Daily Brief Industrials: Tokyo Metro, DN Automotive, Ryobi Ltd, Ohba Co Ltd, Daiseki Co Ltd, AeroVironment Inc, Wizz Air Holdings and more

• 2024 marked our ninth year covering Equity Capital Markets in Asia-Pacific. In 2024, IPO volumes were mainly driven by India, even as Hong Kong showed signs of turning a corner.
• We ended 2024 with an accuracy rate of 79.4% across 68 IPOs that we covered and 68.8% across 109 placements.
• For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

• According to our NAV valuation analysis, it suggests NAV per share of 25,624 won for DN Automotive which is 35% higher than current price.
• We assumed DN Automotive’s estimated post IPO stake of DN Solutions (72.2% stake) would be worth about 4 trillion won. 
• We used a very large holdco discount rate of 70%. DN Automotive is not a pure holdco company but a quasi holding company.

• Ryobi is a leading Japanese manufacturer of die casts, predominantly serving the global auto industry, with an estimated top domestic share of about 20%.
• As the transition out of internal combustion engines (ICE) and into battery electric-powered vehicles (BEV) gathers pace, Ryobi is well placed to capitalize on the demand for lightweight aluminum auto parts, including chassis, e-axle, and battery cases, door frame hinges, and many more parts.
• Although meeting demand generated by this once-in-a -lifetime industrial transformation requires capital expenditures, the company is also focused on improving operating margins over the long term and enhancing shareholder returns, keen to raise its PBR to 1x.

• Share Price: OHBA‘s share price has generally remained flat at a little over JPY 1,000 for the past six months.
• Its share price had risen linearly for a little over a year from JPY 645 at the beginning of 2023, thanks to the Company’s strong shareholder return policy announced in July 2023 targeting a 60% total shareholder return, as well as market recognition and understanding of the Company’s solid growth performance demonstrated by 13 consecutive fiscal years of operating profit growth through FY2024/5.
• However, its share price has recently plateaued.

• Daiseki Co.’s cumulative Q3 sales decreased 6.7% YoY to JPY50.0bn, exceeding the forecast of JPY49.6bn.
• DES’s sales declined 27.6% YoY, impacting consolidated operating profit, which decreased 6.8% YoY to JPY11.0bn.
• FY02/25 forecasts revised upward: sales JPY66.0bn, operating profit JPY14.6bn, with OPM increasing by 0.7pp YoY.

• AVAV is seen as a strong long investment opportunity in comparison to other high-growth defense companies
• The company specializes in producing defense products for the U.S. government and American allies, focusing on reconnaissance and surveillance
• Despite its fast growth and higher revenues compared to competitors like Anduril, AVAV trades at a lower valuation in the public markets and has strong management execution

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Author has a “one problem policy” for investing, avoiding companies with multiple issues that can compound and erode safety margins
• Issues with Wizz include high leverage, engine problems grounding fleet, expensive wet leases impacting earnings, and inherent airline risks
• Despite challenges, wet leases to end soon and management projects improved net income in the future

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.