Industrials

YFO’s press release alleges the Toyo Construction (1890 JP) Board will not recommend the tender as YFO is not a suitable owner rather than the JPY,1000 price being too low.
The Board responded that YFO violated the NDA by disclosing the reasons for the Board’s disapproval. This damages the understanding between the parties, an essential precondition to recommending the offer.
The start of the tender has been pushed back to late January 2023. YFO is committed and will not withdraw the offer for any reason that shareholders may consider unreasonable.

CSI REITs Index: An Investable Benchmark Launches Today

By Brian Freitas

The China Securities Index (CSI) will launch the CSI REITs Index today. The index currently has 14 constituents, and the REITs will be capped at 15% of the index weight.
We expect another 6 REITs to be added to the index at the March rebalance. And then at least another 3 more in June.
The launch of the index should result in ETFs and other passive investment products being floated which should further enhance market liquidity and bring long-term benefits to the market.

Adani Enterprise US$2.4bn Raising Early Look – Lots to Think About: Controversies, Debt, Grand Plans

Adani Enterprises (ADE IN) is looking to raise INR200bn (US$2.4bn) via a further public offering. The company has obtained board approval and is now awaiting shareholder approval.
It is the flagship company of the Adani Group. The group’s listed entities’ stock performance over the past few years has made the founder one of the richest persons globally.
However, the stock is expensive and has had some issues in the past. In this note, we take an early look at the possible placement and its impact.

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Dec 15

Daily Brief Industrials: Toyo Construction, China Communications Construction, Adani Enterprises and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toyo Construction (1890 JP): Pot Shots and Warning Shots
CSI REITs Index: An Investable Benchmark Launches Today
Adani Enterprise US$2.4bn Raising Early Look – Lots to Think About: Controversies, Debt, Grand Plans

Toyo Construction (1890 JP): Pot Shots and Warning Shots

YFO’s press release alleges the Toyo Construction (1890 JP) Board will not recommend the tender as YFO is not a suitable owner rather than the JPY,1000 price being too low.
The Board responded that YFO violated the NDA by disclosing the reasons for the Board’s disapproval. This damages the understanding between the parties, an essential precondition to recommending the offer.
The start of the tender has been pushed back to late January 2023. YFO is committed and will not withdraw the offer for any reason that shareholders may consider unreasonable.

CSI REITs Index: An Investable Benchmark Launches Today

By Brian Freitas

The China Securities Index (CSI) will launch the CSI REITs Index today. The index currently has 14 constituents, and the REITs will be capped at 15% of the index weight.
We expect another 6 REITs to be added to the index at the March rebalance. And then at least another 3 more in June.
The launch of the index should result in ETFs and other passive investment products being floated which should further enhance market liquidity and bring long-term benefits to the market.

Adani Enterprise US$2.4bn Raising Early Look – Lots to Think About: Controversies, Debt, Grand Plans

Adani Enterprises (ADE IN) is looking to raise INR200bn (US$2.4bn) via a further public offering. The company has obtained board approval and is now awaiting shareholder approval.
It is the flagship company of the Adani Group. The group’s listed entities’ stock performance over the past few years has made the founder one of the richest persons globally.
However, the stock is expensive and has had some issues in the past. In this note, we take an early look at the possible placement and its impact.

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Dec 14

Daily Brief Industrials: Toyo Construction, Okk Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue
Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities

Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue

In March, Toyo Construction (1890 JP) agreed to be bought out by INFRONEER Holdings (5076 JP) for ¥770/share. One activist objected, and bought 28%. They then said they’d pay ¥1,000.
The Infroneer deal failure started an acrimonious back and forth. The hostility lessened over the summer, but despite activist Yamauchi Family Office’s protestations of love, no deal as of November.
Today saw another press release, delaying things. The contents are 🌶🌶🌶. NOW things are getting more interesting. Hostility is back. Medium-spicy. Three 🌶 out of five.

Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities

Small machine tool maker OKK used to be good for about ¥2bn in EBITDA, then that dropped to the low ¥1bns on average, then the last two years were negative.
A year ago, Nidec agreed to inject capital and buy 66.6% of OKK – Now Nidec OKK – for peanuts. Yesterday, the two agreed a scrip merger on 1 March.
The process and ratio leave a LOT to be desired but they only need 66.67% and with 66.66% already, it’s a done deal. Nothing you can do about it.

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Dec 14

Daily Brief Industrials: Toyo Construction, Okk Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue
Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities

Toyo (1890) Says “We Reject”. YFO Says “But We Didn’t Talk”. Medium-🌶🌶🌶 Hostile Activism To Ensue

In March, Toyo Construction (1890 JP) agreed to be bought out by INFRONEER Holdings (5076 JP) for ¥770/share. One activist objected, and bought 28%. They then said they’d pay ¥1,000.
The Infroneer deal failure started an acrimonious back and forth. The hostility lessened over the summer, but despite activist Yamauchi Family Office’s protestations of love, no deal as of November.
Today saw another press release, delaying things. The contents are 🌶🌶🌶. NOW things are getting more interesting. Hostility is back. Medium-spicy. Three 🌶 out of five.

Nidec (6594) To Take Over Nidec OKK (6205), Squeezing Out Minorities

By Shifara Samsudeen, ACMA, CGMA

Small machine tool maker OKK used to be good for about ¥2bn in EBITDA, then that dropped to the low ¥1bns on average, then the last two years were negative.
A year ago, Nidec agreed to inject capital and buy 66.6% of OKK – Now Nidec OKK – for peanuts. Yesterday, the two agreed a scrip merger on 1 March.
The process and ratio leave a LOT to be desired but they only need 66.67% and with 66.66% already, it’s a done deal. Nothing you can do about it.

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Dec 13

Daily Brief Industrials: IHI Corp, VinFast, Skymark Airlines, Daiei Kankyo, Idex Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

IHI (7013) | Boeing Orders Take Off
Vinfast Auto IPO: Initial Thoughts
Skymark Airlines IPO Trading – Subscription Has Been Strong Despite Asking More than Peers
Daiei Kankyo IPO Trading – Peers Have Been Correcting
IDEX Corporation: Initiation of Coverage – & Other Drivers
IDEX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

IHI (7013) | Boeing Orders Take Off

By Mark Chadwick

Boeing’s stock price is recovering sharply as it benefits from recent multi-billion-dollar order wins
Japanese stocks (IHI, MHI, KHI & Subaru) are highly geared into the Boeing supply chain
We highlight IHI as a top pick on this thematic and believe aero-engine revenues will continue to recover, driving a stock re-rating

Vinfast Auto IPO: Initial Thoughts

VinFast (1905332D VN) is a full-scale mobility platform in Vietnam focused on manufacturing electric vehicles including e-scooters and e-buses looking to raise US$1bn via a NASDAQ IPO.
The company has switched its business model from ICE vehicles to EVs and looking to sell its electric cars in Vietnam, the US and the Europe.
With relatively new to EV manufacturing and having not sold previously in overseas markets including the US and the EU, we remain conscious over Vinfast’s prospects in the medium-term.

Skymark Airlines IPO Trading – Subscription Has Been Strong Despite Asking More than Peers

By Clarence Chu

Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company.
SA began its operations in Japan as a domestic airline and gradually increased the number of routes offered to passengers. However, it has a mired history of bankruptcy.
In our previous notes, we looked at the company’s past performance and talked about valuations. In this note, we’ll talk about the trading dynamics.

Daiei Kankyo IPO Trading – Peers Have Been Correcting

Daiei Kankyo (9336 JP) , a waste management company, raised around US$314m in its Japan IPO.
Daiei Kankyo is involved in the waste management and related businesses in Japan. The core of its operations consists of its waste management and recycling business
In our previous notes, we looked at the company’s past performance and talked about valuations. In this note, we’ll talk about the trading dynamics.

IDEX Corporation: Initiation of Coverage – & Other Drivers

This is our first report on industrials major, IDEX Corporation.
The company is regularly in the news for its frequent acquisitions and generated good results in the third quarter, surpassing Wall Street expectations on all fronts.
We initiate coverage on the stock of IDEX Corporation with a ‘Hold’ rating.

