INDUSTRIALS Archives | Page 168 of 295 | Smartkarma

• The Korean government has initiated the M&A privatization of HMM, the largest container shipping company in Korea. 
• We are Negative on the shares of HMM Co., Ltd. (011200 KS) in the next 6-12 months. We expect additional 20% to 30%+ downside risk on HMM in this period.
• Although HMM has a strong balance sheet, more investors are likely to emphasize on the negatives including excessive share dilution risk and worsening environment for the global shipping industry.

• Ownership levels in Voltronic Power Technology rise as EM funds open new positions.
• A record 15.7% of EM long-only funds own a position, with Wasatch and Morgan Stanley among the high conviction holders.
• Voltronic Power Technology is now the 12th most widely owned stock in Taiwan and the 7th most overweighted company.  

• Nidec reported strong Q1 results – operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
• The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles. 
• We remain bearish for now given valuation of 25x EV/EBIT.  We are not sure that the new growth driver in Motion & Energy will offset lowered expectations for EVs. 

• CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
• During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.

• Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• In this note we will talk about the trading dynamics.

• FedEx Corporation delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
• Though total revenue declined due to soft demand and yield pressure in international markets, the company maintained revenue quality with disciplined pricing.
• In the quarter, they launched FedEx Sustainability Insights to improve consumer access to emissions information.

• Expeditors International of Washington delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
• In addition to their impressive brokerage operations, Expeditors has successfully leveraged technology and digital solutions to streamline their processes and enhance customer experience.
• We give Expeditors International of Washington a ‘Underperform’ rating with a revised target price.

• Fastenal had a disappointing second quarter of 2023 as it failed to meet the revenue expectations of analysts despite a 5.9% increase in daily sales.
• Its overall business activity has moderated since March, culminating in June with a 4.7% daily sales growth.
• We give Fastenal Company a ‘Hold’ rating with a revised target price.

• Nidec reported strong Q1 results – operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
• The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles. 
• We remain bearish for now given valuation of 25x EV/EBIT.  We are not sure that the new growth driver in Motion & Energy will offset lowered expectations for EVs. 

• CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
• During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.

• Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• In this note we will talk about the trading dynamics.

• FedEx Corporation delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
• Though total revenue declined due to soft demand and yield pressure in international markets, the company maintained revenue quality with disciplined pricing.
• In the quarter, they launched FedEx Sustainability Insights to improve consumer access to emissions information.

• Expeditors International of Washington delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
• In addition to their impressive brokerage operations, Expeditors has successfully leveraged technology and digital solutions to streamline their processes and enhance customer experience.
• We give Expeditors International of Washington a ‘Underperform’ rating with a revised target price.

• Fastenal had a disappointing second quarter of 2023 as it failed to meet the revenue expectations of analysts despite a 5.9% increase in daily sales.
• Its overall business activity has moderated since March, culminating in June with a 4.7% daily sales growth.
• We give Fastenal Company a ‘Hold’ rating with a revised target price.

• Using data from the close on 19 July, there could be 5 changes to the Yuanta/​P-Shares Taiwan Top 50 ETF and 2 deletions for the Yuanta/​P-Shares Taiwan Dividend Plus ETF.
• Stocks that are expected to benefit from the AI revolution could gain ETF inclusion while shipping stocks are the ones expected to be deleted from the ETF.
• There has been a huge increase in shorts on some of the potential inclusions and on most of the potential deletions. That will affect how stocks trade near term.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the September 2023 Rebalance.
• Some semiconductor/electronic component stocks have seen their share prices skyrocket in recent months due to AI-related excitement causing drastic shifts in Leaderboard rankings.
• In my last insight, I expected two T50 changes and one T100 change. Now I expect five T50 changes and three T100 changes.

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

• The Ministry of Land, Infrastructure and Transport’s investigation revealed that the collapse of GS E&C’s underground parking lot was due to deficiencies in design, construction, and supervision.
• As a response, GS E&C will undergo a comprehensive reconstruction of the entire apartment complex, costing approximately KRW 300 billion, which is equivalent to approximately USD 264 million.
• ESG risks have risen due to consumer relations regarding occupational health and safety and risk oversight, with GS E&C’s company risk rating at a ‘very high’ level of 3.1.

