Daily BriefsIndustrials

Industrials: Toshiba Corp, Nishimatsu Construction Co, ANE Logistics, Asia High Yield Bond Index, Nuvoco Vistas and more

In today’s briefing:

  • Toshiba – Activist Expectations Are Starting to Make Us Antsy
  • Nishimatsu Construction (1820) About to Do Its Last Buyback for a While, and You Can’t Participate!
  • ANE IPO: Limited Room for Margin Expansion
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • ANE Logistics Pre-IPO – PHIP Updates – Underlying Growth Is Far from Clear
  • Nuvoco Vistas (Initiating Coverage): Strengthening its leadership position. BUY

Toshiba – Activist Expectations Are Starting to Make Us Antsy

By Mio Kato

The FT had an interesting update on Toshiba’s situation today. They discussed expected valuations from activist investors and the pressure on management to hit those valuations through some combination of asset sales and a PE fund buyout. While such moves could be positive, we are starting to turn more negative on the name.


Nishimatsu Construction (1820) About to Do Its Last Buyback for a While, and You Can’t Participate!

By Travis Lundy

Back in June, Sanshin Electronics (8150 JP) announced a buyback for 28.8% of the company. It came after a long buying campaign by one specific investor. Normally this would be “good news.” Those who want to get out could sell a significant portion of their holding without friction and others could look at the situation and see significant improvement to capital allocation and huge accretion. My piece was called Sanshin Electronics (8150 JP) BIG Buyback Tender – Not Designed For You 

Today, Nishimatsu Construction Co (1820 JP) announced a similar transaction. The stock has done somewhat well over as of recent, hitting a 20+yr high in the past few weeks.

The company has announced it will buy up to 15,000,000 shares for up to ¥54.447bn. That is 26.98% of shares outstanding. The share buyback transaction will be undertaken as a Tender Offer, running from 22 September to 20 October, with the buyback price ¥3,626/share, which is a small premium to the close – Yay!

And once again…

…it is not for you. 


ANE IPO: Limited Room for Margin Expansion

By Shifara Samsudeen, ACMA, CGMA

ANE Logistics (1292621D CH) operates a leading freight express network in China’s less-than-truckload (LTL) market. According to iResearch, ANE has been ranked the largest player in China’s LTL market since 2017 and held a market share of 0.5% in 2020 in terms of total freight volume. The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange and according to news media outlets, the company plans to raise net proceeds of around US$500m.

In this insight, we examine the company’s business model, revenues, margins and outlook.


Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US markets witnessed a sharp sell-off making it the worst trading session since May. Market volatility remained high as investors watch for the impact of economic disruptions in China, particularly in the real estate space and the upcoming Fed Meeting – the tech heavy Nasdaq fell 2.2% while S&P dropped 1.7%. Sectors across were deep in the red led by Energy tanking 3% followed by Consumer Discretionary and Financials losing more than 2.2%. European stocks had a similar story – DAX fell another 2.3%, CAC 1.7% and FTSE 0.9% with banks falling as much as 4.1%. Brazil’s Bovespa plunged another 2.3% adding to the 2.1% loss witnessed on Friday. In the Middle East, UAE’s ADX and Saudi TASI lost 0.8% and 0.6% respectively. Shanghai remains closed for the mid-autumn festival holiday while most of the other Asian equity indices followed the West – HSI has added another 1% to yesterday’s losses of ~3% in early trading and Nikkei was down 2% while Singapore’s STI was slightly up 0.1%. Hong Kong’s CPI YoY for Aug came softer at 1.6% vs. 3.7% last year expectations of 1.8%.  US 10Y Treasury yields widened 2bp to 1.31%.

ANE Logistics Pre-IPO – PHIP Updates – Underlying Growth Is Far from Clear

By Sumeet Singh

ANE, an express freight network operator in China for less-than-truckload (LTL) market, aims to raise around US$500m in its Hong Kong IPO. The company is backed by a host of financial investors including Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.

As per iResearch, ANE’s network was the largest in China in terms of total freight volume over 2017-20 with a market share of 17.2% in 2020.

By Dec 2020, it had collaborated with approximately 26,400 freight partners and agents to serve 3.6m shippers across approximately 96% of the counties and townships in China. Both the freight partners and freight agents operate under its brand and are required to adhere to its service guidelines and policies. ANE’s overall volume and top line growth has been decent. However, not all of its offerings have been growing, while some of its revenue growth was driven by accounting changes. 

We covered various aspects of the deal in our earlier note ANE Logistics Pre-IPO – Margins expanding but appears to be falling behind

In this note we will talk about the updated financials from the PHIP.


Nuvoco Vistas (Initiating Coverage): Strengthening its leadership position. BUY

By HDFC Securities

The recently concluded IPO has also firmed up Nuvoco’s balance sheet. We expect strong cash flow to help accelerate the company’s Karnataka expansion plan. Asset sweating and leverage reduction should bolster return ratios. We initiate coverage on Nuvoco Vistas (Nuvoco) with a BUY rating and a target price of INR 827/share (11x its consolidated Sep23E EBITDA). The company has grown inorganically to become the sixth largest cement company in India and has consolidated its leadership position in the east.

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