Industrials

• Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
• With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
• We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

• Baidu, a Chinese multinational technology giant, chose Hesai Group to be the exclusive LiDAR supplier for its robotaxi fleet in China.  
• Baidu is uniquely positioned for growth in a self-driving robotaxis and its autonomous ride-hailing platform, Apollo Go Robotaxi, gains real traction.   
• Hesai Group may ship at least 300K LiDARs for Baidu’s sixth generation Apollo RT6 robotaxis that would translate into a revenue of up to $300M.

• Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
• With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
• We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

• Baidu, a Chinese multinational technology giant, chose Hesai Group to be the exclusive LiDAR supplier for its robotaxi fleet in China.  
• Baidu is uniquely positioned for growth in a self-driving robotaxis and its autonomous ride-hailing platform, Apollo Go Robotaxi, gains real traction.   
• Hesai Group may ship at least 300K LiDARs for Baidu’s sixth generation Apollo RT6 robotaxis that would translate into a revenue of up to $300M.

We view International Container (ICTSI) as “Low Risk” on the LARA scale. This reflects the company’s: [1] leading position in Philippine container terminal operations; [2] geographically diversified operations, with port terminal assets across 19 countries; and [3] sound business capability to execute its expansion plans, as evidenced by its track record of healthy revenue growth and margin expansion. These are balanced against the risks associated with: [1] a potential increase in competitive pressures in the container shipping industry; [2] the Port of Manila’s small scale (in terms of annual throughput) compared to major ports worldwide; and [3] exposure to political and event risks arising from the company’s operations in frontier markets.

Our fundamental Credit Bias on ICTSI is “Stable”. The company’s leverage has improved over the years, supported by earnings growth and strong OCF generation. That said, FCF may be tempered by high capex and dividend payouts.

Controversies are “Material”. In 2017, ICTSI was accused by the International Transport Workers Federation (ITF) of violating various labour rights. This included the illegal sacking of outsourced workers at its Madagascar terminal, paying “poverty wages” at the company’s terminals in Indonesia and Madagascar, discrimination against unionised workers, as well as safety breaches at various terminals. The ITF also accused ICTSI of profiting off dictatorships, by working with authoritarian governments in Sudan, Syria and the Democratic Republic of Congo. In March 2023, the Organised Crime and Corruption Reporting Project accused the company of bribing two officials from the PNG Ports Corporation in relation to concession awards for its terminals in Papua New Guinea. That said, ICTSI does not appear to be materially impacted by the controversies. Overall, the ESG Impact on Credit is “Neutral”.

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

• Edenred SE is a global payment solutions company with a strong financial performance and dominant industry position
• Company’s stock has declined -19.50% year-to-date due to a legal investigation in Italy
• Despite challenges, Edenred has a strong balance sheet, cash flow generation, and growth potential, making it a long opportunity for investors.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The WTR Sustainable Index was up 7.0% W/W versus the S&P 500 Index (up 0.9%), the Russell 2000 Index (up 6.0%), and the Nasdaq Index (down 0.3%).
• Energy Technology (15.1% of the index) was up 15.5%, while Industrial Climate and Ag Technology (58.5% of the index) was up 4.7%, ClimateTech Mining was down 3.4% and Advanced Transportation Solutions (21.2% of index) was up 9.0%.
• Top 10 Performers: ARVL, ZAPP, NAAS, VMC, PEGY, QS, LCID, OUST, EVGO, COMM

• Pyxis Tankers is a small illiquid microcap company that owns and operates charter tankers and dry bulk vessels
• Trading at a discount to liquidation value of vessels and lower EV/FCF ratio compared to peers
• Strong inside ownership and disciplined capital allocation, with bull thesis based on optimistic outlook for tanker rates in near term

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

We view International Container (ICTSI) as “Low Risk” on the LARA scale. This reflects the company’s: [1] leading position in Philippine container terminal operations; [2] geographically diversified operations, with port terminal assets across 19 countries; and [3] sound business capability to execute its expansion plans, as evidenced by its track record of healthy revenue growth and margin expansion. These are balanced against the risks associated with: [1] a potential increase in competitive pressures in the container shipping industry; [2] the Port of Manila’s small scale (in terms of annual throughput) compared to major ports worldwide; and [3] exposure to political and event risks arising from the company’s operations in frontier markets.

Our fundamental Credit Bias on ICTSI is “Stable”. The company’s leverage has improved over the years, supported by earnings growth and strong OCF generation. That said, FCF may be tempered by high capex and dividend payouts.

