Industrials

Golden Energy & Resources (GER SP)‘s revised proposal from the Widjaja family – distribution proposal (1.3936 GEMS share per share or IDR6,500 per GEMS share) and the delisting proposal (S$0.181).
The revised offer addresses the issue around the previous offer’s unattractive distribution cash alternative and unfavourable FX. However, the revised offer remains light but is not declared final.
The revised offer fails to address the issue concerning the decline in Golden Energy Mines (GEMS IJ) share price and the value of Stanmore Coal (SMR AU) stake.

Merger Arb Mondays (20 Mar) – Toshiba, AAG Energy, Tyro, Newcrest, InvoCare, Pushpay, Golden Energy

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Newcrest Mining (NCM AU), Aag Energy Holdings (2686 HK).
Lowest spreads – Nitro Software Ltd (NTO AU),Norwest Energy NL (NWE AU), GK Goh Holdings (GKG SP), Boustead Projects (BOCJ SP), Nippon Steel Trading Corporation (9810 JP), Nissin Electric.

Recruit: Share Price Continues to Fall as Labour Markets Facing Challenges

Recruit Holdings (6098 JP) share price is down 18% YTD and the valuation multiples have more than halved since their peak in November 2021.
The company’s recent 3QFY03/2022 earnings pointed towards declining profitability with mismatch in the labour markets easing off.
The job openings in the US have further declined in January suggesting that Recruit’s share price has more room to fall as consensus has further downgraded estimates.

Golden Energy: Offer Bumped. Still Insulting

The Widjaja family has responded to criticism from various quarters over its low-balled Offer for Golden Energy & Resources (GER SP) and revised terms.
The all-cash payout for the 62.5% stake in Golden Energy Mines (GEMS IJ) is now 15.5% higher at S$0.792/share. The exit offer is 13% higher at S$0.18.1.
No matter how you slice it, the bump is petty. GEAR’s “rump” is currently worth at least S$0.63/share.

Air China (753 HK): Set to Accelerate

Air China (H) (753 HK) underperformed China Southern (1055 HK) YTD as domestic traffic recovery is faster than international, but its momentum will accelerate in the rest of the year.
With Jan-Feb domestic traffic returned to 92.6% of 2019, CSA’s upside is relative limited. Air China, instead, will benefit from more profound international rebound which only back by 10.3%.
Recent developments including resumption of visa issuance and outbound international group travels, removal of pre-flight negative PCR tests and recovery of visitors to HK all bode well for Air China.

[ZTO Express (ZTO US) Earnings Review]: Striding Towards Ecosystem Development

By Shawn Yang

ZTO guided at least 1.5ppt market share gain in 2023, which exceeds our previous expectation.
ZTO, leveraging its highest market share, is the most likely to expand its own end-to-end ecosystem, which leads to improvement in operating efficiency, increase of doorstep delivery, and pricing power.
Maintain BUY and TP due to share gain, efficiency improvement, and early-mover advantage in expanding ecosystem. Our TP implies 23x P/2023E.

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Mar 20

Daily Brief Industrials: Golden Energy & Resources, Toshiba Corp, Recruit Holdings, Air China Ltd (H), ZTO Express and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Golden Energy (GER SP): Revised Offer Is Still Not Good Enough
Merger Arb Mondays (20 Mar) – Toshiba, AAG Energy, Tyro, Newcrest, InvoCare, Pushpay, Golden Energy
Recruit: Share Price Continues to Fall as Labour Markets Facing Challenges
Golden Energy: Offer Bumped. Still Insulting
Air China (753 HK): Set to Accelerate
[ZTO Express (ZTO US) Earnings Review]: Striding Towards Ecosystem Development

Golden Energy (GER SP): Revised Offer Is Still Not Good Enough

Golden Energy & Resources (GER SP)‘s revised proposal from the Widjaja family – distribution proposal (1.3936 GEMS share per share or IDR6,500 per GEMS share) and the delisting proposal (S$0.181).
The revised offer addresses the issue around the previous offer’s unattractive distribution cash alternative and unfavourable FX. However, the revised offer remains light but is not declared final.
The revised offer fails to address the issue concerning the decline in Golden Energy Mines (GEMS IJ) share price and the value of Stanmore Coal (SMR AU) stake.

Merger Arb Mondays (20 Mar) – Toshiba, AAG Energy, Tyro, Newcrest, InvoCare, Pushpay, Golden Energy

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Newcrest Mining (NCM AU), Aag Energy Holdings (2686 HK).
Lowest spreads – Nitro Software Ltd (NTO AU),Norwest Energy NL (NWE AU), GK Goh Holdings (GKG SP), Boustead Projects (BOCJ SP), Nippon Steel Trading Corporation (9810 JP), Nissin Electric.

