Industrials

• The long-stop date for the satisfaction of the offer conditions has been extended from 9 April to 9 August, to help Dian Swastatika Sentosa (DSSA IJ) obtain shareholder approval.
• An alternative explanation is that the Widjaja family’s offer for Golden Energy & Resources (GER SP) is increasingly looking unattractive in light of Stanmore Coal (SMR AU)’s share price rally. 
• The offer remains light and we think that there is a good chance that the Widjaja family will raise its offer (likely a bump to the delisting price) to succeed.  

• Acrow Formwork and Construction Services (‘ACF’) and Big River Industries (‘BRI’) are key players within the Australian Building Products and Distribution markets.
• Acrow focuses upon Formwork, Industrial Services and Scaffolding; and Big River specialises in the manufacturing of timber veneer, plywood and formply, and distribution of building supplies.
• Both businesses have undergone significant strategic pivots over the past 4-5 years and are now reaping the rewards.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• Heico had another successful quarter and managed an all-around beat driven by record performance within the Flight Support Group.
• The Flight Support Group’s operating income and net sales have increased sequentially.
• Heico’s ETG Group finalized the acquisition of TRAD Tests & Radiations, a pioneer in the extremely specialized field of radiation engineering.

• TransDigm managed to deliver yet another all-around beat in the recent result.
• Their value generation process heavily relies on their capital structure and allocations and has worked well in the post Covid environment.
• 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.

• Despite the world economy slowing down in the third quarter, particularly outside the U.S., UPS managed an all-around beat.
• The execution of their customer-first, people-led, innovation-driven strategy has fundamentally improved many parts of their business, resulting in stronger operating margins.
• In addition, they finished the first phase of their smart package, smart facility implementation, enabling RFID label technology in 101 buildings.

• The long-stop date for the satisfaction of the offer conditions has been extended from 9 April to 9 August, to help Dian Swastatika Sentosa (DSSA IJ) obtain shareholder approval.
• An alternative explanation is that the Widjaja family’s offer for Golden Energy & Resources (GER SP) is increasingly looking unattractive in light of Stanmore Coal (SMR AU)’s share price rally. 
• The offer remains light and we think that there is a good chance that the Widjaja family will raise its offer (likely a bump to the delisting price) to succeed.  

• Acrow Formwork and Construction Services (‘ACF’) and Big River Industries (‘BRI’) are key players within the Australian Building Products and Distribution markets.
• Acrow focuses upon Formwork, Industrial Services and Scaffolding; and Big River specialises in the manufacturing of timber veneer, plywood and formply, and distribution of building supplies.
• Both businesses have undergone significant strategic pivots over the past 4-5 years and are now reaping the rewards.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• Heico had another successful quarter and managed an all-around beat driven by record performance within the Flight Support Group.
• The Flight Support Group’s operating income and net sales have increased sequentially.
• Heico’s ETG Group finalized the acquisition of TRAD Tests & Radiations, a pioneer in the extremely specialized field of radiation engineering.

• TransDigm managed to deliver yet another all-around beat in the recent result.
• Their value generation process heavily relies on their capital structure and allocations and has worked well in the post Covid environment.
• 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.

• Despite the world economy slowing down in the third quarter, particularly outside the U.S., UPS managed an all-around beat.
• The execution of their customer-first, people-led, innovation-driven strategy has fundamentally improved many parts of their business, resulting in stronger operating margins.
• In addition, they finished the first phase of their smart package, smart facility implementation, enabling RFID label technology in 101 buildings.

• Fanuc is a core structural growth stock that has fallen by -4% over the past year. We turn bullish with 8 days to earnings
• We believe that Fanuc is a key beneficiary of continued investment in automation and realignment of supply chains globally
• We focus on Fanuc’s core value drivers – revenue, margins, risk and investment – and see 25% upside for long term investors

• Avalon Technologies (6594468Z IN) is looking to raise about US$130m in its upcoming India IPO. The IPO is expected to consist of both a fresh issue and a secondary portion. 
• Avalon Tech (Avalon) is a vertically integrated electronic manufacturing services (EMS) firm delivering box build solutions in India.
• As per F&S, the firm is one of the leading domestic EMS companies with end-to-end capabilities offering a full stack product and solution suite.

• The acceptance period for EQT’s €26/share offer (46% premium, 16.1x EV/23eEBITDA) runs until 16 February. Minimum acceptance is 62.5% (49.4% of the float). EQT intends to implement a domination agreement.
• The deal makes sense from a strategic standpoint, although there are potential antitrust issues. The price offered seems generous considering my fair-value estimate of €18.67 (DCF-based).
• Gross spread is 3.7% (8.6% estimated annual return assuming settlement by 30 June), which is okayish for a not so liquid stock in the European space. Long.

• Share price of Shenzhen International (152 HK) started slow in this year, but it is on course for stronger earnings in FY23, following a dip in last year. 
• Upside from logistics business, benefits to Shenzhen Expressway (548 HK) on border re-opening, potential massive contribution from logistics parks transformation and upgrading and lack of Shenzhen Airlines’ drag are drivers. 
• ROE is expected to rebound to 11-12% in next two years, returning to FY20-21 level. Back then, its average P/B was 0.68x, suggesting at least 31% upside from 0.52x currently. 

• Fanuc is a core structural growth stock that has fallen by -4% over the past year. We turn bullish with 8 days to earnings
• We believe that Fanuc is a key beneficiary of continued investment in automation and realignment of supply chains globally
• We focus on Fanuc’s core value drivers – revenue, margins, risk and investment – and see 25% upside for long term investors

• Avalon Technologies (6594468Z IN) is looking to raise about US$130m in its upcoming India IPO. The IPO is expected to consist of both a fresh issue and a secondary portion. 
• Avalon Tech (Avalon) is a vertically integrated electronic manufacturing services (EMS) firm delivering box build solutions in India.
• As per F&S, the firm is one of the leading domestic EMS companies with end-to-end capabilities offering a full stack product and solution suite.

• The acceptance period for EQT’s €26/share offer (46% premium, 16.1x EV/23eEBITDA) runs until 16 February. Minimum acceptance is 62.5% (49.4% of the float). EQT intends to implement a domination agreement.
• The deal makes sense from a strategic standpoint, although there are potential antitrust issues. The price offered seems generous considering my fair-value estimate of €18.67 (DCF-based).
• Gross spread is 3.7% (8.6% estimated annual return assuming settlement by 30 June), which is okayish for a not so liquid stock in the European space. Long.

• Share price of Shenzhen International (152 HK) started slow in this year, but it is on course for stronger earnings in FY23, following a dip in last year. 
• Upside from logistics business, benefits to Shenzhen Expressway (548 HK) on border re-opening, potential massive contribution from logistics parks transformation and upgrading and lack of Shenzhen Airlines’ drag are drivers. 
• ROE is expected to rebound to 11-12% in next two years, returning to FY20-21 level. Back then, its average P/B was 0.68x, suggesting at least 31% upside from 0.52x currently. 

• Hanwha Aerospace is still narrowly across the borderline. It is especially painful that the share price was corrected by more than 4% today.
• But suppose the cutoff MC is set at less than ₩2.7T, and Aerospace succeeds in recovering slightly. In that case, it will likely manage to come within the borderline.
• Given that the preemptive flow must not have been significant and the profit forecast has been upwards until recently, a price shooting may appear at the time of the announcement.

• Kyocera’s aggressive long-term investment plan makes sense: abandon an unnecessary zero-debt policy and borrow while interest rates are still low. The resulting debt/equity ratio should be manageable.
• But the near- to medium-term outlook is not encouraging. Semiconductor inventories are still too high and demand is down. Recovery is likely to be slow.
• The shares have dropped 21% since mid-September, but FY Mar-23 guidance looks too high and both consumer and corporate spending are weak. Wait for capitulation.

• After the postal ballot approved the offering in December 2022, Adani Enterprises (ADE IN) is on track to conduct a Rs 200bn or US$2.4bn+ Equity Offering.
• One exchange release today gave the timing, and following  few articles in recent days suggesting it, another release said the offering would be partly paid shares.  
• The structure of the Offer and risks are detailed below but investors should remember, it was illiquidity which got the price here. Liquidity is a Bug not a Feature.

• Leonardo’s revenues should benefit from several program ramp-ups driven by strong book-to-bill in prior years, and an impressive backlog that now stands at €37.4bn
• The underlying market for defense spending remains strong and is set to grow further
• The stock screens very cheap, trading on low multiples vs the sector, and our model shows a fair value well above the current share price.

• Hanwha Aerospace is still narrowly across the borderline. It is especially painful that the share price was corrected by more than 4% today.
• But suppose the cutoff MC is set at less than ₩2.7T, and Aerospace succeeds in recovering slightly. In that case, it will likely manage to come within the borderline.
• Given that the preemptive flow must not have been significant and the profit forecast has been upwards until recently, a price shooting may appear at the time of the announcement.

• Kyocera’s aggressive long-term investment plan makes sense: abandon an unnecessary zero-debt policy and borrow while interest rates are still low. The resulting debt/equity ratio should be manageable.
• But the near- to medium-term outlook is not encouraging. Semiconductor inventories are still too high and demand is down. Recovery is likely to be slow.
• The shares have dropped 21% since mid-September, but FY Mar-23 guidance looks too high and both consumer and corporate spending are weak. Wait for capitulation.

• After the postal ballot approved the offering in December 2022, Adani Enterprises (ADE IN) is on track to conduct a Rs 200bn or US$2.4bn+ Equity Offering.
• One exchange release today gave the timing, and following  few articles in recent days suggesting it, another release said the offering would be partly paid shares.  
• The structure of the Offer and risks are detailed below but investors should remember, it was illiquidity which got the price here. Liquidity is a Bug not a Feature.

• Leonardo’s revenues should benefit from several program ramp-ups driven by strong book-to-bill in prior years, and an impressive backlog that now stands at €37.4bn
• The underlying market for defense spending remains strong and is set to grow further
• The stock screens very cheap, trading on low multiples vs the sector, and our model shows a fair value well above the current share price.

• Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
• They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
• This is one of those times when I can reiterate, Japan Needs More Cowbell. 

• Since mid-December, spreads have shown a mixed performance across our liquid universe (9 have widened, 9 tightened, 1 at same level).
• Trade recommendations long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
• Trade recommendations long prefs / short ords: Sixt, VW, Danieli, MFE-Media for Europe, Grifols, Atlas Copco, Ericsson.

• This is our first report on Stanley Black & Decker, one of the largest global manufacturers of tools and engineering systems catering to a wide variety of industries.
• The company delivered an all-around beat in its last result and has been making significant progress toward narrowing its focus and overhauling its supply chain in recent times.
• We initiate coverage on the stock of Stanley Black & Decker with a ‘Hold’ rating.

• This is our first report on Fastenal, a major wholesale distributor of industrial and construction supplies.
• The company delivered a strong performance in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
• We initiate coverage on the stock of Fastenal Company with a ‘Hold’ rating.

• Stanley Black & Decker one of the largest providers of tools and engineering systems across the world and caters to a wide variety of industries.
• The company has seen significant progress toward narrowing its focus and overhauling its supply chain in recent times.
• We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

• Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
• They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
• This is one of those times when I can reiterate, Japan Needs More Cowbell. 

• Since mid-December, spreads have shown a mixed performance across our liquid universe (9 have widened, 9 tightened, 1 at same level).
• Trade recommendations long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
• Trade recommendations long prefs / short ords: Sixt, VW, Danieli, MFE-Media for Europe, Grifols, Atlas Copco, Ericsson.

• This is our first report on Stanley Black & Decker, one of the largest global manufacturers of tools and engineering systems catering to a wide variety of industries.
• The company delivered an all-around beat in its last result and has been making significant progress toward narrowing its focus and overhauling its supply chain in recent times.
• We initiate coverage on the stock of Stanley Black & Decker with a ‘Hold’ rating.

• This is our first report on Fastenal, a major wholesale distributor of industrial and construction supplies.
• The company delivered a strong performance in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
• We initiate coverage on the stock of Fastenal Company with a ‘Hold’ rating.

• Stanley Black & Decker one of the largest providers of tools and engineering systems across the world and caters to a wide variety of industries.
• The company has seen significant progress toward narrowing its focus and overhauling its supply chain in recent times.
• We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

• There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were discussed on Smartkarma in the past week: Bangchak Corporation (BCP TB)‘s takeunder for Esso Thailand (ESSO TB); Tianqi/OGO’s Offer for Essential Metals (ESS AU).
• Key updates took place for: Norwest Energy NL (NWE AU) and Halcyon Agri (HACL SP).

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were discussed on Smartkarma in the past week: Bangchak Corporation (BCP TB)‘s takeunder for Esso Thailand (ESSO TB); Tianqi/OGO’s Offer for Essential Metals (ESS AU).
• Key updates took place for: Norwest Energy NL (NWE AU) and Halcyon Agri (HACL SP).

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces