Industrials

• IdeaForge Technology Limited (1475641D IN) is looking to raise around US$100m in its upcoming India IPO. Some of its notable pre-IPO investors include Qualcomm, Infosys, Celesta Capital (VC).
• IdeaForge develops and manufactures unmanned aerial systems (UAS) and unmanned aerial vehicles (UAV).
• The bookrunners on the deal are JM Financial and IIFL Securities.

• Triton has raised its offer price to €8.95 in cash, 5.3% above the Alternative Consideration of the Bain’s consortium improved offer (vs. my €9.01/share fair value estimate, comps-based).
• Gross spread is +0.78%. It seems that now it is the turn of the Bain’s consortium to make a move, at least match and probably bid over Triton’s offer.
• Bain has the main shareholders on board. As of 24 February, I estimate the paper profits of Triton to be around €31 million (minus the costs of preparing the offer).

• IAG Presents better than expected Q4 2022 results and announces that it will acquire the remaining 80% of Air Europa for €400 million in a cash and shares deal.
• The purchase price implies valuing 100% of Air Europa at €500 million, which is in line with expectations and is half of the €1,000 million agreed in November 2019.
• Air Europa and IAG finally reach an agreement and clear an uncertainty. It makes strategic sense to create a larger intercontinental hub between Europe and Latin America in Madrid,

• IdeaForge Technology Limited (1475641D IN) is looking to raise around US$100m in its upcoming India IPO. Some of its notable pre-IPO investors include Qualcomm, Infosys, Celesta Capital (VC).
• IdeaForge develops and manufactures unmanned aerial systems (UAS) and unmanned aerial vehicles (UAV).
• The bookrunners on the deal are JM Financial and IIFL Securities.

• Triton has raised its offer price to €8.95 in cash, 5.3% above the Alternative Consideration of the Bain’s consortium improved offer (vs. my €9.01/share fair value estimate, comps-based).
• Gross spread is +0.78%. It seems that now it is the turn of the Bain’s consortium to make a move, at least match and probably bid over Triton’s offer.
• Bain has the main shareholders on board. As of 24 February, I estimate the paper profits of Triton to be around €31 million (minus the costs of preparing the offer).

• IAG Presents better than expected Q4 2022 results and announces that it will acquire the remaining 80% of Air Europa for €400 million in a cash and shares deal.
• The purchase price implies valuing 100% of Air Europa at €500 million, which is in line with expectations and is half of the €1,000 million agreed in November 2019.
• Air Europa and IAG finally reach an agreement and clear an uncertainty. It makes strategic sense to create a larger intercontinental hub between Europe and Latin America in Madrid,

• On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
• The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation. 
• BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.

• In my first piece, Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement I noted that the price was too low. I expected activist efforts.
• The price did not trade below the Tender Offer Price after it opened for trading. That was a sign this wasn’t going to go easy.
• This morning I am made aware of a letter from one of the “active if not activist” shareholders saying the price is too low. Hint: It is.

• We turn bullish on Kubota. Macro indicators point to stabilization 
• Management guidance for 2023 surprised the market, but we think it is realistic
• We think that quarterly results will be a catalyst to convince investors that profitability is improving

• LIG Nex1 produces a wide range of advanced precision electronic systems, including missile, radars, electronic warfare, avionics, tactical communication systems, fire control systems, and naval combat systems.
• LIG Nex1’s operating profit has jumped by nearly 10x from 2019 to 2022. However, its share price has not adequately reflected this growth.
• The company reached its highest ever order backlog of 12.2 trillion won at the end of 2022. The company is benefiting from increased demand for precision guided weapons worldwide.

• Millennium Services Group Ltd (ASX:MIL) has delivered a H1 FY23 result well below prior forecast, with a two-month timing lag between wage increases and pass-through impacting the gross margin over H1 FY23 (down ~190bps to 14%).
• With these costs now passed through under contract, gross margins improved in Q2 FY23 and are forecast to average around 15% for FY23, implying H2 FY23 margins of ~16%.
• This combined with ~$25m-$30m of new contract business wins over the past six months puts the business in good stead for solid growth in H2 FY23 and into FY24. 

• On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
• The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation. 
• BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.

• In my first piece, Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement I noted that the price was too low. I expected activist efforts.
• The price did not trade below the Tender Offer Price after it opened for trading. That was a sign this wasn’t going to go easy.
• This morning I am made aware of a letter from one of the “active if not activist” shareholders saying the price is too low. Hint: It is.

• We turn bullish on Kubota. Macro indicators point to stabilization 
• Management guidance for 2023 surprised the market, but we think it is realistic
• We think that quarterly results will be a catalyst to convince investors that profitability is improving

• LIG Nex1 produces a wide range of advanced precision electronic systems, including missile, radars, electronic warfare, avionics, tactical communication systems, fire control systems, and naval combat systems.
• LIG Nex1’s operating profit has jumped by nearly 10x from 2019 to 2022. However, its share price has not adequately reflected this growth.
• The company reached its highest ever order backlog of 12.2 trillion won at the end of 2022. The company is benefiting from increased demand for precision guided weapons worldwide.

• Millennium Services Group Ltd (ASX:MIL) has delivered a H1 FY23 result well below prior forecast, with a two-month timing lag between wage increases and pass-through impacting the gross margin over H1 FY23 (down ~190bps to 14%).
• With these costs now passed through under contract, gross margins improved in Q2 FY23 and are forecast to average around 15% for FY23, implying H2 FY23 margins of ~16%.
• This combined with ~$25m-$30m of new contract business wins over the past six months puts the business in good stead for solid growth in H2 FY23 and into FY24. 

• SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
• The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
• There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

• Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
• They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
• Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

• Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
• In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
• Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms. 

• SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
• The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
• There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

• Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
• They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
• Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

• Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
• In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
• Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms. 

• Jiangnan (1366 HK) disclosed a scheme privatisation offer from Mr Chu Hui (Chairman and CEO) at HK$0.40 per share, a 107.3% premium to the undisturbed price (HK$0.193 on 13 February).
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The shareholder with a blocking stake will be supportive. 
• The price is final and attractive in the context of historical prices and multiples. The scheme meeting is likely in mid-May. At last close, the gross spread is 12.7%.

• The reference period for the March 2023 index review for TWSE 50 and 100 indices just came to an end on 20 February.
• Previously, it looked like there would not be any index changes during the March 2023 review for these two indices.
• However, now it looks like there could be a change. 

• TVS Supply Chain Solutions (1915741D IN) is looking to raise about US$500m in its upcoming India IPO.
• TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer. 
• TVS SCS has seen its revenue grow as both its operating segments registered decent growth during the track record period. However, its profitability might have been a result of COVID-19. 

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the March 2023 Rebalance.
• As it stands, I see 6 ADDs/DELs for the STOXX Europe 600 index and 3 ADDs and 2 DELs for the Euro STOXX Index in March 2023.
• There are several names requiring a small price change to trigger more constituent changes and with few more days left to the reference date, a lot can change.

• After shares gained 63% in the morning session of the 16 Feb, then subsequently suspended, Chu Hui, the chairman and major shareholder, has made his move on Jiangnan (1366 HK).
• Chu is offering HK$0.40/share by of a Scheme, a 12.68% premium to last close, but a whopping 83.49% over the last full trading day’s closing price. This price is final.
• This is done. Expect payment around late July based on precedent Cayman-incorporated privatisations. 

• Jiangnan (1366 HK) disclosed a scheme privatisation offer from Mr Chu Hui (Chairman and CEO) at HK$0.40 per share, a 107.3% premium to the undisturbed price (HK$0.193 on 13 February).
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The shareholder with a blocking stake will be supportive. 
• The price is final and attractive in the context of historical prices and multiples. The scheme meeting is likely in mid-May. At last close, the gross spread is 12.7%.

• The reference period for the March 2023 index review for TWSE 50 and 100 indices just came to an end on 20 February.
• Previously, it looked like there would not be any index changes during the March 2023 review for these two indices.
• However, now it looks like there could be a change. 

• TVS Supply Chain Solutions (1915741D IN) is looking to raise about US$500m in its upcoming India IPO.
• TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer. 
• TVS SCS has seen its revenue grow as both its operating segments registered decent growth during the track record period. However, its profitability might have been a result of COVID-19. 

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the March 2023 Rebalance.
• As it stands, I see 6 ADDs/DELs for the STOXX Europe 600 index and 3 ADDs and 2 DELs for the Euro STOXX Index in March 2023.
• There are several names requiring a small price change to trigger more constituent changes and with few more days left to the reference date, a lot can change.

• After shares gained 63% in the morning session of the 16 Feb, then subsequently suspended, Chu Hui, the chairman and major shareholder, has made his move on Jiangnan (1366 HK).
• Chu is offering HK$0.40/share by of a Scheme, a 12.68% premium to last close, but a whopping 83.49% over the last full trading day’s closing price. This price is final.
• This is done. Expect payment around late July based on precedent Cayman-incorporated privatisations. 

• Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
• MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
• There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

• Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
• That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic. 
• It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

• Fujitec management is under the gun. Last week, both major international proxy advisors – ISS and Glass Lewis – generally favoured Oasis’ Spill The Board candidate slates.
• Fujitec Co Ltd (6406 JP), of course, had their opinion on the matter (Additional Explanatory Material, Response re ISS, Response re Glass Lewis) 
• How this breaks is a question. Shareholder structure analysis may take us there, but this could end mixed.

• Alight (NYSE: ALIT, $4.5b market cap) is a well-established company providing health, wealth, payroll administration, and human capital management cloud advisory services to most of the leading companies in the United States.
• The company exhibits many qualities that make it an attractive long-term investment: this is an extremely sticky business with 97% revenue retention, high levels of recurring revenues, a market-leading position, and a blue-chip customer base.
• Management also has many levers to accelerate growth further and improve profitability.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources

• Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
• MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
• There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

• Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
• That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic. 
• It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

• Fujitec management is under the gun. Last week, both major international proxy advisors – ISS and Glass Lewis – generally favoured Oasis’ Spill The Board candidate slates.
• Fujitec Co Ltd (6406 JP), of course, had their opinion on the matter (Additional Explanatory Material, Response re ISS, Response re Glass Lewis) 
• How this breaks is a question. Shareholder structure analysis may take us there, but this could end mixed.

• Alight (NYSE: ALIT, $4.5b market cap) is a well-established company providing health, wealth, payroll administration, and human capital management cloud advisory services to most of the leading companies in the United States.
• The company exhibits many qualities that make it an attractive long-term investment: this is an extremely sticky business with 97% revenue retention, high levels of recurring revenues, a market-leading position, and a blue-chip customer base.
• Management also has many levers to accelerate growth further and improve profitability.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources