Industrials

• In Q1 FY02/25, Daiseki reported sales of JPY16.7bn (-6.6% YoY), gross profit of JPY5.9bn (-1.1% YoY), and operating profit of JPY3.9bn (-0.7% YoY).
• Daiseki Co.’s sales increased 7.0% YoY, while DES’s sales fell 28.4% YoY, leading to a consolidated sales decrease.
• Consolidated operating profit for Q1 decreased by 0.7% YoY to JPY3.9bn, with OPM rising 1.4pp to 23.4%.

• RaaS Reseach Group has published an update report on IP services group QANTM Intellectual Property (ASX:QIP) following the release of the Scheme of Arrangement documentation with Adamantem Capital on 25 June.The documentation includes the Independent Expert’s report from Grant Thornton Corporate Finance which concludes that the Scheme is “fair and reasonable” and in the “best interests of QANTM shareholders in the absence of a superior alternative proposal emerging”.
• The independent expert concludes that the fair market value range for QANTM shares on a control basis is from $1.736/share to $2.098/share, suggesting a respective premium of 4.7% and discount of 13.4% to the cash offer of $1.817/share.
• Our existing DCF-based valuation has remained unchanged at $1.79/share.

• In Q1 FY02/25, Daiseki reported sales of JPY16.7bn (-6.6% YoY), gross profit of JPY5.9bn (-1.1% YoY), and operating profit of JPY3.9bn (-0.7% YoY).
• Daiseki Co.’s sales increased 7.0% YoY, while DES’s sales fell 28.4% YoY, leading to a consolidated sales decrease.
• Consolidated operating profit for Q1 decreased by 0.7% YoY to JPY3.9bn, with OPM rising 1.4pp to 23.4%.

• RaaS Reseach Group has published an update report on IP services group QANTM Intellectual Property (ASX:QIP) following the release of the Scheme of Arrangement documentation with Adamantem Capital on 25 June.The documentation includes the Independent Expert’s report from Grant Thornton Corporate Finance which concludes that the Scheme is “fair and reasonable” and in the “best interests of QANTM shareholders in the absence of a superior alternative proposal emerging”.
• The independent expert concludes that the fair market value range for QANTM shares on a control basis is from $1.736/share to $2.098/share, suggesting a respective premium of 4.7% and discount of 13.4% to the cash offer of $1.817/share.
• Our existing DCF-based valuation has remained unchanged at $1.79/share.

• Palliser’s proposal failed to meet the challenging two-thirds threshold at the AGM. Given the ownership landscape, this outcome was anticipated.
• Palliser nearing 50% approval at Keisei’s AGM could signify a triumph, potentially leading to significant pressure on management and a positive shift in share price performance.
• Keisei Electric Railway Co (9009 JP)‘s valuation, now attractively low post a 33% drop and with a potential OP guidance hike, presents minimal downside at a 26.0x EV/OP multiple.

• Today, Toenec Corp (1946 JP) – an integrated facilities company 50+% owned by Chubu Electric Power Co (9502 JP) announced Chubu EPCO would sell down 7.7% to go to 43%+.
• This is surprising. It suggests there are more selldowns to come. It’s also “big” at 88 days of ADV and about 26% of Max Real World Float (85% retail).
• This is an odd sell-down. Chubu EPCO obviously doesn’t want to buy it in. That means overhang for years.

• On July 1, Boeing Co (BA US) announced a definitive agreement to acquire Spirit Aerosystems Holdings, Inc (SPR US) in an expected all-share deal valued at c.$4.7 billion, or $37.25/share.
• Consideration is calculated using a floating exchange ratio ($37.25 divided by 15-day VWAP) with a collar. 0.20466 using Boeing’s last closing share price, which implies 3.9% dilution for Boeing’s shareholders.
• The offer price is 6.4% above consensus price target median ($35), and reasonable, reflecting some control premium. The valuation represents 10.1x EV/2025 EBITDA based on IBES estimates. Long spread.

