intelligence capabilities to DRS’s established strengths in sensing, network computing, force protection, and naval power systems.
• Management framed the deal as a strategic step toward delivering integrated hardware-and-software solutions as defense customers seek faster decisions from increasingly fragmented sensor networks.

• JL MAG is a global market leader in high-performance Neodymium-Iron-Boron (NdFeB) permanent magnets, critical components for rapidly growing sectors like new energy vehicles (NEVs), wind power, and energy-efficient appliances.
• The company’s strategic position is reinforced by long-term supply agreements with key Chinese rare-earth suppliers and a vertically integrated production process, which provides a competitive advantage in a geopolitically sensitive industry.
• Financial performance is intrinsically linked to the volatile prices of rare-earth raw materials, which can cause significant margin fluctuations. However, the strong secular demand from electrification and green energy provides a robust long-term growth outlook.

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• Megmeet actively involved in the power system design of NVIDIA’s Blackwell and Vera Rubin series architectures. This position enjoys very strong scarcity and an ecological moat.
• If the product iteration pace of NVIDIA slows down, the technical roadmap changes, or the order delivery fails to meet expectations, it will directly affect Megmeet’s growth logic.
• The “scarcity” of Megmeet can provide certain valuation premium. Conservative scenario is A/H discount of 35%. Neutral scenario is A/H discount of 25%. Optimistic scenario is A/H discount of 15%.

• GFL Environmental has become the center of an unusual takeover contest after reportedly attracting preliminary interest from at least six private-equity groups.
• Waste collection rarely generates the excitement associated with technology or artificial intelligence, yet GFL offers something financial buyers value highly: recurring demand, pricing power, hard-to-replicate infrastructure and substantial opportunities to increase cash flow.
• The company has confirmed that multiple parties submitted unsolicited expressions of interest, prompting its board to form a special committee and examine possible outcomes.

• Boeing operates as a global duopoly with Airbus in the large commercial aircraft market, benefiting from a record-high backlog that provides significant long-term revenue visibility.
• The company is in a critical recovery phase, focused on stabilizing production and improving its supply chain for key programs like the 737 MAX and 787, with operational execution being the primary determinant of near-term financial performance.
• While long-term demand fundamentals for air travel and defense remain robust, the company faces high uncertainty related to production ramp-up targets, intense regulatory scrutiny, and a valuation that appears stretched on earnings-based metrics pending a full recovery.

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• Revenue increased to JPY19.5bn (+10.2% YoY) with gross profit at JPY4.5bn (+15.8% YoY) and operating profit at JPY2.2bn (+16.9% YoY).
• Installation Work and Equipment businesses saw revenue growth, with orders at JPY35.2bn (+17.2% YoY) and operating profit up 17.3%.
• Revenue in another segment fell to JPY814mn (-38.4% YoY) with an operating loss of JPY37mn, despite improved margins.

• Dominant Market Leader with Deep Vertical Integration: BYD is a global leader in New Energy Vehicles (NEVs), underpinned by a formidable competitive advantage in its deep vertical integration. The in-house production of critical components, including its proprietary Blade Batteries and semiconductors, provides significant cost control, supply chain resilience, and rapid innovation capabilities.
• Aggressive International Expansion as a Key Growth Driver: Facing a hyper-competitive and maturing domestic market, BYD is aggressively expanding its global footprint. This strategy involves not just exporting vehicles but also establishing localized manufacturing hubs in regions like Southeast Asia, Latin America, and Europe to mitigate tariff impacts and cater to local market preferences.
• Intense Competition and Geopolitical Risks Present Headwinds: The company’s profitability is under pressure from a severe price war in the Chinese domestic market. Furthermore, its international ambitions face significant geopolitical risks, including the imposition of tariffs and trade barriers in key markets like the European Union, which could temper its growth trajectory.

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