Recruit: Share Price Continues to Fall as Labour Markets Facing Challenges

Recruit Holdings (6098 JP) share price is down 18% YTD and the valuation multiples have more than halved since their peak in November 2021.
The company’s recent 3QFY03/2022 earnings pointed towards declining profitability with mismatch in the labour markets easing off.
The job openings in the US have further declined in January suggesting that Recruit’s share price has more room to fall as consensus has further downgraded estimates.

Golden Energy: Offer Bumped. Still Insulting

The Widjaja family has responded to criticism from various quarters over its low-balled Offer for Golden Energy & Resources (GER SP) and revised terms.
The all-cash payout for the 62.5% stake in Golden Energy Mines (GEMS IJ) is now 15.5% higher at S$0.792/share. The exit offer is 13% higher at S$0.18.1.
No matter how you slice it, the bump is petty. GEAR’s “rump” is currently worth at least S$0.63/share.

Air China (753 HK): Set to Accelerate

Air China (H) (753 HK) underperformed China Southern (1055 HK) YTD as domestic traffic recovery is faster than international, but its momentum will accelerate in the rest of the year.
With Jan-Feb domestic traffic returned to 92.6% of 2019, CSA’s upside is relative limited. Air China, instead, will benefit from more profound international rebound which only back by 10.3%.
Recent developments including resumption of visa issuance and outbound international group travels, removal of pre-flight negative PCR tests and recovery of visitors to HK all bode well for Air China.

[ZTO Express (ZTO US) Earnings Review]: Striding Towards Ecosystem Development

By Shawn Yang

ZTO guided at least 1.5ppt market share gain in 2023, which exceeds our previous expectation.
ZTO, leveraging its highest market share, is the most likely to expand its own end-to-end ecosystem, which leads to improvement in operating efficiency, increase of doorstep delivery, and pricing power.
Maintain BUY and TP due to share gain, efficiency improvement, and early-mover advantage in expanding ecosystem. Our TP implies 23x P/2023E.

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Mar 19

Daily Brief Industrials: Halcyon Agri, Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional
Halcyon Agri’s Offer Is Now Unconditional
Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT

Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional

Halcyon Agri (HACL SP)’s S$0.413 per share MGO from China Hainan Rubber Industry (601118 CH) has met the 50%+ minimum acceptance condition.
The closing date is extended from 24 March to 10 April. The payment settlement is within seven business days of receipt of a valid acceptance.
The offeror currently represents 50.003% of outstanding shares. At the last close, the gross and annualised spread for a 10 April payment is 2.0% and 41.8%, respectively.

Halcyon Agri’s Offer Is Now Unconditional

China Hainan Rubber Industry (601118 CH)‘s Offer for Halcyon Agri (HACL SP) is now unconditional in all respects.
The closing date has accordingly been extended to the 10 April. It can be further extended.
This transaction is done. And will trade tight to terms.

Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT

Medium-Term, Japan Post Bank (7182 JP) is not in great shape fundamentally compared to others We still know nothing about TOPIX. And we may just not hear.
Kakao Corp (035720 KS) to take control of S.M.Entertainment Co (041510 KS) after HYBE (352820 KS) throws in the towel.
The world is quite volatile now, and funding is probably more precious today than yesterday. But a bid for Toshiba Corp (6502 JP) is too.

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Mar 19

Daily Brief Industrials: Halcyon Agri, Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional
Halcyon Agri’s Offer Is Now Unconditional
Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT

Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional

Halcyon Agri (HACL SP)’s S$0.413 per share MGO from China Hainan Rubber Industry (601118 CH) has met the 50%+ minimum acceptance condition.
The closing date is extended from 24 March to 10 April. The payment settlement is within seven business days of receipt of a valid acceptance.
The offeror currently represents 50.003% of outstanding shares. At the last close, the gross and annualised spread for a 10 April payment is 2.0% and 41.8%, respectively.

Halcyon Agri’s Offer Is Now Unconditional

China Hainan Rubber Industry (601118 CH)‘s Offer for Halcyon Agri (HACL SP) is now unconditional in all respects.
The closing date has accordingly been extended to the 10 April. It can be further extended.
This transaction is done. And will trade tight to terms.

Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT

Medium-Term, Japan Post Bank (7182 JP) is not in great shape fundamentally compared to others We still know nothing about TOPIX. And we may just not hear.
Kakao Corp (035720 KS) to take control of S.M.Entertainment Co (041510 KS) after HYBE (352820 KS) throws in the towel.
The world is quite volatile now, and funding is probably more precious today than yesterday. But a bid for Toshiba Corp (6502 JP) is too.

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
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Mar 18

Daily Brief Industrials: United Rentals and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

United Rentals: This Capital Intensive Business Deserves Attention

United Rentals: This Capital Intensive Business Deserves Attention

By Vladimir Dimitrov, CFA

The leader in rental equipment industry offers attractive returns, in spite of short-term risk of recession.
United Rentals’ well thought out growth strategy has created an important competitive advantage.
High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the company.

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Mar 18

Daily Brief Industrials: United Rentals and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

United Rentals: This Capital Intensive Business Deserves Attention

United Rentals: This Capital Intensive Business Deserves Attention

By Vladimir Dimitrov, CFA

The leader in rental equipment industry offers attractive returns, in spite of short-term risk of recession.
United Rentals’ well thought out growth strategy has created an important competitive advantage.
High free cash flow allows the management to increase shareholder distributions, while also reinvesting back into the business, according to the company.

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Mar 17

Daily Brief Industrials: Berli Jucker, ZKH Group, AviChina Industry & Technology H, Green Li-ion Pte Ltd, AEye and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Berli Jucker (BJC TB) – A Retail and Packaging Fuelled Growth Story
ZKH IPO: Neither Good nor Bad
AviChina Industry (2357 HK): Still Well-Placed as Our High Conviction
Battery Recycling Startup Green Li-Ion Secures US$20.5M Pre-Series B Funding
New CEO Looking to Leverage Continental and Other Partners for 4Sight Rollouts

Berli Jucker (BJC TB) – A Retail and Packaging Fuelled Growth Story

By Angus Mackintosh

Berli Jucker (BJC TB) released a strong set of 4Q2022 numbers reflecting the benefit of increasing tourism numbers in Thailand significantly positively impacting 25 of its stores.
The company strategically reduced its B2B business, whilst growing its Don Chai stores quite aggressively. Berli Jucker plans to increase its store numbers further in 2023.
Berli Jucker‘s packaging supply chain business will see new aluminium can capacity this year in Thailand and should see a 2H2023 growth pick-up. Overall a more positive outlook for 2023.

ZKH IPO: Neither Good nor Bad

ZKH Group (ZKH US) is a leading MRO procurement service platform in China offering digital and fulfilment solutions for participants in the industry value chain.
The company has filed for an IPO to list its shares in the US and plans to raise about US$200-300m through the IPO.
Having analyzed the limited information available, we are indifferent on ZKH’s operating performance and would only recommend if shares are priced attractively

AviChina Industry (2357 HK): Still Well-Placed as Our High Conviction

The slight dip in FY22 earnings for AviChina Industry & Technology H (2357 HK) is due to product restructuring at Avicopter (600038 CH) and higher impairment/fair value losses.
It should return to growth track in the next two years, with rise in product demand, recovery in Avicopter, further restructuring and M&As being major drivers.
Share price has increased 15.9% YTD but it is just on 9.2x FY23 PER. Its market cap is at 58.5% discount to holdings in its four listed A-share subsidiaries.

Battery Recycling Startup Green Li-Ion Secures US$20.5M Pre-Series B Funding

By e27

Green Li-ion, a lithium-ion battery recycling technology company based in Singapore, has raised US$20.5 million in pre-Series B funding.
Green Li-ion has developed a novel technology that processes 100 per cent of all used lithium batteries.
It recycles and reuses all metals to directly re-manufacture battery-grade cathode material ready for reuse in new batteries.

New CEO Looking to Leverage Continental and Other Partners for 4Sight Rollouts

By Water Tower Research

CEO Matt Fisch’s first earnings call announced revenue of $1.1 million in 4Q22, in line with quarterly expectations.
CFO Bob Brown announced that he is leaving the company effective March 31.
Fisch said the company is “in the process of developing a strategic plan and timeline that builds on [our] significant achievements made to date.”

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Mar 17

Daily Brief Industrials: Berli Jucker, ZKH Group, AviChina Industry & Technology H, Green Li-ion Pte Ltd, AEye and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Berli Jucker (BJC TB) – A Retail and Packaging Fuelled Growth Story
ZKH IPO: Neither Good nor Bad
AviChina Industry (2357 HK): Still Well-Placed as Our High Conviction
Battery Recycling Startup Green Li-Ion Secures US$20.5M Pre-Series B Funding
New CEO Looking to Leverage Continental and Other Partners for 4Sight Rollouts

Berli Jucker (BJC TB) – A Retail and Packaging Fuelled Growth Story

By Angus Mackintosh

Berli Jucker (BJC TB) released a strong set of 4Q2022 numbers reflecting the benefit of increasing tourism numbers in Thailand significantly positively impacting 25 of its stores.
The company strategically reduced its B2B business, whilst growing its Don Chai stores quite aggressively. Berli Jucker plans to increase its store numbers further in 2023.
Berli Jucker‘s packaging supply chain business will see new aluminium can capacity this year in Thailand and should see a 2H2023 growth pick-up. Overall a more positive outlook for 2023.

ZKH IPO: Neither Good nor Bad

ZKH Group (ZKH US) is a leading MRO procurement service platform in China offering digital and fulfilment solutions for participants in the industry value chain.
The company has filed for an IPO to list its shares in the US and plans to raise about US$200-300m through the IPO.
Having analyzed the limited information available, we are indifferent on ZKH’s operating performance and would only recommend if shares are priced attractively

AviChina Industry (2357 HK): Still Well-Placed as Our High Conviction