In today’s briefing:
- Yamauchi No.10 Announces Its Offer (If Toyo Accepts)
- Daifuku – Just Too Pricey
- Cahya Mata Sarawak (CMSM.KL) – 1 Q22: Beats Expectations
- Kajaria Ceramics – Soaring Gas Prices Dent Margins
Yamauchi No.10 Announces Its Offer (If Toyo Accepts)
- Yamauchi No.10 Family Office and Toyo Construction (1890 JP) have been going back and forth in the last few weeks, with TC trying to figure out if it accepts YFO.
- The Infroneer Tender Offer ends today, and with that – perhaps coincidental timing and perhaps not – YFO has formally announced an intention to launch a Tender Offer.
- That puts the ball back in Toyo Construction’s court. The deal would be at ¥1,000/share and would launch in late June… if TC is ready and willing.
Daifuku – Just Too Pricey
- Daifuku’s 4QFY22 was strong with revenue of ¥143bn (+3.8% vs. consensus) and OP of ¥17.3bn (+8.2% vs. consensus).
- Guidance was relatively strong at the top line, 1.1% above but margin assumptions were far too conservative resulting in a 4.1% miss vs. consensus.
- One may think that creates upside potential but guidance for 2H to grow vs. 1H is optimistic and valuations are too stretched to withstand a deceleration in earnings momentum.
Cahya Mata Sarawak (CMSM.KL) – 1 Q22: Beats Expectations
- Tactical U/G to BUY
- Core net profit up +123% YoY, +5% QoQ
- Optimistic on prospects
- Two deals pending completion
1Q22 core net profit of MYR72m was 37%/34% of our/consensus FY22E, with the beat coming from its cement, road maintenance and property ops, and strong assoc contribution. We make no change to our earnings forecasts pending completion of sale of its 25% stake in OMS. The stock now offers >10% upside (incl. div yld) to our unchanged MYR1.27 TP (based on 7x FY22E PER; -1SD of LT mean). Tactical U/G to BUY.
Kajaria Ceramics – Soaring Gas Prices Dent Margins
- Q4FY22 performance: Kajaria posted lower-than-estimated margin (~200bps miss) in Q4FY22, as margin compressed QoQ on rising gas prices (crude linked).
- Outlook: For FY23, KJC targets volume/revenue growth of ~15-20%/20-25%.
- It expects India’s tiles export to increase by ~35% YoY, as sharp spikes in gas and electricity prices in European countries have increased Indian tile’s competitiveness.
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