Controversies are “Material”. In 2017, ICTSI was accused by the International Transport Workers Federation (ITF) of violating various labour rights. This included the illegal sacking of outsourced workers at its Madagascar terminal, paying “poverty wages” at the company’s terminals in Indonesia and Madagascar, discrimination against unionised workers, as well as safety breaches at various terminals. The ITF also accused ICTSI of profiting off dictatorships, by working with authoritarian governments in Sudan, Syria and the Democratic Republic of Congo. In March 2023, the Organised Crime and Corruption Reporting Project accused the company of bribing two officials from the PNG Ports Corporation in relation to concession awards for its terminals in Papua New Guinea. That said, ICTSI does not appear to be materially impacted by the controversies. Overall, the ESG Impact on Credit is “Neutral”.

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

• Edenred SE is a global payment solutions company with a strong financial performance and dominant industry position
• Company’s stock has declined -19.50% year-to-date due to a legal investigation in Italy
• Despite challenges, Edenred has a strong balance sheet, cash flow generation, and growth potential, making it a long opportunity for investors.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The WTR Sustainable Index was up 7.0% W/W versus the S&P 500 Index (up 0.9%), the Russell 2000 Index (up 6.0%), and the Nasdaq Index (down 0.3%).
• Energy Technology (15.1% of the index) was up 15.5%, while Industrial Climate and Ag Technology (58.5% of the index) was up 4.7%, ClimateTech Mining was down 3.4% and Advanced Transportation Solutions (21.2% of index) was up 9.0%.
• Top 10 Performers: ARVL, ZAPP, NAAS, VMC, PEGY, QS, LCID, OUST, EVGO, COMM

• Pyxis Tankers is a small illiquid microcap company that owns and operates charter tankers and dry bulk vessels
• Trading at a discount to liquidation value of vessels and lower EV/FCF ratio compared to peers
• Strong inside ownership and disciplined capital allocation, with bull thesis based on optimistic outlook for tanker rates in near term

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
• With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

• Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.
• Concerns over pricing continue to increase in Europe, following Lufthansa’s profit warning last week.
• We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.

• Rentokil Initial (RTO) is trading at a historically low valuation despite being in a resilient industry like pest control
• Rentokil is well-managed with a long-tenured management team that consistently exceeds guidance and has a track record of double-digit EPS growth
• With a P/E ratio of 17.5x, Rentokil presents an attractive investment opportunity with potential for a 30%+ return by the end of 2025 if targets are met and the multiple reverts to historical averages

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Rolls Royce is a British company known for its power business, mainly converting stored energy into kinetic energy through big engines such as airplane engines.
• The company’s core business is in civil aerospace, with a focus on engineering excellence and a history dating back to the early 1900s.
• The publicly traded entity of Rolls Royce Holdings focuses on the aerospace market, specifically in the production of airplane engines for large commercial planes and business.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Blackline Safety provides gas detection and safety monitoring services, currently undervalued at 2.3x NTM sales
• Transitioning from hardware to SaaS will potentially double the company’s value in 3 years
• Management’s experience in the industry supports the company’s potential for future success and 100% upside over the next 3 years through revenue growth and margin improvement.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
• With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

• Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.
• Concerns over pricing continue to increase in Europe, following Lufthansa’s profit warning last week.
• We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.

• Rentokil Initial (RTO) is trading at a historically low valuation despite being in a resilient industry like pest control
• Rentokil is well-managed with a long-tenured management team that consistently exceeds guidance and has a track record of double-digit EPS growth
• With a P/E ratio of 17.5x, Rentokil presents an attractive investment opportunity with potential for a 30%+ return by the end of 2025 if targets are met and the multiple reverts to historical averages

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Rolls Royce is a British company known for its power business, mainly converting stored energy into kinetic energy through big engines such as airplane engines.
• The company’s core business is in civil aerospace, with a focus on engineering excellence and a history dating back to the early 1900s.
• The publicly traded entity of Rolls Royce Holdings focuses on the aerospace market, specifically in the production of airplane engines for large commercial planes and business.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Blackline Safety provides gas detection and safety monitoring services, currently undervalued at 2.3x NTM sales
• Transitioning from hardware to SaaS will potentially double the company’s value in 3 years
• Management’s experience in the industry supports the company’s potential for future success and 100% upside over the next 3 years through revenue growth and margin improvement.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
• Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
• We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

• Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
• The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024. 
• Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).

• CSX Corporation reported mixed financial results for the first quarter of 2024, demonstrating solid operational performance amid various challenges including severe weather and infrastructure disruptions.
• The company recorded a total volume increase of 3% driven primarily by a 7% growth in its Intermodal business.
• Despite this growth in volume, revenue declined slightly by approximately 1% year over year to just under $3.7 billion, influenced by lower fuel surcharges and changes in mix.

• Q1 FY12/24 results: Revenue JPY12.6bn (+11.2% YoY), Operating profit JPY2.5bn (+19.1% YoY), Net income JPY2.4bn (+29.8% YoY).
• Orders and backlog: Orders JPY12.0bn (+7.6% YoY), Order backlog JPY17.4bn (+9.1% YoY), driven by semiconductor-related applications.
• FY12/24 forecast: Revenue JPY54.0bn (+9.6% YoY), Operating profit JPY10.9bn (+17.4% YoY), Capital investment JPY16.0bn (JPY5.7bn in FY12/23).

• Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
• Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
• We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

• Sanil Electric reported excellent IPO book building results. The IPO price has been determined at 35,000 won, which is 16.7% higher than the high end of the IPO price range.
• The demand ratio from 2,205 institutional investors was 414 to 1. Sanil Electric (062040 KS) IPO will start trading on 29 July 2024. 
• Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (67% higher than the IPO price of 35,000 won).

• CSX Corporation reported mixed financial results for the first quarter of 2024, demonstrating solid operational performance amid various challenges including severe weather and infrastructure disruptions.
• The company recorded a total volume increase of 3% driven primarily by a 7% growth in its Intermodal business.
• Despite this growth in volume, revenue declined slightly by approximately 1% year over year to just under $3.7 billion, influenced by lower fuel surcharges and changes in mix.

• Q1 FY12/24 results: Revenue JPY12.6bn (+11.2% YoY), Operating profit JPY2.5bn (+19.1% YoY), Net income JPY2.4bn (+29.8% YoY).
• Orders and backlog: Orders JPY12.0bn (+7.6% YoY), Order backlog JPY17.4bn (+9.1% YoY), driven by semiconductor-related applications.
• FY12/24 forecast: Revenue JPY54.0bn (+9.6% YoY), Operating profit JPY10.9bn (+17.4% YoY), Capital investment JPY16.0bn (JPY5.7bn in FY12/23).

• The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
• Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
• There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.

• Medi Assist Healthcare Services (0886371D IN) was listed on 23rd Jan 2024 after raising US$140m. The IPO had been 100% secondary, with the promoters and pre-IPO investors trimming their stakes.
• Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
• Coming up for six-month lockup expiry are the firm’s pre-IPO shareholders and a portion of the promoters’ stakes.

• Strong team, innovative product, and potential market demand in auto tech space support highly speculative projections for investment in Joby Aerospace
• Despite concerns about aggressive projections, company’s current valuation offers attractive entry point for investors seeking substantial upside with decent margin of safety
• Joby’s eVTOL aircraft development and plans for air taxi service differentiate it from other failed SPAC ventures, positioning it as top-tier hard tech startup with potential for success

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
• We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
• Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

• Nextracker’s Fourth Quarter and Full Fiscal Year 2024 conference detailed a period of significant achievement and robust performance, balanced by a practical outlook on the evolving challenges and opportunities in the solar industry.
• The company reported a strong year with highlights including a 40% annual increase in Q4 revenue to $737 million and a doubling of adjusted EBITDA to $160 million for the same period.
• This capped a fiscal year where revenue soared over 30% to hit $2.5 billion with adjusted EDBITA more than doubling to $521 million.

• The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
• Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
• There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.

• Medi Assist Healthcare Services (0886371D IN) was listed on 23rd Jan 2024 after raising US$140m. The IPO had been 100% secondary, with the promoters and pre-IPO investors trimming their stakes.
• Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
• Coming up for six-month lockup expiry are the firm’s pre-IPO shareholders and a portion of the promoters’ stakes.

• Strong team, innovative product, and potential market demand in auto tech space support highly speculative projections for investment in Joby Aerospace
• Despite concerns about aggressive projections, company’s current valuation offers attractive entry point for investors seeking substantial upside with decent margin of safety
• Joby’s eVTOL aircraft development and plans for air taxi service differentiate it from other failed SPAC ventures, positioning it as top-tier hard tech startup with potential for success

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
• We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
• Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

• Nextracker’s Fourth Quarter and Full Fiscal Year 2024 conference detailed a period of significant achievement and robust performance, balanced by a practical outlook on the evolving challenges and opportunities in the solar industry.
• The company reported a strong year with highlights including a 40% annual increase in Q4 revenue to $737 million and a doubling of adjusted EBITDA to $160 million for the same period.
• This capped a fiscal year where revenue soared over 30% to hit $2.5 billion with adjusted EDBITA more than doubling to $521 million.