Industrials

• Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the not so positive aspects of the deal.

• Japan’s rising defense budget and military collaboration with the US and Europe should support a high level of orders for the foreseeable future.
• Defense is the growth driver, but other divisions should hold up well due to the ongoing rationalization of operations.
• Profits should rebound this year and rise further in FY Mar-26, bringing the P/E down to 9X or less. The weak yen is a large positive. 

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.

• Adani Ports & Special Economic Zone
• Bharti Airtel
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources

• Simpson Manufacturing Company showcased mixed results in its First Quarter 2024 financial performance amidst a challenging housing market landscape particularly marked by variability in the U.S. and Europe.
• The company reported a modest year-over-year decline in net sales totaling $530.6 million.
• Despite increased sales volumes in North America, which rose by 8% due to a flat U.S. housing market, broad gains were offset by the timing and calculation of volume discounts connected with previous price reductions.

• As we are entering the second half of 2024, inflation has remained sticky as expected.
• The lingering fear of a global recession has been mitigating rising shipping and production costs and, as a result, kept inflation in check.
• We see more opportunities in selected Chinese bonds in industries away from property and local government financing vehicle (LGFV) sectors and believe non-Asia emerging bonds offer better value.

• Acuity Brands, a leader in the lighting and building management solutions industry, showcased a robust fiscal second quarter for 2024, emphasizing solid execution across its operational and financial metrics.
• All segments of the business were reported to be contributing positively, with emphasis on the adjusted operating profit, margin expansion, and increased adjusted diluted earnings per share.
• The company has strategically aligned its portfolio, focusing on margin accretive products and efficient capital allocation to stimulate value creation.

The highlight of Severfield’s FY24 results was the 14% increase in underlying operating profit despite declining revenue. This gives a clue to the increasing quality of earnings as the company captures future projects and benefits from its internal digitalisation programme, Project Horizon. Furthermore, the Indian JV rapidly improved profit and is expanding capacity to meet growing demand. The balance sheet offers scope for both the £10m share buyback and potential M&A. Our forecasts are unchanged, and we introduce FY27 estimates. The 7.2x FY25e P/E is undemanding.

• Resideo Technologies Inc. reported its first quarter 2024 financial performance, showcasing an effective blend of strategic initiatives and operational adjustments aimed at long-term value creation and margin improvement, despite a backdrop of modestly declining revenue.
• The company’s revenue for the quarter stood at $1.49 billion, marking a 4% decrease compared to the previous year, primarily due to divestiture impacts.
• However, the adjusted EBITDA was relatively stable year-over-year, highlighting effective cost management and operational efficiency.

• EPS topped our estimate and consensus on margin strength.
• MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.
• Adjusted EPS beat consensus of $0.54 and our estimate of $0.55. 

• Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the not so positive aspects of the deal.

• Japan’s rising defense budget and military collaboration with the US and Europe should support a high level of orders for the foreseeable future.
• Defense is the growth driver, but other divisions should hold up well due to the ongoing rationalization of operations.
• Profits should rebound this year and rise further in FY Mar-26, bringing the P/E down to 9X or less. The weak yen is a large positive. 

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.

• Adani Ports & Special Economic Zone
• Bharti Airtel
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources

• Simpson Manufacturing Company showcased mixed results in its First Quarter 2024 financial performance amidst a challenging housing market landscape particularly marked by variability in the U.S. and Europe.
• The company reported a modest year-over-year decline in net sales totaling $530.6 million.
• Despite increased sales volumes in North America, which rose by 8% due to a flat U.S. housing market, broad gains were offset by the timing and calculation of volume discounts connected with previous price reductions.

• As we are entering the second half of 2024, inflation has remained sticky as expected.
• The lingering fear of a global recession has been mitigating rising shipping and production costs and, as a result, kept inflation in check.
• We see more opportunities in selected Chinese bonds in industries away from property and local government financing vehicle (LGFV) sectors and believe non-Asia emerging bonds offer better value.

• Acuity Brands, a leader in the lighting and building management solutions industry, showcased a robust fiscal second quarter for 2024, emphasizing solid execution across its operational and financial metrics.
• All segments of the business were reported to be contributing positively, with emphasis on the adjusted operating profit, margin expansion, and increased adjusted diluted earnings per share.
• The company has strategically aligned its portfolio, focusing on margin accretive products and efficient capital allocation to stimulate value creation.

