INDUSTRIALS Archives | Page 139 of 295 | Smartkarma

• Grab Holdings looks set to move toward cashflow breakeven in 2H2024 having hit adjusted EBITDA breakeven in 3Q2023 as it successfully struck a delicate balance between growth and profitability.
• The sale of 75% of Tokopedia by GoTo may mean more intense competition in Indonesia as it focuses on online delivery services but Grab is well-positioned to deal with this.
• 2024 will see the potential completion of the Transcab deal plus a potential acquisition in food delivery increasing scale and competitiveness. Valuations are attractive relative to growth and financial position.

• Air China (H) (753 HK) is proposing a new share placement to raise Rmb6bn and HK$2bn. EPS dilution is manageable at 6% so we view the proposal positively.  
• The new equity will enhance book value by 11.5% and lower its gearing by 103pp to 399.8%. The full subscription by the parent is also a vote of confidence. 
• Recent share price weakness is due to the overall weakness in the Chinese equity market, but both macro and operating environments are improving. Selldown is unjustified.

• Qantas Airways (QAN AU) (QAN) is enjoying the best time of its life on industry consolidation benefits, demand exceeding supply to many sectors, and flourishing air cargo  
• Domestic Australia is an ironclad goldmine, with a benign competitive environment as the archrival is busy restructuring. International sector capacity deployment is picking up, but still deep in underserved territory     
• Target price AUD6.58 (+23% UPSIDE), based on 7x CY2024 PE – long-term historical mean. AUD500 million share buyback should provide downside support 

• Air China (H) (753 HK) is proposing a new share placement to raise Rmb6bn and HK$2bn. EPS dilution is manageable at 6% so we view the proposal positively.  
• The new equity will enhance book value by 11.5% and lower its gearing by 103pp to 399.8%. The full subscription by the parent is also a vote of confidence. 
• Recent share price weakness is due to the overall weakness in the Chinese equity market, but both macro and operating environments are improving. Selldown is unjustified.

• Qantas Airways (QAN AU) (QAN) is enjoying the best time of its life on industry consolidation benefits, demand exceeding supply to many sectors, and flourishing air cargo  
• Domestic Australia is an ironclad goldmine, with a benign competitive environment as the archrival is busy restructuring. International sector capacity deployment is picking up, but still deep in underserved territory     
• Target price AUD6.58 (+23% UPSIDE), based on 7x CY2024 PE – long-term historical mean. AUD500 million share buyback should provide downside support 

• Open House (3288 JP) took over Sanei Architecture Planning (3228 JP) this past autumn when banks forced the issue over the former CEO/owner’s mafia ties discovered in an investigation.
• Seedheiwa (1739 JP) now better known as Meldia DC, is ~60% held by Sanei Architecture Planning, and 3% by Mr Koike. It has debt. So it needs cleaning up too.
• This is too light for minorities, and even lighter for whole co, but it’s a done deal. 

• Open House (3288 JP) took over Sanei Architecture Planning (3228 JP) this past autumn when banks forced the issue over the former CEO/owner’s mafia ties discovered in an investigation.
• Seedheiwa (1739 JP) now better known as Meldia DC, is ~60% held by Sanei Architecture Planning, and 3% by Mr Koike. It has debt. So it needs cleaning up too.
• This is too light for minorities, and even lighter for whole co, but it’s a done deal. 

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net sell RMB 2.2bn of A-shares on sharply lighter activity. Quieter all week.
• Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

• Stay long Benefit One (2412 JP). Dai-Ichi Life can pay more, if pushed on pricing. May not be huge, but it could be a few percent or even 10%. 
• Hankook & Company (000240 KS)‘s family feud goes public. The public tender looks set to fail. Coal in stockings all-round.
• If you had any Toyo Construction (1890 JP) left over from the rally up to ¥1,300+, get out. There may be a better opportunity later, but not here.

• Following a strong margin performance in 2Q, we are raising our 3QFY24 EPS estimate to $0.43, just below the midpoint of guidance, from $0.38.
• The increase is the result of higher margin assumptions on a lower revenue forecast.
• We are also reviewing and lowering our revenue assumptions for the remainder of FY24 and FY25. 

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Nothing of note in a quiet week.
• Event-Driven developments – Benefit One Inc (2412 JP), JSR Corp (4185 JP), Weiqiao Textile Co (2698 HK), Adbri (ABC AU), Azure Minerals (AZS AU), Link Administration (LNK AU).

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net sell RMB 2.2bn of A-shares on sharply lighter activity. Quieter all week.
• Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

• Stay long Benefit One (2412 JP). Dai-Ichi Life can pay more, if pushed on pricing. May not be huge, but it could be a few percent or even 10%. 
• Hankook & Company (000240 KS)‘s family feud goes public. The public tender looks set to fail. Coal in stockings all-round.
• If you had any Toyo Construction (1890 JP) left over from the rally up to ¥1,300+, get out. There may be a better opportunity later, but not here.

• Following a strong margin performance in 2Q, we are raising our 3QFY24 EPS estimate to $0.43, just below the midpoint of guidance, from $0.38.
• The increase is the result of higher margin assumptions on a lower revenue forecast.
• We are also reviewing and lowering our revenue assumptions for the remainder of FY24 and FY25. 

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Nothing of note in a quiet week.
• Event-Driven developments – Benefit One Inc (2412 JP), JSR Corp (4185 JP), Weiqiao Textile Co (2698 HK), Adbri (ABC AU), Azure Minerals (AZS AU), Link Administration (LNK AU).

• Taxi-Related services operator A2B Australia (A2B AU) has completed a large property sale and subsequently entered into a Scheme with Singapore’s ComfortDelGro Corp (CD SP).
• The property sale enabled a $0.60/share fully franked dividend. Separately, and in addition, ComfortDelGro is offering A$1.45/share. Or A$2.05/share all-in. Before franking credits, for those who can take advantage. 
• The special divi ex-date is the 12 January. It is not conditional on the Scheme. Implementation for the Scheme, assuming all approvals are met, is expected mid-April.

• A2B Australia (A2B AU) has entered a scheme implementation deed with Comfortdelgro Corp (CD SP) at A$1.45 per share. Including the special dividend of A$0.60, the total offer is A$2.05.
• ACCC approval should be forthcoming as ComfortDelGro is not a significant player in Australia. A2B has several substantial shareholders and a high retail shareholder base, posing a risk.
• The shares are trading through terms. However, a bump is unlikely as the offer is attractive, and several substantial shareholders have sold down recently.  

• The Medium-Term Management Plan UNISOL includes the following FY26/12 targets, net sales of ¥200.0 bn, operating profit of ¥10.0 bn, and ROE of 8.5%.
• MARUKA FURUSATO will enter the 2nd stage of the plan, a period of accelerated growth, starting in FY24/12. During the 1st stage of the plan, which was centered on establishing a base, various initiatives were undertaken.
• The company promoted cross sales and expanded rebates through commercial flow integration, starting with streamlining administration departments, which included merging offices. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Aggreko’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial”, but Disclosure is “Weak”.

• Taxi-Related services operator A2B Australia (A2B AU) has completed a large property sale and subsequently entered into a Scheme with Singapore’s ComfortDelGro Corp (CD SP).
• The property sale enabled a $0.60/share fully franked dividend. Separately, and in addition, ComfortDelGro is offering A$1.45/share. Or A$2.05/share all-in. Before franking credits, for those who can take advantage. 
• The special divi ex-date is the 12 January. It is not conditional on the Scheme. Implementation for the Scheme, assuming all approvals are met, is expected mid-April.

• A2B Australia (A2B AU) has entered a scheme implementation deed with Comfortdelgro Corp (CD SP) at A$1.45 per share. Including the special dividend of A$0.60, the total offer is A$2.05.
• ACCC approval should be forthcoming as ComfortDelGro is not a significant player in Australia. A2B has several substantial shareholders and a high retail shareholder base, posing a risk.
• The shares are trading through terms. However, a bump is unlikely as the offer is attractive, and several substantial shareholders have sold down recently.  

• The Medium-Term Management Plan UNISOL includes the following FY26/12 targets, net sales of ¥200.0 bn, operating profit of ¥10.0 bn, and ROE of 8.5%.
• MARUKA FURUSATO will enter the 2nd stage of the plan, a period of accelerated growth, starting in FY24/12. During the 1st stage of the plan, which was centered on establishing a base, various initiatives were undertaken.
• The company promoted cross sales and expanded rebates through commercial flow integration, starting with streamlining administration departments, which included merging offices. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Aggreko’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial”, but Disclosure is “Weak”.

• Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP). 
• The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share. 
• Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.

• Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY2,123 per share, a 32.7% premium to M3 Inc (2413 JP)’s offer.
• The other terms are unchanged. The pre-conditions relate to board recommendation, Pasona Group (2168 JP) support, and the M3 offer not being completed. The tender offer starts in mid-January 2024.
• While M3 has extended its offer period to 17 January 2024, it will unlikely engage in a bidding war. Expect the Board and Pasona to support the Dai-ichi Life proposal.

• Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
• Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
• That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.

• The 20% retreat in the share price of Cosco Shipping Energy Transportation (1138 HK) from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.
• 4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.
• Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F. 

• Airports of Thailand (AOT TB) 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.
• AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while Malaysia Airports Holdings (MAHB MK) kept them under control.
• Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.

• After market close on December 20, MillerKnoll reported 2QFY24 adjusted EPS of $0.59, ahead of our estimate of $0.55 and the consensus mean of $0.54.
• Margins were better than expected, while revenue of $949.5 million came in at the low end of guidance.
• Sales in the Americas segment disappointed relative to our expectations.