• Lindbergh S.p.A. provides specialized logistics services for industrial maintenance & repair operations in Italy and France, with high barriers to entry
• Strong unit economics with zero customer and revenue churn most years, over 90% of revenue from recurring contracts
• Recent expansion into B2C thermohydraulic MRO services market in Italy, strong competitive advantage and potential for growth

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.

• Palliser’s proposal failed to meet the challenging two-thirds threshold at the AGM. Given the ownership landscape, this outcome was anticipated.
• Palliser nearing 50% approval at Keisei’s AGM could signify a triumph, potentially leading to significant pressure on management and a positive shift in share price performance.
• Keisei Electric Railway Co (9009 JP)‘s valuation, now attractively low post a 33% drop and with a potential OP guidance hike, presents minimal downside at a 26.0x EV/OP multiple.

• Today, Toenec Corp (1946 JP) – an integrated facilities company 50+% owned by Chubu Electric Power Co (9502 JP) announced Chubu EPCO would sell down 7.7% to go to 43%+.
• This is surprising. It suggests there are more selldowns to come. It’s also “big” at 88 days of ADV and about 26% of Max Real World Float (85% retail).
• This is an odd sell-down. Chubu EPCO obviously doesn’t want to buy it in. That means overhang for years.

• On July 1, Boeing Co (BA US) announced a definitive agreement to acquire Spirit Aerosystems Holdings, Inc (SPR US) in an expected all-share deal valued at c.$4.7 billion, or $37.25/share.
• Consideration is calculated using a floating exchange ratio ($37.25 divided by 15-day VWAP) with a collar. 0.20466 using Boeing’s last closing share price, which implies 3.9% dilution for Boeing’s shareholders.
• The offer price is 6.4% above consensus price target median ($35), and reasonable, reflecting some control premium. The valuation represents 10.1x EV/2025 EBITDA based on IBES estimates. Long spread.

• Lindbergh S.p.A. provides specialized logistics services for industrial maintenance & repair operations in Italy and France, with high barriers to entry
• Strong unit economics with zero customer and revenue churn most years, over 90% of revenue from recurring contracts
• Recent expansion into B2C thermohydraulic MRO services market in Italy, strong competitive advantage and potential for growth

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.

• Finding a trading entry point during a stock dividend event is tough, but locally, stock prices often rise post-ex-rights date and stabilize after listing, over 70% of the time.
• There’s speculation that local flow trading, mainly driven by local prop traders, might target this pattern in Glovis’s stock dividend as well.
• While I wouldn’t recommend banking on this probabilistic trading setup, it’s important to be aware that this could significantly impact stock movements from the ex-rights date to the listing date.

• Timee Inc (215A JP) is looking to raise US$290m from 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. In this note, we undertake a peer comparison.

• GMS Inc. reported a robust fiscal year 2024, marked by record net sales of $5.5 billion, a testament to volume growth across all four product categories—Wallboard, Ceilings, Complementary Products, and Steel Framing.
• In particular, the resilience in Wallboard pricing and inflation adjustments in Ceilings and Complementary Products significantly contributed to the revenue.
• These results underscore the company’s strong position in the market, benefiting from ongoing demand in multifamily and steady commercial activity levels.

• Griffon Corporation delivered a mixed set of financial results in the fiscal second quarter of 2024, presenting a complex landscape for potential investors.
• On the positive front, Griffon reported a robust start to the year, with healthier performances particularly noted in the Home and Building Products (HBP) segment which outperformed expectations partly due to unexpectedly high residential order volumes that defied typical seasonal trends.
• Furthermore, the Consumer and Professional Products (CPP) segment also showed improvement, registered in an increased EBITDA, attributed to lower production costs in North America, offsetting a decline in revenue by 11% due to dampened demand.

