Industrials

• New Management, New Targets, New Profile. Mission to change the underlying culture to one of ‘accountability’ and ‘delivery’
• Launch of the Grow & Impact program which sets out a clear and coherent strategy to 2025, a plan designed to accelerate the group’s profitable growth. 
• Valuation upside. The stock trades on EV/Sales below 0.5x. Historical multiple above 1x. We see rerating potential. Price could double if the Company delivers on targets

• 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 – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Genesis Minerals (GMD AU), 111 Inc (YI US), Origin Energy (ORG AU).
• Lowest spreads – Nitro Software Ltd (NTO AU), Norwest Energy NL (NWE AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Elmo Software (ELO AU). 

• Some creative float increases for AC Energy Corp (ACEN), San Miguel (SMC PM) and Emperador (EMP PM) should result in the stocks remaining in the index and getting passive inflows.
• DMCI Holdings (DMC PM) should replace Megaworld Corp (MEG PM), while UnionBank of the Philippines (UBP PM)‘s inclusion should result in Robinsons Land Co (RLC PM)‘s deletion from the index. 
• There will be a big impact on the additions, deletions and stocks with float changes. The stocks have already started to move ahead of the passive flows.

• There are 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• No new deals were discussed on Smartkarma in the past week. 
• Key updates took place for: OZ Minerals Ltd (OZL AU), Warrego Energy (WGO AU), Shandong Fengxiang (9977 HK), and Toyo Construction (1890 JP).

• Norfolk Southern is a rail transport major, known to offer its services in the Southeast, East and Midwest U.S.
• The company’s recent financial performance has been decent and the management has shown its commitment to productivity and efficiency by significantly improving its operating ratio.
• They are actively qualifying conductors, carrying out and fine-tuning their TOP|SPG operating strategy, and bolstering their leadership group and operations.

• This is our first report on rail transport major, Norfolk Southern.
• The company delivered strong financial results in Q3 surpassing Wall Street expectations in terms of revenues as well as earnings.
• We initiate coverage on the stock of Norfolk Southern Corporation with a ‘Hold’ rating.

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.

• Zoomlion Heavy Industry H

• New Management, New Targets, New Profile. Mission to change the underlying culture to one of ‘accountability’ and ‘delivery’
• Launch of the Grow & Impact program which sets out a clear and coherent strategy to 2025, a plan designed to accelerate the group’s profitable growth. 
• Valuation upside. The stock trades on EV/Sales below 0.5x. Historical multiple above 1x. We see rerating potential. Price could double if the Company delivers on targets

• 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 – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Genesis Minerals (GMD AU), 111 Inc (YI US), Origin Energy (ORG AU).
• Lowest spreads – Nitro Software Ltd (NTO AU), Norwest Energy NL (NWE AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Elmo Software (ELO AU). 

• Some creative float increases for AC Energy Corp (ACEN), San Miguel (SMC PM) and Emperador (EMP PM) should result in the stocks remaining in the index and getting passive inflows.
• DMCI Holdings (DMC PM) should replace Megaworld Corp (MEG PM), while UnionBank of the Philippines (UBP PM)‘s inclusion should result in Robinsons Land Co (RLC PM)‘s deletion from the index. 
• There will be a big impact on the additions, deletions and stocks with float changes. The stocks have already started to move ahead of the passive flows.

• There are 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• No new deals were discussed on Smartkarma in the past week. 
• Key updates took place for: OZ Minerals Ltd (OZL AU), Warrego Energy (WGO AU), Shandong Fengxiang (9977 HK), and Toyo Construction (1890 JP).

• Norfolk Southern is a rail transport major, known to offer its services in the Southeast, East and Midwest U.S.
• The company’s recent financial performance has been decent and the management has shown its commitment to productivity and efficiency by significantly improving its operating ratio.
• They are actively qualifying conductors, carrying out and fine-tuning their TOP|SPG operating strategy, and bolstering their leadership group and operations.

• This is our first report on rail transport major, Norfolk Southern.
• The company delivered strong financial results in Q3 surpassing Wall Street expectations in terms of revenues as well as earnings.
• We initiate coverage on the stock of Norfolk Southern Corporation with a ‘Hold’ rating.

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.

• Zoomlion Heavy Industry H

• One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
• One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
• The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

• One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
• One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
• The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

• Adi Sarana Armada (ASSA IJ) continues to represent a unique proxy to play both transport and logistics in Indonesia through its auto business plus logistics including last-mile player Anteraja. 
• ASSA Rent is the largest car leasing leader in Indonesia, with Autopedia leading auto auctions and a leader in used car sales through Caroline, which is expanding its presence fast. 
• Anteraja has seen rapid growth and may see some slowdown from e-commerce but continues to gain share and ASSA logistics continue to diversify. Valuations are attractive on 10x FY2023E PER.

