In today’s briefing:
- Yangzijiang Shipbuilding (YZJSGD SP) Rolls Over As The US Seeks To Curb China’s Shipping Dominance
- Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer
- Shortlist of Top India Small Cap Ideas: Value, Insider Buying & Margin of Safety-February 2025
- StubWorld: Daemyung Sono Takes Control Of T’Way Holdings (004870 KS)
- TRAXION 4Q24: Positive EBITDA Margin Expansion (Quick View)
- POSCO Int & Seah Steel Holdings: Key Beneficiaries of Trump’s Plan to Develop Alaskan Gas Fields
- Rocket Lab (RKLB):We Think It’s Going To Be A Long, Long Tim
- Sustainable Investing Surveyor: Focus on Bridger Aerospace (BAER)
- HNI Corporation – New Revenue, EPS Estimates…
- Amaero International Ltd – Fully funded through to commercialisation
Yangzijiang Shipbuilding (YZJSGD SP) Rolls Over As The US Seeks To Curb China’s Shipping Dominance
- After the United States Trade Representative’s (USTR) office proposed a raft of fees and other shipping restrictions on Chinese vessels, non-SOE Yangzijiang Shipbuilding (YZJSGD SP) is down 16%.
- Port entrance fees include up to US$1mn/vessel owned by Chinese transport operators; and non-Chinese transport operators operating Chinese-built vessels would pay up to US$1.5mn per port entry
- Fees are currently preliminary, and may, as witnessed in recent Trump policies, be a bargaining chip rather than firm action. If enacted, these measures would curtail a promising Chinese export.
Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer
- Tonami Holdings (9070 JP) has recommended a Japan Post Holdings (6178 JP)-sponsored MBO at JPY10,200, a 73.8% premium to the last close.
- The offer is attractive compared to historical trading ranges and peer multiples. The offer represents an all-time high.
- The offer is above the midpoint of the special committee IFA’s DCF valuation range but below that of the target IFA. However, the required minority acceptance rate is not onerous.
Shortlist of Top India Small Cap Ideas: Value, Insider Buying & Margin of Safety-February 2025
- We compile our selection of small-cap companies based on our desired characteristics: insider buying, value, near term growth triggers and margin of safety.
- Out top picks are Sarla Performance Fibers Ltd (SRPL IN) , Quess Corp Ltd (QUESS IN) , and GNA Axles Ltd (GNA IN)
- Given the steep correction in small and mid-cap Indian stocks, all the mentioned companies have seen active insider buying in recent weeks.
StubWorld: Daemyung Sono Takes Control Of T’Way Holdings (004870 KS)
- Daemyung Sono Group will acquire a controlling 46.26% stake in T’Way Holdings (004870 KS) (THI) held by Yearimdang Publishing (036000 KS). THI looks stretched.
- Preceding my comments on the T’way Group are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
TRAXION 4Q24: Positive EBITDA Margin Expansion (Quick View)
- TRAXION posted a positive report (above our expectations but below consensus estimates).
- Total revenues increased by 14% YoY, while EBITDA rose 14% YoY with a positive recovery trend (margin expansion compared vs. 1H24).
- Net income amounted to P$203 M, a 3% YoY contraction vs. P$209 M in 4Q23 due to non-recurring expenses related to the 2024 efficiencies plan.
POSCO Int & Seah Steel Holdings: Key Beneficiaries of Trump’s Plan to Develop Alaskan Gas Fields
- Posco International Corporation (047050 KS) and SeAH Steel Holdings (003030 KS) are two key beneficiaries of the Trump administration’s efforts to significantly increase the Alaskan gas fields.
- The initial estimated cost of this massive project is about $44 billion for the pipeline and related infrastructure.
- Despite recent rallies, the valuations of POSCO International and Seah Steel Holdings remain attractive.
Rocket Lab (RKLB):We Think It’s Going To Be A Long, Long Tim
- Rocket Lab (RKLB) is a rocket development and space systems company that has seen shares rise 485% over the last year to a $11.2 billion valuation, propelled by investor and analyst excitement over the upcoming launch of Neutron, a medium-lift rocket that RKLB hopes will compete with SpaceX’s Falcon 9.
- We believe that RKLB has materially misled investors about the likelihood that its Neutron rocket will launch in mid-2025, a timeline the company has repeatedly claimed in media interviews and on earnings calls. In fact, rocket experts we spoke to put the timeline of a rocket launch from mid-2026 to mid-2027, a one to two year delay.
- Many aspects of RKLB’s Neutron program remain far behind where they need to be: from engine development, to engine and structure production, to launch pad construction, to rocket transport to the launch site, per documents we reviewed and 23 interviews with industry experts, including former Rocket Lab engineers and executives.
Sustainable Investing Surveyor: Focus on Bridger Aerospace (BAER)
- The WTR Sustainable Index was down 1.3% W/W versus the S&P 500 Index (down 1.7%), the Russell 2000 Index (down 3.7%), and the Nasdaq Index (down 2.3%).
- Energy Technology (13.1% of the index) was down 2.2%, while Industrial Climate and Ag Technology (46.3% of the index) was down 1.8%, ClimateTech Mining was up 2.9%, and Advanced Transportation Solutions (21.7% of the index) was down 2.9%.
- Top 10 Performers: SOLO, XOS, EFOI, AZRE, BNRG, KNDI, LOOP, GRB, EGT, CRE
HNI Corporation – New Revenue, EPS Estimates…
- HNI reported strong 4Q24 margins despite continued revenue headwinds in both Workplace Furnishings (WF) and Residential Building Products (RBP), with adjusted EPS of $0.87 beating our estimate of $0.78 and consensus even as revenue came in lighter than our expectations in both segments.
- See (1) for our summary of the quarter and our variance analysis below.
- EPS should continue to grow through FY26, even on flat revenue, on the basis of (1) continued margin strength, and (2) KII and Mexico synergies delivering $0.70-0.80 EPS growth over the next two years.
Amaero International Ltd – Fully funded through to commercialisation
- RaaS Research Group has published an update on advanced materials manufacturing group Amaero International (ASX:3DA) following recent events including execution of the credit agreement for the US$22.8m loan from the Export-Import Bank of the United States, the $22m institutional share placement and release of the H1 FY25 results.The company recently announced a $22m institutional placement, priced at $0.30/share, concluding a series of six strategic capital raises since May 2022 to raise $98.5m.
- The company says the proceeds from the raise together with the now executed credit agreement for a US$22.8m (A$36.2m) loan from the Export-Import Bank of the United States (EXIM), will fund Amaero’s planned capital expenditure and operations through to anticipated EBITDA break-even in FY26.
- Separately, Amaero has also released its H1 FY25 accounts, delivering a better-than-forecast underlying EBITDA loss of $7.5m versus our forecast for $9.1m.
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