Daily BriefsIndustrials

Industrials: Transurban Group, Shenzhen International, Asia High Yield Bond Index, Gadang Holdings and more

In today’s briefing:

  • Transurban Entitlement and Shortfall – Well Flagged Deal for a Well Known Asset
  • Shenzhen Intl (152 HK): Positive Highlights from Recent Catch-Up with Company
  • CK Asset Launches S$ PerpNC3; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and L…
  • Ends Contract Drought

Transurban Entitlement and Shortfall – Well Flagged Deal for a Well Known Asset

By Sumeet Singh

Transurban aims to raise around US$3.2bn (A$4.2bn) via a mix of entitlement offer and private placement to AustralianSuper to fund the acquisition of the remaining 49% stake in WestConnex.

We have covered some of the prior entitlement offer related shortfall bookbuilds in the past:

In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


Shenzhen Intl (152 HK): Positive Highlights from Recent Catch-Up with Company

By Osbert Tang, CFA

We came back with a positive view on Shenzhen International (152 HK) after a brief catch-up discussion with the company. For 2H21, we see upside potential in earnings and our takeaways are also encouraging. We see possibility for higher earnings contribution from the Meilin Checkpoint project and logistics business on asset divestment. At just 6x PER, 0.6x P/B (-2 SD below average) and 8.6% dividend yield for FY21, SZI’s valuations are attractive relative to the fundamentals.

Strategically, the new CEO will foster closer working relations with its parent and affiliates, it is a beneficiary of the Qianhai expansion (as it still has 40% land yet to be developed) and it sees possibility of participation in the booming air cargo terminal business of Air China. We believe the recent share price weakness is a good opportunity for this interesting name in the Greater Bay Area. 


CK Asset Launches S$ PerpNC3; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and L…

By BondEvalue

US markets ended lower with both S&P and Nasdaq closing 0.9% in the red. Barring Healthcare which was up 0.1% all sectors ended in the red with Materials, Utilities and IT falling the most, down 2.1%, 1.6% and 1.5% respectively. European stocks finished lower too – DAX was down 1%, CAC 0.8% and FTSE 0.9% lower. Brazil’s Bovespa fell sharply by 2.1%, adding to the week’s losses. In the Middle East, UAE’s ADX and Saudi TASI lost 1% and 0.2% respectively on Sunday. With regard to Asian equity markets, Shanghai, KOSPI and Nikkei are closed today. HSI is down ~4%, with  Bloomberg mentioning the fall has been driven the biggest sell-off in property stocks since May 2020 as Hong Kong’s property index is down 5.9%. US 10Y Treasury yields were 2bp reaching 1.34%. US IG and HY CDX spreads widened 0.6bp and 5bp respectively. EU Main CDS spreads were 0.4bp wider and Crossover CDS spreads widened 2.9bp. Asia ex-Japan CDS spreads widened 4.5bp.

Ends Contract Drought

By TA Securities Holdings Bhd

First Construction Job Win in FY22 GADANG’s wholly-owned subsidiary, Gadang Engineering (M) Sdn Bhd, has secured an RM100.3mn subcontract works for Central Spine Road (Package 2) from Binary Vista Sdn Bhd. The subcontract works include demolition, site clearance, earthwork, and an access bridge to Kuala Berang, Terengganu. […] Assuming a gross margin of 10%, the project is estimated to generate RM4.0mn of net earnings throughout the construction period. With this new job win, GADANG’s outstanding order book is estimated at RM525.0mn, translating into 1.4x FY21 construction revenue. […] Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.

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