Industrials

By Shifara Samsudeen, ACMA, CGMA

Two years ago, I wrote about the history of activist attention on what was then the 8th largest elevator maker in the world Fujitec Co Ltd (6406 JP).
In Activist Pressure FINALLY Works on Fujitec (6406)- Going Up? (Albeit Slowly) I discussed what were still nascent efforts by Oasis to trigger change at the top.
On 30 November 2022, Oasis – which officially went above 5% only this past March but on 30 November reported 16.52% – called an EGM. It’s worth a look.

2022 High Conviction Recruit: More Room for Shares to Fall

It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.
Though Staffing and Matching & Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.
With global recruitment markets facing challenges with weakening of global economies, we think Recruit Holdings (6098 JP) ‘s shares have further room to fall in 2023E.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
The Sembcorp Marine (SMM SP) – Keppel Corp (KEP SP) deal seems likely to complete in 1Q 2023.
Below is a look at the potential index flow consequences of this deal and other potential index changes between now and the March 2023 Rebalance.

Venteny Raises $21m Via Indonesia IPO

By Tech in Asia

The firm, which provides growth funding and human resource services, went public under the ticker symbol VTNY.
Venteny offered around 930 million shares – representing 15% of its enlarged share pool – at a price of 360 rupiah (US$0.023) apiece.
The company raised US$21 million, pegging its valuation at around US$158 million.

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Dec 20

Daily Brief Industrials: Fujitec Co Ltd, Recruit Holdings, Sembcorp Marine, Venteny and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Fujitec (6406) Activism Levelling Up – A Board Spill to Come?
2022 High Conviction Recruit: More Room for Shares to Fall
Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion
Venteny Raises $21m Via Indonesia IPO

Fujitec (6406) Activism Levelling Up – A Board Spill to Come?

By Shifara Samsudeen, ACMA, CGMA

Two years ago, I wrote about the history of activist attention on what was then the 8th largest elevator maker in the world Fujitec Co Ltd (6406 JP).
In Activist Pressure FINALLY Works on Fujitec (6406)- Going Up? (Albeit Slowly) I discussed what were still nascent efforts by Oasis to trigger change at the top.
On 30 November 2022, Oasis – which officially went above 5% only this past March but on 30 November reported 16.52% – called an EGM. It’s worth a look.

2022 High Conviction Recruit: More Room for Shares to Fall

It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.
Though Staffing and Matching & Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.
With global recruitment markets facing challenges with weakening of global economies, we think Recruit Holdings (6098 JP) ‘s shares have further room to fall in 2023E.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
The Sembcorp Marine (SMM SP) – Keppel Corp (KEP SP) deal seems likely to complete in 1Q 2023.
Below is a look at the potential index flow consequences of this deal and other potential index changes between now and the March 2023 Rebalance.

Venteny Raises $21m Via Indonesia IPO

By Tech in Asia

The firm, which provides growth funding and human resource services, went public under the ticker symbol VTNY.
Venteny offered around 930 million shares – representing 15% of its enlarged share pool – at a price of 360 rupiah (US$0.023) apiece.
The company raised US$21 million, pegging its valuation at around US$158 million.

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Dec 19

Daily Brief Industrials: Toyo Construction and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro

Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro

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 – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), Origin Energy (ORG AU).
Lowest spreads Warrego Energy (WGO AU), Nitro Software Ltd (NTO AU), Chip Eng Seng Corp (CHIP SP), Uzabase Inc (3966 JP), Norwest Energy Nl (NWE AU), Elmo Software (ELO AU).

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Dec 19

Daily Brief Industrials: Toyo Construction and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro

Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro

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 – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), Origin Energy (ORG AU).
Lowest spreads Warrego Energy (WGO AU), Nitro Software Ltd (NTO AU), Chip Eng Seng Corp (CHIP SP), Uzabase Inc (3966 JP), Norwest Energy Nl (NWE AU), Elmo Software (ELO AU).

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Dec 18

Daily Brief Industrials: Toshiba Corp, Nidec Corp, SK Inc, Trex Company and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba
(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec
SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis
Trex Company Inc.: Initiation of Coverage – Financial Forecasts

Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba

Stay long NTT Data Corp (9613 JP) through mid-January. Then sell.
Origin Energy (ORG AU) may drift lower as the street crunches numbers, in tandem with a vacuum of news as Brookfield undertakes its due diligence.
Toyo Construction (1890 JP) is now upset that YFO has decided to release the reason why Toyo management didn’t.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec

There are 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals were discussed on Smartkarma: the St Barbara (SBM AU)/ Genesis Minerals (GMD AU) merger; Acotec (6669 HK)‘s Offer, Okk (6205 JP)‘s Offer, MinRes (MIN AU)/Norwest (NWE AU) merger.
Key updates took place for: Tyro Payments (TYR AU), Origin Energy (ORG AU), Yashili International Holdings (1230 HK), and Toyo Construction (1890 JP).

SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

By Douglas Kim

In early December, the divorce settlement between SK Group Chairman Chey Tae-Won and his former wife Roh So-Young was finalized after 6+ years of long proceedings.
The end of the divorce settlement means that there is now a greater probability of SK Inc materially cancelling some of its treasury shares in 2023.
Our SoTP valuation of SK Inc suggests an implied valuation of 260,712 won per share, suggesting 28.1% upside from current levels.

Trex Company Inc.: Initiation of Coverage – Financial Forecasts

This is our first report on Trex, one of the largest manufacturers of high-performance, wood-alternative railing and decking, as well as a leader in eco-friendly, low-maintenance living products in the world.
The launch of the new Trex Transcend lineage product line of the company has been received favorably in the market.
In this quarter, Trex partnered with two more distribution locations in Texas, which enabled it to expand and service the availability of the products of Trex Outdoor Living in the fastest-growing markets.

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Dec 18

Daily Brief Industrials: Toshiba Corp, Nidec Corp, SK Inc, Trex Company and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba
(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec
SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis
Trex Company Inc.: Initiation of Coverage – Financial Forecasts

Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba

Stay long NTT Data Corp (9613 JP) through mid-January. Then sell.
Origin Energy (ORG AU) may drift lower as the street crunches numbers, in tandem with a vacuum of news as Brookfield undertakes its due diligence.
Toyo Construction (1890 JP) is now upset that YFO has decided to release the reason why Toyo management didn’t.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec

There are 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals were discussed on Smartkarma: the St Barbara (SBM AU)/ Genesis Minerals (GMD AU) merger; Acotec (6669 HK)‘s Offer, Okk (6205 JP)‘s Offer, MinRes (MIN AU)/Norwest (NWE AU) merger.
Key updates took place for: Tyro Payments (TYR AU), Origin Energy (ORG AU), Yashili International Holdings (1230 HK), and Toyo Construction (1890 JP).

SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

By Douglas Kim

In early December, the divorce settlement between SK Group Chairman Chey Tae-Won and his former wife Roh So-Young was finalized after 6+ years of long proceedings.
The end of the divorce settlement means that there is now a greater probability of SK Inc materially cancelling some of its treasury shares in 2023.
Our SoTP valuation of SK Inc suggests an implied valuation of 260,712 won per share, suggesting 28.1% upside from current levels.

Trex Company Inc.: Initiation of Coverage – Financial Forecasts

This is our first report on Trex, one of the largest manufacturers of high-performance, wood-alternative railing and decking, as well as a leader in eco-friendly, low-maintenance living products in the world.
The launch of the new Trex Transcend lineage product line of the company has been received favorably in the market.
In this quarter, Trex partnered with two more distribution locations in Texas, which enabled it to expand and service the availability of the products of Trex Outdoor Living in the fastest-growing markets.

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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

Dec 17

Daily Brief Industrials: Xinyi Glass Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival

Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival

By Henry Soediarko

The Chinese property market is undergoing a revival story initiated by the government.
Xinyi Glass Holdings (868 HK) main product is a key component for real estate developers.
Xinyi Glass has a much cleaner balance sheet compared to the property developers.

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Dec 17

Daily Brief Industrials: Xinyi Glass Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival

Xinyi Glass (868): Efficient Way to Ride Chinese Property Market Revival

By Henry Soediarko

The Chinese property market is undergoing a revival story initiated by the government.
Xinyi Glass Holdings (868 HK) main product is a key component for real estate developers.
Xinyi Glass has a much cleaner balance sheet compared to the property developers.

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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Dec 16

Daily Brief Industrials: Toshiba Corp, Indian Railway Catering and Tourism, Emerson Electric Co, Carrier Global Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502) – Funding Secured!
Toshiba (6502 JP): Securing Financing Helps Sentiment but Hurdles Remain
IRCTC OFS – Well Flagged Deal for an Overly Well Priced Stock
Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report
Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers
Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers

Toshiba (6502) – Funding Secured!