IDEX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

By Shifara Samsudeen, ACMA, CGMA

IDEX Corporation is an industrial giant and is often in the news for its acquisition-led growth moves.
The company’s recent financial performance has been strong with double-digit growth in organic sales across its three segments: Fluid & Metering Technologies, Health & Science Technologies, and Fire & Safety/Diversified Products.
IDEX’s overall backlog positions remain strong though its operating margin has negatively impacted by incremental depreciation from recent acquisitions.

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Dec 13

Daily Brief Industrials: IHI Corp, VinFast, Skymark Airlines, Daiei Kankyo, Idex Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

IHI (7013) | Boeing Orders Take Off
Vinfast Auto IPO: Initial Thoughts
Skymark Airlines IPO Trading – Subscription Has Been Strong Despite Asking More than Peers
Daiei Kankyo IPO Trading – Peers Have Been Correcting
IDEX Corporation: Initiation of Coverage – & Other Drivers
IDEX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

IHI (7013) | Boeing Orders Take Off

By Mark Chadwick

Boeing’s stock price is recovering sharply as it benefits from recent multi-billion-dollar order wins
Japanese stocks (IHI, MHI, KHI & Subaru) are highly geared into the Boeing supply chain
We highlight IHI as a top pick on this thematic and believe aero-engine revenues will continue to recover, driving a stock re-rating

Vinfast Auto IPO: Initial Thoughts

VinFast (1905332D VN) is a full-scale mobility platform in Vietnam focused on manufacturing electric vehicles including e-scooters and e-buses looking to raise US$1bn via a NASDAQ IPO.
The company has switched its business model from ICE vehicles to EVs and looking to sell its electric cars in Vietnam, the US and the Europe.
With relatively new to EV manufacturing and having not sold previously in overseas markets including the US and the EU, we remain conscious over Vinfast’s prospects in the medium-term.

Skymark Airlines IPO Trading – Subscription Has Been Strong Despite Asking More than Peers

By Clarence Chu

Skymark Airlines (9204 JP) raised US$242m in its Japan IPO. Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company.
SA began its operations in Japan as a domestic airline and gradually increased the number of routes offered to passengers. However, it has a mired history of bankruptcy.
In our previous notes, we looked at the company’s past performance and talked about valuations. In this note, we’ll talk about the trading dynamics.

Daiei Kankyo IPO Trading – Peers Have Been Correcting

Daiei Kankyo (9336 JP) , a waste management company, raised around US$314m in its Japan IPO.
Daiei Kankyo is involved in the waste management and related businesses in Japan. The core of its operations consists of its waste management and recycling business
In our previous notes, we looked at the company’s past performance and talked about valuations. In this note, we’ll talk about the trading dynamics.

IDEX Corporation: Initiation of Coverage – & Other Drivers

This is our first report on industrials major, IDEX Corporation.
The company is regularly in the news for its frequent acquisitions and generated good results in the third quarter, surpassing Wall Street expectations on all fronts.
We initiate coverage on the stock of IDEX Corporation with a ‘Hold’ rating.

IDEX Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

IDEX Corporation is an industrial giant and is often in the news for its acquisition-led growth moves.
The company’s recent financial performance has been strong with double-digit growth in organic sales across its three segments: Fluid & Metering Technologies, Health & Science Technologies, and Fire & Safety/Diversified Products.
IDEX’s overall backlog positions remain strong though its operating margin has negatively impacted by incremental depreciation from recent acquisitions.

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Dec 12

Daily Brief Industrials: VinFast, Yokogawa Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

VinFast Auto IPO: The Bear Case
Yokogawa Electric (6841 JP): Carbon-Neutral Industrial Park & Green Hydrogen

VinFast Auto IPO: The Bear Case

VinFast (1905332D VN), a Vietnamese EV manufacturer and a majority-owned affiliate of Vingroup Jsc (VIC VN), has filed for a US$1.0 billion IPO to list on Nasdaq.
In VinFast Auto IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case are a lack of brand recognition, questionable ability to generate profits, the precarious state of financing and liability exposure to ICE vehicles.

Yokogawa Electric (6841 JP): Carbon-Neutral Industrial Park & Green Hydrogen

Yokogawa is diversifying with integrated controls systems for green hydrogen plants in the Netherlands and Australia and a carbon neutral industrial park in Japan.
Holland Hydrogen I, the YURI hydrogen project and the Goi and Soga Complex take the company beyond oil, gas and petrochemicals.
Based on long-term energy and environmental priorities, these projects should be immune to recession.

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Dec 12

Daily Brief Industrials: VinFast, Yokogawa Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

VinFast Auto IPO: The Bear Case
Yokogawa Electric (6841 JP): Carbon-Neutral Industrial Park & Green Hydrogen

VinFast Auto IPO: The Bear Case

VinFast (1905332D VN), a Vietnamese EV manufacturer and a majority-owned affiliate of Vingroup Jsc (VIC VN), has filed for a US$1.0 billion IPO to list on Nasdaq.
In VinFast Auto IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case are a lack of brand recognition, questionable ability to generate profits, the precarious state of financing and liability exposure to ICE vehicles.

Yokogawa Electric (6841 JP): Carbon-Neutral Industrial Park & Green Hydrogen

Yokogawa is diversifying with integrated controls systems for green hydrogen plants in the Netherlands and Australia and a carbon neutral industrial park in Japan.
Holland Hydrogen I, the YURI hydrogen project and the Goi and Soga Complex take the company beyond oil, gas and petrochemicals.
Based on long-term energy and environmental priorities, these projects should be immune to recession.

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Dec 11

Daily Brief Industrials: Hong Kong Hang Seng Index, Toshiba Corp, Hamamatsu Photonics Kk, Country Garden Services Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong
Hamamatsu Photonics (6965 JP): Earning Momentum Fading
Hong Kong CEO & Director Dealings (9 Dec): Hopefluent, Matrix, Country Garden Services

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

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

Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – VinFast (1905332D VN) pre-markets a US$1bn IPO, I-Tail (ITC TB) and Sunshine Insurance (6963 HK) have tepid debuts, Weilong Delicious Global (WDG HK) launches a US$141m IPO.
Event-Driven developments – Bigtincan Holdings Ltd (BTH AU), Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Xingda International (1899 HK), Chip Eng Seng Corp (CHIP SP).

Hamamatsu Photonics (6965 JP): Earning Momentum Fading

As expected, FY Sep-22 results were ahead of guidance. Management is forecasting further growth this fiscal year, but guiding for a YoY decline in operating profit in 2H.
In addition, the depreciation of the yen, which added 5% to sales at 17% to operating profit last fiscal year, has reversed, economies have weakened and interest rates are up.
We continue to recommend profit taking. We would like to buy the shares at ¥6,000 – 15% down from the Dec. 9 close.

Hong Kong CEO & Director Dealings (9 Dec): Hopefluent, Matrix, Country Garden Services

By David Blennerhassett

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
These insights may flag those companies where shares have been pledged. Stocks mentioned include Hopefluent Group (733 HK), Matrix Holdings (1005 HK), Country Garden Services Holdings (6098 HK).

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Dec 11

Daily Brief Industrials: Hong Kong Hang Seng Index, Toshiba Corp, Hamamatsu Photonics Kk, Country Garden Services Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong
Hamamatsu Photonics (6965 JP): Earning Momentum Fading
Hong Kong CEO & Director Dealings (9 Dec): Hopefluent, Matrix, Country Garden Services

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

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

Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – VinFast (1905332D VN) pre-markets a US$1bn IPO, I-Tail (ITC TB) and Sunshine Insurance (6963 HK) have tepid debuts, Weilong Delicious Global (WDG HK) launches a US$141m IPO.
Event-Driven developments – Bigtincan Holdings Ltd (BTH AU), Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Xingda International (1899 HK), Chip Eng Seng Corp (CHIP SP).

Hamamatsu Photonics (6965 JP): Earning Momentum Fading