INDUSTRIALS Archives | Page 165 of 295 | Smartkarma

• Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
• The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
• Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.

• 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 – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
• Event-Driven developments – E Guardian Inc (6050 JP), Itochu Techno Solutions (4739 JP), Toshiba Corp (6502 JP), Symbio Holdings (SYM AU), Metro Pacific Investments Co (MPI PM).     

• Transport industry officials want to ban ‘free shipping’, forcing customers to pay for all deliveries and even redeliveries.
• The aim is to reduce demand in time for new rules on driver overtime due to come into force next year and should relieve pressure on Yamato and others.
• There is also more collaboration to reduce costs and labour: Yamato has scrapped its small packet business entirely, passing customers on to Japan Post. 

• On Friday container giant AP Moeller – Maersk A/S (MAERSKB DC) raised FY23 guidance, lifting the bottom of its EBITDA range & increasing target FCF from US$2bn+ to US$3bn+
• Despite beating Q2 expectations and raising FY guidance, management warned that the “normalization” of container shipping conditions is taking longer than anticipated
• Maersk’s shares traded down on the news, but the company’s statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk’s TTM ROIC 34%!)

• This may get squeezy after Nippon Yusen Kk (9101 JP) announced a ¥200bn over 9mos. Do not be short. Be long. 
• On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP). 
• Remain bullish Kawasaki Kisen Kaisha (9107 JP) vs TOPIX, especially near-term. But this is a much less exciting and squeeze-able opportunity than before,

• WW Grainger Inc. delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• The quarter finished with daily sales growth.
• Along with the strong top-line growth of WW Grainger, it delivered continued ROIC, robust operating cash flow, and substantial EPS growth.

• This may get squeezy after Nippon Yusen Kk (9101 JP) announced a ¥200bn over 9mos. Do not be short. Be long. 
• On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP). 
• Remain bullish Kawasaki Kisen Kaisha (9107 JP) vs TOPIX, especially near-term. But this is a much less exciting and squeeze-able opportunity than before,

• WW Grainger Inc. delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• The quarter finished with daily sales growth.
• Along with the strong top-line growth of WW Grainger, it delivered continued ROIC, robust operating cash flow, and substantial EPS growth.

• Investors such as Peak XV’s Surge, Blume Ventures, and Mathew Cyriac, former head of Blackstone India, have backed the US$7.3 million round of India-based Ethereal Machines.
• Based in Bangalore, Ethereal Machines uses proprietary Computer Numerical Control machines, such as drills and mills, to produce precision engineering components for aerospace, automobile, and healthcare use.
• The company said that its offerings reduce costs by 30% and production lead times by 40%.

• Investors such as Peak XV’s Surge, Blume Ventures, and Mathew Cyriac, former head of Blackstone India, have backed the US$7.3 million round of India-based Ethereal Machines.
• Based in Bangalore, Ethereal Machines uses proprietary Computer Numerical Control machines, such as drills and mills, to produce precision engineering components for aerospace, automobile, and healthcare use.
• The company said that its offerings reduce costs by 30% and production lead times by 40%.

• In March, NYK announced a new Mid-Term Management Plan discussed in Nippon Yusen – New MidTermPlan = New Shareholder Return Policy. They promised a full Shareholder Return Policy in May. 
• There was limited new SRP discussion in the 9 May earnings announcement. The MTMP suggested ¥200bn over 2yrs. The (Japanese) earnings announcement did too. Then May ended. 
• Now the Buyback Plan is out. ¥200bn over 9mos. That is different. This could move. 

• S.F. Holding (002352 CH) could raise between HK$26-33bn (US$3.4-4.2bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
• The H-shares could get Fast Entry to certain indices and regular entry to others depending on the number of shares that are allotted to cornerstone and/or strategic investors.
• The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

• On 28 July, Toshiba Corp (6502 JP) disclosed that JIP delayed the tender start to “sometime in August 2023” vs the target “in the last ten days of July 2023.”
• Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.
• The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. 

• It has been reported in local media that investors in exchangeable bonds issued by Irum TNC converted about 0.24 million shares of EBs into Ecopro BM equity on 26 July.
• There are increasing concerns that the remaining EB could be released into the market in the coming months. 
• After the poor 2Q 2023 results, we believe the consensus is likely to reduce sales and profit estimates of Ecopro BM from 2023 to 2025.

• In March, NYK announced a new Mid-Term Management Plan discussed in Nippon Yusen – New MidTermPlan = New Shareholder Return Policy. They promised a full Shareholder Return Policy in May. 
• There was limited new SRP discussion in the 9 May earnings announcement. The MTMP suggested ¥200bn over 2yrs. The (Japanese) earnings announcement did too. Then May ended. 
• Now the Buyback Plan is out. ¥200bn over 9mos. That is different. This could move. 

• S.F. Holding (002352 CH) could raise between HK$26-33bn (US$3.4-4.2bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
• The H-shares could get Fast Entry to certain indices and regular entry to others depending on the number of shares that are allotted to cornerstone and/or strategic investors.
• The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

• On 28 July, Toshiba Corp (6502 JP) disclosed that JIP delayed the tender start to “sometime in August 2023” vs the target “in the last ten days of July 2023.”
• Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.
• The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. 

