INDUSTRIALS Archives | Page 175 of 295 | Smartkarma

• Toshiba Corp (6502 JP)‘s Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.
• Given CR Power (836 HK)‘s clean energy unit’s profitably, a listing should be a significant event, attracting a wide audience, and probably a premium to other listed green energy plays.
• Chindata Group (CD US) is unquestionably cheap. But Bain’s indicative Offer is not the answer to long-suffering shareholders.

• Hydro Lithium (formerly Korea Se Corp) is the top reserved issue in INDUSTRIALS and will get to replace NICE IS as a result of the KOSPI transfer listing.  
• The most significant price movements occur when the index corporate action announcement is made. However, some investors hunt for this pattern, as observed in the case of Youlchon Chemical.
• Hence, it’s worth considering an earlier entry timing. To minimize uncertainty, it’s vital to keep an eye on the preemptive price increase of Hydro Lithium before KRX’s approval.

• Toshiba announced today that its board had shifted stance on JIP’s upcoming tender and would recommend shareholders tender. 
• The special committee will review its opinion on the tender offer and based on that the company will offer another opinion when the tender commences. 
• Despite peers rising 13-30% since April an offer price increase still looks unlikely.

• Toshiba Corp (6502 JP) Board now recommends shareholders accept Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share. The Board also effectively rules out a bump.
• The Board unconvincingly recommends the offer in part on the premise that the IFA’s DCF valuation is unrealistic due to punchy forecasts and positive feedback from stakeholders.  
• The Board fails to consider that the peers have materially re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers’ multiples.

• In March, when the JIP Offer for Toshiba Corp (6502 JP) was announced, the Toshiba Board supported the Offer but declined, at the time, to recommend it to shareholders. 
• “[The price] has clearly not reached the level at which it is possible to recommend to general shareholders that they tender their shares at this time.” That was then.
• 10 weeks later and the Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.

• Redox (RDX AU), a chemical and ingredients distributor, is looking to raise around US$270m in its Australia IPO. 
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide.
• In this note, we undertake a quick peer comaprison and talk about valuations.

• GMR Airports Infrastructure (GMRI IN) saw pressure on its scrip after its results, that witnessed losses widening to INR-8.4 bn in F23 from INR -7.5 bn in F22 (continuing operations).
• The losses have further dented the balance sheet, that already looked fragile over a number of years.
• The company also faces cash generation problems on the back of debt burden, apart from severe contingent liabilities, that could further hamper the net-worth. Investors should remain cautious.

• TransDigm Group managed to exceed analyst expectations in terms of revenue as well as earnings in its recent quarterly result.
• With approximately 90% of net sales generated by unique proprietary products, the company’s focus on aftermarket revenues has provided stability and higher margins.
• TransDigm experienced substantial growth in total commercial revenues and bookings across all major market channels.

The quality of Severfield’s revenues is materially underappreciated by the market in our view, especially now that the UK and EU are embarking on huge investment programmes to renew and upgrade infrastructure to address global trends, such as the drive for net zero emissions. The reorganisation of the group, the internal improvement project (Project Horizon) and the EPS-enhancing M&A deal are not fully reflected in the FY24e P/E rating of c 7.0x, which is comfortably below the long-term average of 10.0x. Our positive stance is supported by the company’s strong balance sheet, progressive dividend and yield of over 5%.

• Jacobs Engineering Group managed to exceed analyst expectations in terms of revenue as well as earnings.
• The People and Places line of business of Jacobs Engineering delivered a strong performance.
• The divergent solutions operating unit had a strong operating profit with up in operating profit.

• Toshiba announced today that its board had shifted stance on JIP’s upcoming tender and would recommend shareholders tender. 
• The special committee will review its opinion on the tender offer and based on that the company will offer another opinion when the tender commences. 
• Despite peers rising 13-30% since April an offer price increase still looks unlikely.

• Toshiba Corp (6502 JP) Board now recommends shareholders accept Japan Industrial Partners (JIP)’s pre-conditional tender offer of JPY4,620 per share. The Board also effectively rules out a bump.
• The Board unconvincingly recommends the offer in part on the premise that the IFA’s DCF valuation is unrealistic due to punchy forecasts and positive feedback from stakeholders.  
• The Board fails to consider that the peers have materially re-rated, the offer’s price ratio remains unattractive and the declining premium of the offer’s implied multiple vs peers’ multiples.

• In March, when the JIP Offer for Toshiba Corp (6502 JP) was announced, the Toshiba Board supported the Offer but declined, at the time, to recommend it to shareholders. 
• “[The price] has clearly not reached the level at which it is possible to recommend to general shareholders that they tender their shares at this time.” That was then.
• 10 weeks later and the Board has a Revised Opinion. It has recommended the Offer for reasons which smack of resignation rather than appropriate deliberation. Investors beware.

• Redox (RDX AU), a chemical and ingredients distributor, is looking to raise around US$270m in its Australia IPO. 
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide.
• In this note, we undertake a quick peer comaprison and talk about valuations.

• GMR Airports Infrastructure (GMRI IN) saw pressure on its scrip after its results, that witnessed losses widening to INR-8.4 bn in F23 from INR -7.5 bn in F22 (continuing operations).
• The losses have further dented the balance sheet, that already looked fragile over a number of years.
• The company also faces cash generation problems on the back of debt burden, apart from severe contingent liabilities, that could further hamper the net-worth. Investors should remain cautious.

• TransDigm Group managed to exceed analyst expectations in terms of revenue as well as earnings in its recent quarterly result.
• With approximately 90% of net sales generated by unique proprietary products, the company’s focus on aftermarket revenues has provided stability and higher margins.
• TransDigm experienced substantial growth in total commercial revenues and bookings across all major market channels.

The quality of Severfield’s revenues is materially underappreciated by the market in our view, especially now that the UK and EU are embarking on huge investment programmes to renew and upgrade infrastructure to address global trends, such as the drive for net zero emissions. The reorganisation of the group, the internal improvement project (Project Horizon) and the EPS-enhancing M&A deal are not fully reflected in the FY24e P/E rating of c 7.0x, which is comfortably below the long-term average of 10.0x. Our positive stance is supported by the company’s strong balance sheet, progressive dividend and yield of over 5%.

• Jacobs Engineering Group managed to exceed analyst expectations in terms of revenue as well as earnings.
• The People and Places line of business of Jacobs Engineering delivered a strong performance.
• The divergent solutions operating unit had a strong operating profit with up in operating profit.

• Japan’s newly approved hydrogen strategy has ignited a stock market rally in related names: KHI (+20%) Iwatani (+15%) Kansai Elec (+2%)
• Japan government approved higher supply targets for hydrogen to bring the hydrogen strategy in line with the most recent energy mix targets
• Kawasaki Heavy Industries plays a key role in Japan’s hydrogen supply chain, specializing in liquefied hydrogen and innovative initiatives

• Redox (RDX AU), a chemical and ingredients distributor, is looking to raise around US$270m in its Australia IPO. 
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide.
• In this note, we will look at the company’s past performance.

• Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th Jun 2023.
• Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline  according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Japan’s newly approved hydrogen strategy has ignited a stock market rally in related names: KHI (+20%) Iwatani (+15%) Kansai Elec (+2%)
• Japan government approved higher supply targets for hydrogen to bring the hydrogen strategy in line with the most recent energy mix targets
• Kawasaki Heavy Industries plays a key role in Japan’s hydrogen supply chain, specializing in liquefied hydrogen and innovative initiatives

• Redox (RDX AU), a chemical and ingredients distributor, is looking to raise around US$270m in its Australia IPO. 
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide.
• In this note, we will look at the company’s past performance.

• Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. The shares began to trade on 14th Dec 2022, its six-month lockup will expire on 11th Jun 2023.
• Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline  according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• ASSA continues to demonstrate the ability to adapt to the changing environment in 1Q2023 with growth in its car fleet and improving profitability for logistics and the last mile. 
• Anteraja has seen a slowdown in e-commerce revenues but is focusing more on building offline customers, whilst ASSA logistics is increasingly focused on mid-mile and cold-chain logistics. 
• JBA Auction is seeing a strong recovery to pre-pandemic levels and maintains 40% market share, whilst Caroline is targeting 3,000-4,000 used car sales in 2023, whilst expanding its offline network.

• In 1Q FY12/23, net sales rose 12.8%, and operating profit increased 20.3%; thus, MARUKA FURUSATO made good progress toward achieving 1H forecasts of 9.2% increase in net sales and 9.4% decline in operating profit.
• As a large percentage of the company’s earnings comes from business orders, short-term earnings are unlikely to change much.
• It appears, however, that the company is making greater than initially expected progress in reducing its order backlog as supply constraints, such as shortage of semiconductors, are eliminated.

• ASSA continues to demonstrate the ability to adapt to the changing environment in 1Q2023 with growth in its car fleet and improving profitability for logistics and the last mile. 
• Anteraja has seen a slowdown in e-commerce revenues but is focusing more on building offline customers, whilst ASSA logistics is increasingly focused on mid-mile and cold-chain logistics. 
• JBA Auction is seeing a strong recovery to pre-pandemic levels and maintains 40% market share, whilst Caroline is targeting 3,000-4,000 used car sales in 2023, whilst expanding its offline network.

• In 1Q FY12/23, net sales rose 12.8%, and operating profit increased 20.3%; thus, MARUKA FURUSATO made good progress toward achieving 1H forecasts of 9.2% increase in net sales and 9.4% decline in operating profit.
• As a large percentage of the company’s earnings comes from business orders, short-term earnings are unlikely to change much.
• It appears, however, that the company is making greater than initially expected progress in reducing its order backlog as supply constraints, such as shortage of semiconductors, are eliminated.

• Media reports indicate that Austal Ltd (ASB AU) is in the crosshairs of investors looking to take the company private.
• In an announcement, Austal Ltd (ASB AU) said it is regularly involved in discussion with strategic parties to create value for shareholders.
• The recent large contract from the US Navy, potentially more contracts in the pipeline and a weak AUD could result in investors paying up to take the company private.

• Media reports indicate that Austal Ltd (ASB AU) is in the crosshairs of investors looking to take the company private.
• In an announcement, Austal Ltd (ASB AU) said it is regularly involved in discussion with strategic parties to create value for shareholders.
• The recent large contract from the US Navy, potentially more contracts in the pipeline and a weak AUD could result in investors paying up to take the company private.

• 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 – Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN), JD Industrials (2231713D CH) IPOs.
• Event-Driven developments – Golden Energy & Resources (GER SP), Challenger Technologies (CHLG SP), Enm Holdings (128 HK), Golden Eagle Retail (3308 HK), Metro Pacific Investments Co (MPI PM), Yashili. 

• In terms of fleet characteristics, market exposure, and recent financial performance, we believe T.S. Lines (TSL HK) and Taiwan’s Wan Hai Lines (2615 TT) are directly comparable
• WHL has more exposure to the Transpacific, but still boasts a much larger Intra-Asia operation owing to its scale advantage (fleet and revenue about four times the size of TSL)
• Given the similarities we outline in this insight, we believe TSL’s shares should trade at EV/Fleet and EV/Revenue multiples in line with WHL’s; no premium is justified, in our view