• This is our first report on Danaher Corporation, a well-known manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
• The company had a strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
• It delivered market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.

• This is our first report on industrials giant, Illinois Tool Works.
• The company achieved a 13% revenue increase on the top line, with 16% organic growth from its core businesses which is a good sign.
• While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

• Danaher Corporation is a renowned manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
• The company has had a decent financial performance off-late and has been consistently delivering market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.
• Its acquisition-led growth strategy implies that it will be in regular need for debt in order to fund acquisitions.

• Illinois Tool Works is an industrials major catering to a wide variety of end markets ranging from automotive to welding and construction projects.
• The company’s financial performance has been decent despite the fact that the operating climate is still quite dynamic and challenging.
• While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

• Adi Sarana Armada (ASSA IJ) continues to represent a unique proxy to play both transport and logistics in Indonesia through its auto business plus logistics including last-mile player Anteraja. 
• ASSA Rent is the largest car leasing leader in Indonesia, with Autopedia leading auto auctions and a leader in used car sales through Caroline, which is expanding its presence fast. 
• Anteraja has seen rapid growth and may see some slowdown from e-commerce but continues to gain share and ASSA logistics continue to diversify. Valuations are attractive on 10x FY2023E PER.

• This is our first report on Danaher Corporation, a well-known manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
• The company had a strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
• It delivered market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.

• This is our first report on industrials giant, Illinois Tool Works.
• The company achieved a 13% revenue increase on the top line, with 16% organic growth from its core businesses which is a good sign.
• While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

• Danaher Corporation is a renowned manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
• The company has had a decent financial performance off-late and has been consistently delivering market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.
• Its acquisition-led growth strategy implies that it will be in regular need for debt in order to fund acquisitions.

• Illinois Tool Works is an industrials major catering to a wide variety of end markets ranging from automotive to welding and construction projects.
• The company’s financial performance has been decent despite the fact that the operating climate is still quite dynamic and challenging.
• While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

• Dynasty Ceramic Pub (DCC TB) is Thailand’s leading ceramic tile manufacturer with a large portion of sales in the mass market as well as upcountry, diversifying sales. 
• The company continues to build new capacity and is moving into the porcelain tile business to cater for the higher-end market where it will compete with Chinese imports.
• Dynasty Ceramic Pub (DCC TB) is a high-quality play on the economic recovery in Thailand, with a good governance reputation. Valuations look reasonable plus a dividend yield of over 6%.

• AviChina Industry & Tech (2357 HK) announced plan to consolidate helicopter business by disposing Changhe Aircraft and Harbin Aircraft to its subsidiary Avic Helicopter (600038 CH). 
• AviChina can achieve synergy at its helicopter business, realise capital gains from disposal and enjoy higher valuations on these assets while maintaining its controlling ownership.
• The resultant increase in stake in Avicopter will further widen AviChina’s discount to its holdings in four listed A-share subsidiaries. Its current 66% discount is just too steep.

• Dynasty Ceramic Pub (DCC TB) is Thailand’s leading ceramic tile manufacturer with a large portion of sales in the mass market as well as upcountry, diversifying sales. 
• The company continues to build new capacity and is moving into the porcelain tile business to cater for the higher-end market where it will compete with Chinese imports.
• Dynasty Ceramic Pub (DCC TB) is a high-quality play on the economic recovery in Thailand, with a good governance reputation. Valuations look reasonable plus a dividend yield of over 6%.

• AviChina Industry & Tech (2357 HK) announced plan to consolidate helicopter business by disposing Changhe Aircraft and Harbin Aircraft to its subsidiary Avic Helicopter (600038 CH). 
• AviChina can achieve synergy at its helicopter business, realise capital gains from disposal and enjoy higher valuations on these assets while maintaining its controlling ownership.
• The resultant increase in stake in Avicopter will further widen AviChina’s discount to its holdings in four listed A-share subsidiaries. Its current 66% discount is just too steep.

• On 13 December, Toyo Construction (1890 JP) suitor YFO issued a press release which was not to the liking of Toyo Construction. A day later, Toyo Construction offered its own.
• YFO responded on the 21st, saying ToyoKen’s PR was inaccurate. Not quite a week after that, ToyoKen announced one tiny subsidiary(Tecos) would absorb another (portable toilet rental co Orient Ecology).
• Synergies? None. Growth? None. Scale? Nope. Was this for some other reason investors need to worry about? Maybe.

• On 13 December, Toyo Construction (1890 JP) suitor YFO issued a press release which was not to the liking of Toyo Construction. A day later, Toyo Construction offered its own.
• YFO responded on the 21st, saying ToyoKen’s PR was inaccurate. Not quite a week after that, ToyoKen announced one tiny subsidiary(Tecos) would absorb another (portable toilet rental co Orient Ecology).
• Synergies? None. Growth? None. Scale? Nope. Was this for some other reason investors need to worry about? Maybe.