Industrials

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 – Genex Power Ltd (GNX AU), Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Nippon Steel Trading Corporation (9810 JP), Conexio Corp (9422 JP), Golden Energy.
Lowest spreads – Nitro Software Ltd (NTO AU), Shandong Fengxiang (9977 HK), Chip Eng Seng Corp (CHIP SP), Elmo Software (ELO AU), OZ Minerals Ltd (OZL AU), Norwest Energy.

2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

By Ankit Agrawal, CFA

Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.
Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.
Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.

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Dec 26

Daily Brief Industrials: Nippon Steel Trading Corporation, Polycab India and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals
2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals

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 – Genex Power Ltd (GNX AU), Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Nippon Steel Trading Corporation (9810 JP), Conexio Corp (9422 JP), Golden Energy.
Lowest spreads – Nitro Software Ltd (NTO AU), Shandong Fengxiang (9977 HK), Chip Eng Seng Corp (CHIP SP), Elmo Software (ELO AU), OZ Minerals Ltd (OZL AU), Norwest Energy.

2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

By Ankit Agrawal, CFA

Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.
Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.
Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.

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Dec 25

Daily Brief Industrials: Csx Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers
CSX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers

This is our first report on CSX, one of the largest providers of rail-based freight transportation services in the United States.
Their competitive advantages should encourage more CSX rail shipping from their clients, but they still need to concentrate on making this happen.
We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

CSX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

CSX Corporation is one of the largest providers of rail-based freight transportation services in the United States.
The company’s services include not only traditional rail service and transport of intermodal containers and trailers but also rail-to-truck transfers and bulk commodity operations.
Their competitive advantages should encourage more CSX rail shipping from their clients, but they still need to concentrate on making this happen.

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Dec 25

Daily Brief Industrials: Csx Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers
CSX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

CSX Corporation: Initiation of Coverage – Business Strategy & Other Drivers

This is our first report on CSX, one of the largest providers of rail-based freight transportation services in the United States.
Their competitive advantages should encourage more CSX rail shipping from their clients, but they still need to concentrate on making this happen.
We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

CSX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

CSX Corporation is one of the largest providers of rail-based freight transportation services in the United States.
The company’s services include not only traditional rail service and transport of intermodal containers and trailers but also rail-to-truck transfers and bulk commodity operations.
Their competitive advantages should encourage more CSX rail shipping from their clients, but they still need to concentrate on making this happen.

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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
✓ Events & Webinars

Dec 23

Daily Brief Industrials: Siemens Gamesa Renewable Energy, S.A. and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Siemens Energy/Siemens Gamesa: Delisting

Siemens Energy/Siemens Gamesa: Delisting

By Jesus Rodriguez Aguilar

After the end of the offer period, Siemens Energy will hold 631,538,509 shares of Siemens Gamesa, representing 92.72% of the share capital (below the 96.71% squeeze-out threshold condition).
Siemens Energy will execute plan B: a standing purchase order beginning 23 December followed by an EGM that will approve delisting.
Unicaja Banco SA (UNI SM) will replace Siemens Gamesa in the Ibex 35 index. Talgo (TLGO SM) will replace Unicaja in the Ibex Medium Cap.

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Dec 23

Daily Brief Industrials: Siemens Gamesa Renewable Energy, S.A. and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Siemens Energy/Siemens Gamesa: Delisting

Siemens Energy/Siemens Gamesa: Delisting

By Jesus Rodriguez Aguilar

After the end of the offer period, Siemens Energy will hold 631,538,509 shares of Siemens Gamesa, representing 92.72% of the share capital (below the 96.71% squeeze-out threshold condition).
Siemens Energy will execute plan B: a standing purchase order beginning 23 December followed by an EGM that will approve delisting.
Unicaja Banco SA (UNI SM) will replace Siemens Gamesa in the Ibex 35 index. Talgo (TLGO SM) will replace Unicaja in the Ibex Medium Cap.