The highlight of Severfield’s FY24 results was the 14% increase in underlying operating profit despite declining revenue. This gives a clue to the increasing quality of earnings as the company captures future projects and benefits from its internal digitalisation programme, Project Horizon. Furthermore, the Indian JV rapidly improved profit and is expanding capacity to meet growing demand. The balance sheet offers scope for both the £10m share buyback and potential M&A. Our forecasts are unchanged, and we introduce FY27 estimates. The 7.2x FY25e P/E is undemanding.

• Resideo Technologies Inc. reported its first quarter 2024 financial performance, showcasing an effective blend of strategic initiatives and operational adjustments aimed at long-term value creation and margin improvement, despite a backdrop of modestly declining revenue.
• The company’s revenue for the quarter stood at $1.49 billion, marking a 4% decrease compared to the previous year, primarily due to divestiture impacts.
• However, the adjusted EBITDA was relatively stable year-over-year, highlighting effective cost management and operational efficiency.

• EPS topped our estimate and consensus on margin strength.
• MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.
• Adjusted EPS beat consensus of $0.54 and our estimate of $0.55. 

• Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the positive aspects of the deal.

• Back on the 15th May, Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and GIP, offered to buy shares not already owned in Malaysia Airports (MAHB MK) at RM11.00/share.
• The premium to undisturbed appears reasonable. The price is a life-time high. The 90% acceptance hurdle was not insurmountable, and the consortium had the flexibility to lower the %. 
• But the Offer is now facing unexpected political pushback, amid protests against the Israel-linked bid.

• Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
• Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Sanil Electric (062040 KS) is looking to raise up to US$164m in its Korean IPO.
• Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards.  As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
• In this note, we talk about the company’s historical performance.

• We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.
• We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.
• However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.

• Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
• Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
• Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

• Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
• The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
• With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

• Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
• Our detailed analysis of Southwest’s financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
• Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite

• Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the positive aspects of the deal.

• Back on the 15th May, Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and GIP, offered to buy shares not already owned in Malaysia Airports (MAHB MK) at RM11.00/share.
• The premium to undisturbed appears reasonable. The price is a life-time high. The 90% acceptance hurdle was not insurmountable, and the consortium had the flexibility to lower the %. 
• But the Offer is now facing unexpected political pushback, amid protests against the Israel-linked bid.

• Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
• Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Sanil Electric (062040 KS) is looking to raise up to US$164m in its Korean IPO.
• Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards.  As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
• In this note, we talk about the company’s historical performance.

• We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.
• We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.
• However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.

• Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
• Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
• Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

• Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
• The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
• With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

• Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
• Our detailed analysis of Southwest’s financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
• Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the September 2024 index rebal event.
• We currently see two ADDs and two DELs for the STAR 50 index resulting in one-way flows of US$681mn.

• We interact with a few business partners of Eureka Forbes (EUREKAFO IN)  to understand the latest on-ground business developments.
• Key areas that are probed include feedback on product quality and innovation, attachment rates for AMC services, key drivers of volume, improvements in service quality, and product premiumization.
• Based on our interactions, it is quite evident that the company is not interested in developing its offline sales channels, i.e., the franchises.

• Ingersoll Rand announced its results for the first quarter of 2024, indicating a solid performance underpinned by strategic initiatives and operational agility.
• Despite facing macroeconomic challenges, the company has demonstrated its resilience and capacity to execute effectively against these headwinds.
• Key to its strategy is the IRX initiative, an internal system designed to optimize performance and fuel growth through efficiency and innovation.

• Lyft’s first quarter of 2024 exhibited a robust start, underpinned by notable growth across several key parameters indicative of a thriving ridesharing business in both the U.S. and Canadian markets.
• Revenues, gross bookings, and the total number of rides all recorded substantial increases year over year.
• The implementation of strategic changes and enhancements in the service and operational model seems to have borne fruit, reflecting in the reported financial figures and operational metrics.

Mytilineos recently announced a company name change to Metlen Energy & Metals. The decision to rebrand is in line with its strategy of establishing a strong international identity. It also confirmed its intention to examine an international listing, including on the London Stock Exchange. We profile Metlen and examine how it could look in the context of an LSE listing. It would rank c 90th in the LSE’s largest index firms on market capitalisation and c 50th based on earnings, indicating potential re-rating upside. Metlen is a c€5bn market capitalisation firm listed in Athens with two core pillars: an integrated Energy business (power generation and distribution, a high-growth renewables business and gas supply and trading) and Metals (Europe’s largest integrated bauxite, alumina and aluminium producer).

