Industrials: SCREEN Holdings, Siemens Gamesa Renewable Energy, S.A., Berli Jucker, Avic Shenyang Aircraft, Kajaria Ceramics and more

• Screen Holdings beat FY Mar-22 profit guidance by a wide margin. This year, management is aiming for 12% sales growth and a 22% increase in operating profit.
• New SPE orders have exceeded sales for seven straight quarters and the backlog is at a record high. But 1H of FY Mar-23 is expected to be weak.
• A new factory is scheduled to come on line in 4Q, raising total SPE capacity by 20%. The risk is that this will coincide with a downturn in demand.

• Siemens Energy is considering a cash offer for the 32.9% of Siemens Gamesa it does not own. Group simplification and major restructuring would make sense.
• Applying the 6-month VWAP rule, the offer price could reach c. €18.1/share. Takeover regulation says the offer must be in cash and the price equitable, allowing for other calculation methods.
• Siemens Energy does not need to offer a high premium and could make an announcement on 24 May (CMD). Recommendation is long.

• Yesterday analyst meeting came out with slightly positive tone. However, weak short-term performance from rising energy cost and lower consumer purchasing power and limited upside to our target price
• From management guidance, gross profit margin will be decline 50bps YoY in 2022 due to a rising energy cost and raw material in packaging business and consumer supply business. Meanwhile
• We have positive view on medium to long-term performance supported by better modern retail performance (BigC). Currently,BigC market share was at 21% (+1% to 2% YoY) and we expect BigC 

• As a major player in China’s defense sector with established franchise in combat aircraft, Avic Shenyang Aircraft (600760 CH) will enjoy earnings stability, reflecting positively on its defensiveness.
• We believe it will benefit from China’s efforts to narrow military gap against the US and the increase in military spending due to rising geopolitical tension globally. 
• AVIC Shenyang is less affected by pandemic lockdowns and has showed good capability to improve profitability, which are reflected in the solid 61% growth in 1Q22 recurring profit.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.