• It has been reported in local media that investors in exchangeable bonds issued by Irum TNC converted about 0.24 million shares of EBs into Ecopro BM equity on 26 July.
• There are increasing concerns that the remaining EB could be released into the market in the coming months. 
• After the poor 2Q 2023 results, we believe the consensus is likely to reduce sales and profit estimates of Ecopro BM from 2023 to 2025.

• Today, Kawasaki Kisen Kaisha (9107 JP) announced Q1 earnings. As expected, net was WAY down on weak container business. But the company revised up H1 and Full-Year.
• KLINE increased its FY2023 payout, upping its expected buyback plan from ¥50bn to ¥60bn. This is still cheap at 8.5x and 0.7x book, and there is non-container growth. 
• The structure of the buyback deserves attention. It may deserve a very short-term trade. The buyback construct has the possibility of “fun and games.”

• ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
• The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
• Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit

• Fortive Corporation delivered a strong result and managed an all-around beat in the last quarter, showcasing its portfolio’s durability and the strength of its execution.
• The company achieved higher core growth, margins, earnings, and free cash flows.
• Their focus on building leading positions across customers’ critical connected workflows has paid off, demonstrated by the significant margins and expansion in adjusted operating margins.

Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% upside.

• Today, Kawasaki Kisen Kaisha (9107 JP) announced Q1 earnings. As expected, net was WAY down on weak container business. But the company revised up H1 and Full-Year.
• KLINE increased its FY2023 payout, upping its expected buyback plan from ¥50bn to ¥60bn. This is still cheap at 8.5x and 0.7x book, and there is non-container growth. 
• The structure of the buyback deserves attention. It may deserve a very short-term trade. The buyback construct has the possibility of “fun and games.”

• ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
• The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
• Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit

• Fortive Corporation delivered a strong result and managed an all-around beat in the last quarter, showcasing its portfolio’s durability and the strength of its execution.
• The company achieved higher core growth, margins, earnings, and free cash flows.
• Their focus on building leading positions across customers’ critical connected workflows has paid off, demonstrated by the significant margins and expansion in adjusted operating margins.

Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% upside.

• In April, Sekisui Jushi (4212 JP) announced lackluster earnings and unsurprising guidance after a year marked by higher costs. It also announced a small (2.5%) buyback, likely for cross-holdings.
• Yesterday, the company announced Q1 results, and a revision to their buyback programme (to buy 20.2% of shares out). This morning their 22+% (#1) shareholder Sekisui Chemical sold 18%. 
• Forward PER dropped nearly 20%. The stock is still outrageously cash/securities-rich and if “re-levered” to zero net leverage would get a high 20s ROE. Hmmm…

• Ecopro BM (247540 KS) and Kum Yang (001570 KS)’s shares are down 2.5% and 4.5%, respectively today, driven by news of insiders at these companies selling their shares.
• It is estimated that the total amount of Ecopro BM shares sold by insiders and related parties was about 20 billion won in July by more than 12 insiders/related parties.
• We are increasingly concerned about insiders selling at Ecopro BM and Kum Yang. Coupled with lofty valuations, we think there is a higher probability of downside risk on these names. 

• As of 1 August, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (2822 HK) in September.
• There should be over 1x ADV to buy on NARI Technology Co Ltd A (600406 CH) and over 1x ADV to sell on Shaanxi Coal Industry (601225 CH). 
• There are a few stocks bunched around similar market caps among the potential adds and there could be changes to the list over the next few weeks.

• 3M Company delivered a strong result and managed an all-around beat in the last quarter.
• Their cost management efforts and restructuring initiatives primarily drove these margin increases.
• We give 3M Company a ‘Hold’ rating with a revised target price.

• General Dynamics delivered a positive result and managed an all-around beat in the last quarter.
• General Dynamics had a revenue increase across Defense segments and a modest increase in Aerospace.
• The revenue increase came from international vehicle programs at European Land Systems and Land Systems.

XP Power reported year-on-year revenue growth of 30% in H123 as it made good progress shipping from its elevated backlog. As expected, orders declined year-on-year, but the c £250m backlog still provides at least nine months’ revenue visibility. The company continues to invest for the longer term in Malaysia (manufacturing) and the United States (R&D). With no change to management’s full year expectations, we maintain our normalised operating profit forecasts for FY23 and FY24 and nudge up our interest cost forecast for FY23.

• Old Dominion Freight Line Inc. delivered a mixed set of results for this quarter with revenues below the analyst consensus.
• Considering the operating challenges that are associated with the domestic economy’s continued softness, and decreased volumes, the financial results were solid.
• We give Old Dominion Freight Line an ‘Underperform’ rating with a revised target price.

• Otis Worldwide managed to surpass the revenue and earnings expectations of Wall Street.
• Otis also achieved significant milestones in innovation, launching the Gen3 Core elevator and securing major projects globally.
• Looking ahead, Otis’ management has raised its 2023 outlook, and with the launch of the UpLift program, the company aims to drive efficiency and sustainable growth for the future.

• TRS continues to grow in its two smaller business segments while the packaging segment continues to experience a moderated recovery
• Predominantly consumer staples. Inventory management has been the main culprit for the packaging segment not recovering as fast as expected
• We believe the softness in packaging has created an investment opportunity in TRS’s stock as the Company streamlines its operations