• SiteOne Landscape Supply, Inc. reported its first quarter results for the fiscal year 2024, which were met with mixed outcomes as the company navigated through various market challenges such as commodity price deflation and adverse weather impacts in some markets.
• Despite these challenges, the company managed to post an 8% increase in net sales, demonstrating resilience in its operational strategy and a boosted performance through recent acquisitions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Finding a trading entry point during a stock dividend event is tough, but locally, stock prices often rise post-ex-rights date and stabilize after listing, over 70% of the time.
• There’s speculation that local flow trading, mainly driven by local prop traders, might target this pattern in Glovis’s stock dividend as well.
• While I wouldn’t recommend banking on this probabilistic trading setup, it’s important to be aware that this could significantly impact stock movements from the ex-rights date to the listing date.

• Timee Inc (215A JP) is looking to raise US$290m from 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. In this note, we undertake a peer comparison.

• GMS Inc. reported a robust fiscal year 2024, marked by record net sales of $5.5 billion, a testament to volume growth across all four product categories—Wallboard, Ceilings, Complementary Products, and Steel Framing.
• In particular, the resilience in Wallboard pricing and inflation adjustments in Ceilings and Complementary Products significantly contributed to the revenue.
• These results underscore the company’s strong position in the market, benefiting from ongoing demand in multifamily and steady commercial activity levels.

• Griffon Corporation delivered a mixed set of financial results in the fiscal second quarter of 2024, presenting a complex landscape for potential investors.
• On the positive front, Griffon reported a robust start to the year, with healthier performances particularly noted in the Home and Building Products (HBP) segment which outperformed expectations partly due to unexpectedly high residential order volumes that defied typical seasonal trends.
• Furthermore, the Consumer and Professional Products (CPP) segment also showed improvement, registered in an increased EBITDA, attributed to lower production costs in North America, offsetting a decline in revenue by 11% due to dampened demand.

• SiteOne Landscape Supply, Inc. reported its first quarter results for the fiscal year 2024, which were met with mixed outcomes as the company navigated through various market challenges such as commodity price deflation and adverse weather impacts in some markets.
• Despite these challenges, the company managed to post an 8% increase in net sales, demonstrating resilience in its operational strategy and a boosted performance through recent acquisitions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• No surprise: Keisei Electric Railway (9009 JP) shareholders voted down Palliser’s proposal. If the vote was close, Palliser may ups its rhetorical game, and takes a harder stance.
• Argyle failed to boot one CMCDI (133 HK) director. They’ll next target the management agreement renewal; and agitate the company buy back 20% of shares outstanding at 90% of NAV.
• The Offeror now has 90.16% in Great Eastern Holdings (GE SP) – so this will get suspended at the close of the Offer.

• SF Holding’s time-definite express service differentiates it from Chinese rivals
• We believe SF dominates China’s domestic inter-city air express segment
• High exposure to air service mostly beneficial, with few risks, in our view

• No surprise: Keisei Electric Railway (9009 JP) shareholders voted down Palliser’s proposal. If the vote was close, Palliser may ups its rhetorical game, and takes a harder stance.
• Argyle failed to boot one CMCDI (133 HK) director. They’ll next target the management agreement renewal; and agitate the company buy back 20% of shares outstanding at 90% of NAV.
• The Offeror now has 90.16% in Great Eastern Holdings (GE SP) – so this will get suspended at the close of the Offer.

• SF Holding’s time-definite express service differentiates it from Chinese rivals
• We believe SF dominates China’s domestic inter-city air express segment
• High exposure to air service mostly beneficial, with few risks, in our view

• SK Square’s market cap exceeds SK Networks’ by over 10 times, qualifying this merger as small-scale. Thus, only SK Networks needs shareholder approval and grants appraisal rights solely to shareholders.
• The current arbitrage spread for SK Networks’ appraisal rights is 1.95%, and for the swap, it’s 4.16%. These are nominal values excluding trading costs and taxes.
• Today’s SK Square and SK Networks prices reflect arbitrage spreads. Yesterday’s 8% spread widened, focusing on narrowing appraisal rights and swap spreads, essential before next week’s announcement.

• Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
• The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry. 
• Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on. 