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Dec 22

Daily Brief Industrials: Nippon Steel Trading Corporation, Tatsuta Electric Wire & Cable, Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium
ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium
Toshiba (6502 JP): Sanctions on YMTC Help Kioxia
Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) today announced they would buy out Nippon Steel & Sumikin Bussan (9810 JP), their steel-trading subsidiary.
The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)
On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.

ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium

ENEOS Holdings (5020 JP) and subsidiary JX Nippon Mining & Metals Corporation announced today it would buy out minorities in miner and refiner Tatsuta Elec Wire & Cable (5809 JP).
The Tender Offer comes at a 74% premium for their 37% sub. 5% off a 2yr high, 10% off a 20-year high. This is likely to be a “done deal”.
JX probably starts with ~55% in the bag out of the 66.7% minimum. But the tender doesn’t start for ~ 6 months. Separately, importantly, there is a precedent here.

Toshiba (6502 JP): Sanctions on YMTC Help Kioxia

By Scott Foster

The U.S. government put YMTC on its Entity List in early December, effectively cutting it off from U.S. semiconductor equipment companies and other U.S. technology.
YMTC’s Xtacking architecture was good enough for Apple, but it will now have trouble maintaining its 5% market share, let alone ramping up production of its new 232-layer device.
This will take some of the competitive pressure off Kioxia and benefit Toshiba, which owns 41% of its shares.

Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Nippon Steel & Sumikin Bussa (9810 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
Mitsui & Co Ltd (8031 JP) will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.

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Dec 22

Daily Brief Industrials: Nippon Steel Trading Corporation, Tatsuta Electric Wire & Cable, Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium
ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium
Toshiba (6502 JP): Sanctions on YMTC Help Kioxia
Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) today announced they would buy out Nippon Steel & Sumikin Bussan (9810 JP), their steel-trading subsidiary.
The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)
On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.

ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium

ENEOS Holdings (5020 JP) and subsidiary JX Nippon Mining & Metals Corporation announced today it would buy out minorities in miner and refiner Tatsuta Elec Wire & Cable (5809 JP).
The Tender Offer comes at a 74% premium for their 37% sub. 5% off a 2yr high, 10% off a 20-year high. This is likely to be a “done deal”.
JX probably starts with ~55% in the bag out of the 66.7% minimum. But the tender doesn’t start for ~ 6 months. Separately, importantly, there is a precedent here.

Toshiba (6502 JP): Sanctions on YMTC Help Kioxia

By Scott Foster

The U.S. government put YMTC on its Entity List in early December, effectively cutting it off from U.S. semiconductor equipment companies and other U.S. technology.
YMTC’s Xtacking architecture was good enough for Apple, but it will now have trouble maintaining its 5% market share, let alone ramping up production of its new 232-layer device.
This will take some of the competitive pressure off Kioxia and benefit Toshiba, which owns 41% of its shares.

Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Nippon Steel & Sumikin Bussa (9810 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
Mitsui & Co Ltd (8031 JP) will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.

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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 21

Daily Brief Industrials: Kawasaki Kisen Kaisha, Beijing-Shanghai High Speed Railway-A, REPT BATTERO Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
Northbound Stock Connect Expansion: Potential Changes in 2023
REPT BATTERO Energy Pre-IPO Tearsheet

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR

The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad.

Northbound Stock Connect Expansion: Potential Changes in 2023

By Brian Freitas

On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

REPT BATTERO Energy Pre-IPO Tearsheet

By Clarence Chu

REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic Securities.
REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
As per F&S, it was amongst the top ten lithium-ion battery manufacturers in China as per installations for new energy application in 2021.

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Dec 21

Daily Brief Industrials: Kawasaki Kisen Kaisha, Beijing-Shanghai High Speed Railway-A, REPT BATTERO Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
Northbound Stock Connect Expansion: Potential Changes in 2023
REPT BATTERO Energy Pre-IPO Tearsheet

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR