Smartkarma Daily Briefs

• Barnes Group, a diversified global manufacturer and service provider, presented its financial results and strategic developments during the first quarter of 2024.
• The company reported a robust start to the year, underlined by a significant growth in revenue and adjusted EBITDA, alongside progress in strategic pillars aimed at enhancing shareholder value.
• This performance is particularly noteworthy as Barnes Group is currently evaluating strategic options, including a potential sale, which could influence the market’s perception and future performance of the company.

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

Notably, RR in 2023 successfully retained its No. 2 position in the Dow Jones Sustainability Index for the aerospace & defence industry.

• Q224 parcel volume growth slowed dramatically in all markets versus Q124 pace
• Share price has fallen by more than half compared to Q124 peak levels
• HK$7.8 is our target, but slower growth, sub-par margins & disclosure = AVOID

• Q1 FY02/25 results: Revenue JPY11.6bn (+5.2% YoY), Gross profit JPY1.9bn (+12.7% YoY), Operating profit JPY550mn (+6.9% YoY).
• Food Packaging and Containers: 65.7% of revenue, gross profit rose 17.4% YoY, revenue increased 5.0% YoY.
• Net income attributable to owners of the parent: JPY532mn (+95.3% YoY) due to decreased income taxes.

• Barnes Group, a diversified global manufacturer and service provider, presented its financial results and strategic developments during the first quarter of 2024.
• The company reported a robust start to the year, underlined by a significant growth in revenue and adjusted EBITDA, alongside progress in strategic pillars aimed at enhancing shareholder value.
• This performance is particularly noteworthy as Barnes Group is currently evaluating strategic options, including a potential sale, which could influence the market’s perception and future performance of the company.

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

Notably, RR in 2023 successfully retained its No. 2 position in the Dow Jones Sustainability Index for the aerospace & defence industry.

• Q224 parcel volume growth slowed dramatically in all markets versus Q124 pace
• Share price has fallen by more than half compared to Q124 peak levels
• HK$7.8 is our target, but slower growth, sub-par margins & disclosure = AVOID

• Q1 FY02/25 results: Revenue JPY11.6bn (+5.2% YoY), Gross profit JPY1.9bn (+12.7% YoY), Operating profit JPY550mn (+6.9% YoY).
• Food Packaging and Containers: 65.7% of revenue, gross profit rose 17.4% YoY, revenue increased 5.0% YoY.
• Net income attributable to owners of the parent: JPY532mn (+95.3% YoY) due to decreased income taxes.

• Grandblue Environment Co A (600323 CH) disclosed a potential pre-conditional privatisation of Canvest Environmental Protection Group (1381 HK) at HK$4.90 per share, a 20.7% premium to the last close price. 
• Completing the capital injection from SOE entities into the offeror is a precondition. Grandblue also proposes that the controlling shareholder roll over 7.23% of its effective 44.75% stake. 
• While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. Timing is the key risk. 

• Timee Inc (215A JP), a leading part-time job platform in Japan, is seeking to raise up to US$286 million. Book-building runs from 9 to 23 July.
• We previously discussed the IPO in Timee (215A JP) IPO: The Bull Case and Timee (215A JP) IPO: The Bear Case. 
• In this note, we discuss valuation. Our analysis suggests that Timee is attractively valued at the IPO price range in the context of the forecasted growth. 

• Timee Inc (215A JP) is looking to raise US$290m in its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In an earlier note, we looked at the firm’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.

• 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 13.9bn of A-shares. NORTHBOUND bought utilities and raw materials and sold everything else, especially consumer names. Appliances remain on the sell side.
• It is notable that net flows as a percentage of value traded are clearly “short gamma”, which is to say, sector underperformers are being sold, not bought.

• The review period for the September rebalance ends 30 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
• We forecast 6 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX).
• Excluding the migrations, the potential adds have outperformed the potential deletes since the start of the calendar year and there could be further outperformance over the next few weeks.

• Operations are on track with earlier guidance given during FY23 results, loads and yields are healthy, with UK and North American performing better than expected  
• Will buyback and cancel remaining 97.7m preference shares for a sum of HKD10b by end of July 2024. Shareholder dilution has been avoided  
• Cathay Pacific is a value BUY, our target price of HK$9.90 (+24% UPSIDE) implies 10x FY2024 PE, parity multiple against its arch-rival Singapore Airlines (SIA SP) 

• Shenzhen Yuejiang Technology (Dobot), a China-based cobot company, filed for a Hong Kong IPO. Cobots are robots with operational robotic arms intended for collaboration within a shared space.
• Dobot was backed by CICC, CRRC VC, Greenpine Growth, Qianhai Equity, and China Internet Investment Fund, among others. The company was founded in 2015 in Shenzhen, PRC.
• The offering may attract significant investor interest after South Korea’s robotics company Doosan Robotics could raise ~$318M in October 2023.

• We believe SF’s core express margins are higher than most of its peers’ margins
• But on 2023 EV / EBITDA SF trades at multiples below most Chinese, US peers
• One objective of SF listing in HK is to attract global investors, lift valuation