• Rising exports, as it has higher margins and Growth in Non-Auto sectors
• Acquisition of ACIL, JMT auto, TSUYO, and Multitech Auto will drive revenue
• Reducing dependency on a single product or categories and single customer

• Grab Holdings (GRAB US) continues to face off the competition with product-led initiatives which continue to gain traction, improving retention rates, and increasing user spend and frequency.
• Competition from new players in Singapore is evident but given Grab’s market position, which allows it to virtually guarantee driver’s daily income, whilst competition often affects smaller players more.
• Grab Holdings (GRAB US) continues to reinvest excess margins in growth but the real kicker will come next year once new product initiatives fully take hold. 

• In FY03/24, revenue was JPY97.0bn (+3.9% YoY), operating profit was JPY1.6bn (+103.5% YoY), recurring profit was JPY2.1bn (+61.6% YoY), and net income attributable to owners of the parent was JPY1.5bn (+19.3% YoY). Information Security earnings expanded due to a recovery in demand for transportation IC cards as inbound demand increased with the end of the COVID-19 pandemic.
• On the other hand, operating loss in Information Communication increased due to lower demand for publication printing.
• Kyodo Printing’s full-year forecast for FY03/25 calls for revenue of JPY104.0bn (+7.2% YoY), operating profit of JPY3.1bn (+96.6% YoY), recurring profit of JPY3.6bn (+72.8% YoY), and net income attributable to owners of the parent of JPY3.3bn (+117.4% YoY).

• The AZEK Company reported robust performance for the second quarter of fiscal 2024.
• The company’s ability to outperform market expectations stemmed from strong residential segment growth, strategic channel partnerships, and innovative product offerings.
• This performance has led The AZEK Company to raise its fiscal year outlook for both net sales and adjusted EBITDA.

• SK Square’s market cap exceeds SK Networks’ by over 10 times, qualifying this merger as small-scale. Thus, only SK Networks needs shareholder approval and grants appraisal rights solely to shareholders.
• The current arbitrage spread for SK Networks’ appraisal rights is 1.95%, and for the swap, it’s 4.16%. These are nominal values excluding trading costs and taxes.
• Today’s SK Square and SK Networks prices reflect arbitrage spreads. Yesterday’s 8% spread widened, focusing on narrowing appraisal rights and swap spreads, essential before next week’s announcement.

• Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
• The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry. 
• Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on. 

• Rising exports, as it has higher margins and Growth in Non-Auto sectors
• Acquisition of ACIL, JMT auto, TSUYO, and Multitech Auto will drive revenue
• Reducing dependency on a single product or categories and single customer

• Grab Holdings (GRAB US) continues to face off the competition with product-led initiatives which continue to gain traction, improving retention rates, and increasing user spend and frequency.
• Competition from new players in Singapore is evident but given Grab’s market position, which allows it to virtually guarantee driver’s daily income, whilst competition often affects smaller players more.
• Grab Holdings (GRAB US) continues to reinvest excess margins in growth but the real kicker will come next year once new product initiatives fully take hold. 

• In FY03/24, revenue was JPY97.0bn (+3.9% YoY), operating profit was JPY1.6bn (+103.5% YoY), recurring profit was JPY2.1bn (+61.6% YoY), and net income attributable to owners of the parent was JPY1.5bn (+19.3% YoY). Information Security earnings expanded due to a recovery in demand for transportation IC cards as inbound demand increased with the end of the COVID-19 pandemic.
• On the other hand, operating loss in Information Communication increased due to lower demand for publication printing.
• Kyodo Printing’s full-year forecast for FY03/25 calls for revenue of JPY104.0bn (+7.2% YoY), operating profit of JPY3.1bn (+96.6% YoY), recurring profit of JPY3.6bn (+72.8% YoY), and net income attributable to owners of the parent of JPY3.3bn (+117.4% YoY).

• The AZEK Company reported robust performance for the second quarter of fiscal 2024.
• The company’s ability to outperform market expectations stemmed from strong residential segment growth, strategic channel partnerships, and innovative product offerings.
• This performance has led The AZEK Company to raise its fiscal year outlook for both net sales and adjusted EBITDA.