A Nikkei article today suggests FUNDING SECURED for JIP’s deal for Toshiba Corp (6502 JP). Noises 2wks ago suggested this timing for a deal, but there are no terms yet.
The syndicate, led by SMBC and Mizuho, “has agreed to ¥1.2trln in loans.” The two leads take two-thirds but details suggest not all is as smooth as the headline suggests.
The remaining questions are whether the major holders will take the bait at that price, and/or whether JIC would come in over the top. I expect yes to the first.

Toshiba (6502 JP): Securing Financing Helps Sentiment but Hurdles Remain

The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has secured bank financing of around JPY1.2 trillion (US$8.8 billion), conditional on Toshiba Corp (6502 JP) selling some businesses.
JIP will table an offer valuing Toshiba at JPY2.2 trillion (US$16 billion). The special committee is assessing the proposal and a final decision will be made at a board meeting.
JIP’s next challenge is getting the committee to recommend the offer. While a potential offer of JPY5,100 is not terrible, it is well below the original bid expectation of JPY6,000.

IRCTC OFS – Well Flagged Deal for an Overly Well Priced Stock

By Sumeet Singh

Government of India (GoI) aims to raise up to US$360m via selling its 5% stake in Indian Railway Catering and Tourism (IRCTC IN).
This is not the first selldown by GoI and won’t be the last either. However, the stock now looks more expensive than ever.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report

Emerson Electric is a well-known engineering company catering to clients in the industrial, commercial, and consumer markets.
It continues to see growth potential in the life sciences sector thanks to continued investment in creating new drugs, vaccines, and medications.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers

This is our first report on engineering major, Emerson Electric.
The company had a strong finish to the fiscal year 2022, with sales increasing by 9% surpassing Wall Street expectations.
We initiate coverage on the stock of Emerson Electric with a ‘Hold’ rating.

Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers

This is our first report on global HVAC major, Carrier Global Corporation.
On the heels of the continued traction on pricing, Carrier delivered quite high organic sales growth in the quarter, and importantly, it continues delivering double-digit aftermarket organic growth.
Among other major updates, the company completed the acquisition of the global light commercial and residential HVAC business of Toshiba.

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Dec 16

Daily Brief Industrials: Toshiba Corp, Indian Railway Catering and Tourism, Emerson Electric Co, Carrier Global Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502) – Funding Secured!
Toshiba (6502 JP): Securing Financing Helps Sentiment but Hurdles Remain
IRCTC OFS – Well Flagged Deal for an Overly Well Priced Stock
Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report
Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers
Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers

Toshiba (6502) – Funding Secured!

A Nikkei article today suggests FUNDING SECURED for JIP’s deal for Toshiba Corp (6502 JP). Noises 2wks ago suggested this timing for a deal, but there are no terms yet.
The syndicate, led by SMBC and Mizuho, “has agreed to ¥1.2trln in loans.” The two leads take two-thirds but details suggest not all is as smooth as the headline suggests.
The remaining questions are whether the major holders will take the bait at that price, and/or whether JIC would come in over the top. I expect yes to the first.

Toshiba (6502 JP): Securing Financing Helps Sentiment but Hurdles Remain

The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has secured bank financing of around JPY1.2 trillion (US$8.8 billion), conditional on Toshiba Corp (6502 JP) selling some businesses.
JIP will table an offer valuing Toshiba at JPY2.2 trillion (US$16 billion). The special committee is assessing the proposal and a final decision will be made at a board meeting.
JIP’s next challenge is getting the committee to recommend the offer. While a potential offer of JPY5,100 is not terrible, it is well below the original bid expectation of JPY6,000.

IRCTC OFS – Well Flagged Deal for an Overly Well Priced Stock

By Sumeet Singh

Government of India (GoI) aims to raise up to US$360m via selling its 5% stake in Indian Railway Catering and Tourism (IRCTC IN).
This is not the first selldown by GoI and won’t be the last either. However, the stock now looks more expensive than ever.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Emerson Electric Co.: Detailed Credit Analysis & Financial Strength Evaluation Report

Emerson Electric is a well-known engineering company catering to clients in the industrial, commercial, and consumer markets.
It continues to see growth potential in the life sciences sector thanks to continued investment in creating new drugs, vaccines, and medications.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Emerson Electric Co.: Initiation of Coverage – Recent Divestments & Other Drivers

This is our first report on engineering major, Emerson Electric.
The company had a strong finish to the fiscal year 2022, with sales increasing by 9% surpassing Wall Street expectations.
We initiate coverage on the stock of Emerson Electric with a ‘Hold’ rating.

Carrier Global Corporation: Initiation of Coverage – Acquisition Of Toshiba’s HVAC Business & Other Drivers