• Herein we revise and update MLKN estimates following MillerKnoll’s FY23 earnings report and FY24 guidance.

• Our 1QFY24 diluted non-GAAP EPS estimate is now $0.20, down $0.10 from our previous (reduced) $0.30 estimate.

• Our FY24 annual estimate is now $1.82 (down from $2.00), below the midpoint of the $1.70-$2.00 management outlook.

• Using data from the close on 19 July, there could be 5 changes to the Yuanta/​P-Shares Taiwan Top 50 ETF and 2 deletions for the Yuanta/​P-Shares Taiwan Dividend Plus ETF.
• Stocks that are expected to benefit from the AI revolution could gain ETF inclusion while shipping stocks are the ones expected to be deleted from the ETF.
• There has been a huge increase in shorts on some of the potential inclusions and on most of the potential deletions. That will affect how stocks trade near term.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the September 2023 Rebalance.
• Some semiconductor/electronic component stocks have seen their share prices skyrocket in recent months due to AI-related excitement causing drastic shifts in Leaderboard rankings.
• In my last insight, I expected two T50 changes and one T100 change. Now I expect five T50 changes and three T100 changes.

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

• The Ministry of Land, Infrastructure and Transport’s investigation revealed that the collapse of GS E&C’s underground parking lot was due to deficiencies in design, construction, and supervision.
• As a response, GS E&C will undergo a comprehensive reconstruction of the entire apartment complex, costing approximately KRW 300 billion, which is equivalent to approximately USD 264 million.
• ESG risks have risen due to consumer relations regarding occupational health and safety and risk oversight, with GS E&C’s company risk rating at a ‘very high’ level of 3.1.

• Herein we revise and update MLKN estimates following MillerKnoll’s FY23 earnings report and FY24 guidance.

• Our 1QFY24 diluted non-GAAP EPS estimate is now $0.20, down $0.10 from our previous (reduced) $0.30 estimate.

• Our FY24 annual estimate is now $1.82 (down from $2.00), below the midpoint of the $1.70-$2.00 management outlook.

• Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and  51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
• Preceding my comments on SZ Int’l/SZ E’Way are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• After the Blackmores Ltd (BKL AU) Scheme Meeting result was announced earlier today, post-close the S&P/ASX team announced Ventia (VNT AU) would replace it on 21 July at the close.
• This is not that surprising. Janaghan Jeyakumar, CFA expected it in June, and it was a super-close second recently for him for the Sep rebalance. 
• Given the shareholder structure and flow dynamics, it’s worth taking a closer look.

• SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024.
• Local media have mentioned that SK Ecoplant’s market cap could range from 5 trillion won to 10 trillion won.
• At the end of 2022, SK Inc’s 44.5% stake in SK Ecoplant had a book value of 545 billion won, which is much less the market value of SK Ecoplant.

• The company has shifted its growth driver from rail equipment to EV parts supplier.
• Q1 23 growth came from emerging equipment coming to the rescue at a double digit rate when the train equipment segment recorded a slight decrease. 
• Compared to last year, the company is trading at a lower valuation, yet its key growth driver has a better and more sustainable quality. 

• Ever since our 5/30/23 ETF Pathfinder, our view has been that we cannot be bearish unless a key support level breaks (at the time, that was 4050 on the SPX).
• The S&P 500 is now above 4300-4325 — a level that, in January this year, we had anticipated would cap upside for 2023.
• We believe 4300-4325 will act as major support moving forward, and we are bullish as long as the SPX is above 4300; we discussed this in our 7/3/23 ETF Pathfinder.

• Those that the local market is particularly interested in are the 192nd convertible bonds (CB) held by KDB, along with the 193rd bonds with warrants (BW) owned by KOBC.
• These two bonds’ call option exercise date is September 25th. Upon conversion of these bonds, 200M new shares will be issued (41% of SO and a 30% dilution).
• The key is the trade-off between not disrupting the selling process and avoiding any breach of trust. The prevailing local sentiment suggests that KDB and KOBC will choose stock conversion.

• NodeFlair, a Singapore-based career advancement platform for tech talents, announced today that it has raised US$2 million Series A funding.
• The funding round was led by Iterative with participation from 500 Global and PERSOL VENTURE PARTNERS, the corporate venture capital arm of HR management group PERSOL.
• Prominent angel investors Quek Siu Rui (CEO & Co-founder of Carousell), JJ Chai (CEO & Co-founder of Rainforest), and Siew Kum Hong (Former COO of AirBnB China) also participated in the funding round.

• Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and  51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
• Preceding my comments on SZ Int’l/SZ E’Way are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• After the Blackmores Ltd (BKL AU) Scheme Meeting result was announced earlier today, post-close the S&P/ASX team announced Ventia (VNT AU) would replace it on 21 July at the close.
• This is not that surprising. Janaghan Jeyakumar, CFA expected it in June, and it was a super-close second recently for him for the Sep rebalance. 
• Given the shareholder structure and flow dynamics, it’s worth taking a closer look.

• SK Ecoplant is getting ready to complete its IPO sometime in late 2023/1H 2024.
• Local media have mentioned that SK Ecoplant’s market cap could range from 5 trillion won to 10 trillion won.
• At the end of 2022, SK Inc’s 44.5% stake in SK Ecoplant had a book value of 545 billion won, which is much less the market value of SK Ecoplant.

• The company has shifted its growth driver from rail equipment to EV parts supplier.
• Q1 23 growth came from emerging equipment coming to the rescue at a double digit rate when the train equipment segment recorded a slight decrease. 
• Compared to last year, the company is trading at a lower valuation, yet its key growth driver has a better and more sustainable quality. 

• Ever since our 5/30/23 ETF Pathfinder, our view has been that we cannot be bearish unless a key support level breaks (at the time, that was 4050 on the SPX).
• The S&P 500 is now above 4300-4325 — a level that, in January this year, we had anticipated would cap upside for 2023.
• We believe 4300-4325 will act as major support moving forward, and we are bullish as long as the SPX is above 4300; we discussed this in our 7/3/23 ETF Pathfinder.

• Those that the local market is particularly interested in are the 192nd convertible bonds (CB) held by KDB, along with the 193rd bonds with warrants (BW) owned by KOBC.
• These two bonds’ call option exercise date is September 25th. Upon conversion of these bonds, 200M new shares will be issued (41% of SO and a 30% dilution).
• The key is the trade-off between not disrupting the selling process and avoiding any breach of trust. The prevailing local sentiment suggests that KDB and KOBC will choose stock conversion.

• NodeFlair, a Singapore-based career advancement platform for tech talents, announced today that it has raised US$2 million Series A funding.
• The funding round was led by Iterative with participation from 500 Global and PERSOL VENTURE PARTNERS, the corporate venture capital arm of HR management group PERSOL.
• Prominent angel investors Quek Siu Rui (CEO & Co-founder of Carousell), JJ Chai (CEO & Co-founder of Rainforest), and Siew Kum Hong (Former COO of AirBnB China) also participated in the funding round.

• Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.” 
• Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
• Lots of moving parts on this one, but in the end, Retail probably decides this.

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 29%+ stake was released from lock-up today.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. 
• In this note, we will talk about the lockup dynamics and possible placement.

• Since the announcement of the proposed Tokyo Disney Sea expansion in 2015, Keisei Electric Railway Co (9009 JP)‘s price perfromance has significantly diverged from Oriental Land (4661 JP)‘s price performance.
• The valuation disparity may result from the Disney Sea expansion’s impact, possibly due to Keisei Electric’s value-oriented investor base.
• Fantasy Springs’ opening could resolve the valuation distortion, leading to potential rewards in a Long Keisei Electric and Short Oriental Land trade.

• We expect Shenzhen International (152 HK) to sustain efforts in realising and releasing the value of its assets, and this will be positive in narrowing its discount to book.
• The plan to issue REIT by using Hangzhou and Guizhou logistics projects as underlying assets will add to earnings. We estimate they account for 14% of SZI’s total project area.
• Subscription to A-share issuance of Shenzhen Expressway Co (548 HK) will increase its book value by Rmb5bn. This will lower its P/B multiple to 0.46x, from 0.54x.

• Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of 12,500 won. 
• We estimate Nexteel to generate sales of 883.6 billion won (up 32.2% YoY) and operating profit of 257.4 billion won (up 42% YoY) in 2023.
• Nexteel’s main products include pipes used to extract oil and gas from oil wells. It also makes steel pipes for transporting oil & steam, construction, shipbuilding, and machinery industries.

• DWF Group (DWF LN) is discussing with Inflexion regarding a 100p/share offer (£342 million implied equity value, 53% premium, 8.2x Fwd P/E, but 18% discount to IPO price). PUSU is 7 August.
• Spread to the offer price is 16.2%. The market is pricing a 53% chance to complete the deal, which seems low. Poor cash generation and leverage are already known.
• The shares trade at 6.7x Fwd P/E, 7.6% dividend yield and 18.6% FCF yield (IBES estimates). Considering that management has said it would recommend the offer, my TP is 100p.

• Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.” 
• Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
• Lots of moving parts on this one, but in the end, Retail probably decides this.

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 29%+ stake was released from lock-up today.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. 
• In this note, we will talk about the lockup dynamics and possible placement.

• Since the announcement of the proposed Tokyo Disney Sea expansion in 2015, Keisei Electric Railway Co (9009 JP)‘s price perfromance has significantly diverged from Oriental Land (4661 JP)‘s price performance.
• The valuation disparity may result from the Disney Sea expansion’s impact, possibly due to Keisei Electric’s value-oriented investor base.
• Fantasy Springs’ opening could resolve the valuation distortion, leading to potential rewards in a Long Keisei Electric and Short Oriental Land trade.

• We expect Shenzhen International (152 HK) to sustain efforts in realising and releasing the value of its assets, and this will be positive in narrowing its discount to book.
• The plan to issue REIT by using Hangzhou and Guizhou logistics projects as underlying assets will add to earnings. We estimate they account for 14% of SZI’s total project area.
• Subscription to A-share issuance of Shenzhen Expressway Co (548 HK) will increase its book value by Rmb5bn. This will lower its P/B multiple to 0.46x, from 0.54x.

• Our base case valuation of Nexteel is target price of 18,671 won per share, which represents 49% higher than the high end of the IPO price range of 12,500 won. 
• We estimate Nexteel to generate sales of 883.6 billion won (up 32.2% YoY) and operating profit of 257.4 billion won (up 42% YoY) in 2023.
• Nexteel’s main products include pipes used to extract oil and gas from oil wells. It also makes steel pipes for transporting oil & steam, construction, shipbuilding, and machinery industries.

• DWF Group (DWF LN) is discussing with Inflexion regarding a 100p/share offer (£342 million implied equity value, 53% premium, 8.2x Fwd P/E, but 18% discount to IPO price). PUSU is 7 August.
• Spread to the offer price is 16.2%. The market is pricing a 53% chance to complete the deal, which seems low. Poor cash generation and leverage are already known.
• The shares trade at 6.7x Fwd P/E, 7.6% dividend yield and 18.6% FCF yield (IBES estimates). Considering that management has said it would recommend the offer, my TP is 100p.

• We expect JDL to report C2Q23 revenue and non-IFRS net profit margin (1.5%) and 0.4ppts vs. consensus. We expect 2Q revenue (excl. Deppon) to grow 5%~ YoY .
• JDL is facing increasing competition from (1) the recent launch of Cainiao’s high-end delivery service, (2) improved ZTO service, and (2) Douyin’s actions to increasingly in-source logistics.
• We maintain JDL’s SELL rating but raise its TP to HK$ 9.4, as we expect JDL will lower staffing costs, and by reducing staff redundancy.