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the September 2024 index rebal event.
• We currently see two ADDs and two DELs for the STAR 50 index resulting in one-way flows of US$681mn.

• We interact with a few business partners of Eureka Forbes (EUREKAFO IN)  to understand the latest on-ground business developments.
• Key areas that are probed include feedback on product quality and innovation, attachment rates for AMC services, key drivers of volume, improvements in service quality, and product premiumization.
• Based on our interactions, it is quite evident that the company is not interested in developing its offline sales channels, i.e., the franchises.

• Ingersoll Rand announced its results for the first quarter of 2024, indicating a solid performance underpinned by strategic initiatives and operational agility.
• Despite facing macroeconomic challenges, the company has demonstrated its resilience and capacity to execute effectively against these headwinds.
• Key to its strategy is the IRX initiative, an internal system designed to optimize performance and fuel growth through efficiency and innovation.

• Lyft’s first quarter of 2024 exhibited a robust start, underpinned by notable growth across several key parameters indicative of a thriving ridesharing business in both the U.S. and Canadian markets.
• Revenues, gross bookings, and the total number of rides all recorded substantial increases year over year.
• The implementation of strategic changes and enhancements in the service and operational model seems to have borne fruit, reflecting in the reported financial figures and operational metrics.

Mytilineos recently announced a company name change to Metlen Energy & Metals. The decision to rebrand is in line with its strategy of establishing a strong international identity. It also confirmed its intention to examine an international listing, including on the London Stock Exchange. We profile Metlen and examine how it could look in the context of an LSE listing. It would rank c 90th in the LSE’s largest index firms on market capitalisation and c 50th based on earnings, indicating potential re-rating upside. Metlen is a c€5bn market capitalisation firm listed in Athens with two core pillars: an integrated Energy business (power generation and distribution, a high-growth renewables business and gas supply and trading) and Metals (Europe’s largest integrated bauxite, alumina and aluminium producer).

• Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
• This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive. 
• Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.

• MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
• While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
• We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.

• Q1-3 FY7/24 results were in line with unchanged guidance. Gross margin increased from 22.9% to 24.0% YoY, a positive development as the company selectively raised consultant prices.
• With the scope for further increases, we believe the company can achieve sustainable double-digit sales growth in the medium term.
• Profitability is also set to improve via pricing as well as 1) scaling the newly-established strategic consulting subsidiary with high gross margins and 2) improving the sales mix by growing direct business with customers, as opposed to solely acting as freelancers and providing staff from business partners. 

• We introduce our new revenue and earnings estimates and full financial model following
• Steelcase’s 1QFY25 earnings beat versus consensus and WTR estimates.
• Steelcase posted 1QFY25 adjusted EPS of $0.16 versus $0.09 in 1QFY24, beating consensus of $0.10 and our estimate of $0.11.

• TTC sells gas-powered outdoor power equipment to professional customers with Pro sales being the main source of revenue
• They also serve residential customers and have a wide range of products including mowers, snow equipment, and large machinery for infrastructure markets
• A key focus of the short case against the company is their involvement in providing credit extension through quasi-off-balance sheet financing vehicles like Red Iron

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
• This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive. 
• Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.

• MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
• While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
• We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.

• Q1-3 FY7/24 results were in line with unchanged guidance. Gross margin increased from 22.9% to 24.0% YoY, a positive development as the company selectively raised consultant prices.
• With the scope for further increases, we believe the company can achieve sustainable double-digit sales growth in the medium term.
• Profitability is also set to improve via pricing as well as 1) scaling the newly-established strategic consulting subsidiary with high gross margins and 2) improving the sales mix by growing direct business with customers, as opposed to solely acting as freelancers and providing staff from business partners. 

• We introduce our new revenue and earnings estimates and full financial model following
• Steelcase’s 1QFY25 earnings beat versus consensus and WTR estimates.
• Steelcase posted 1QFY25 adjusted EPS of $0.16 versus $0.09 in 1QFY24, beating consensus of $0.10 and our estimate of $0.11.

• TTC sells gas-powered outdoor power equipment to professional customers with Pro sales being the main source of revenue
• They also serve residential customers and have a wide range of products including mowers, snow equipment, and large machinery for infrastructure markets
• A key focus of the short case against the company is their involvement in providing credit extension through quasi-off-balance sheet financing vehicles like Red Iron

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Sanil Electric is getting ready to complete its IPO in late July in KOSPI. The IPO price range is from 24,000 won to 30,000 won per share. 
• The company is planning is raise between 182.4 billion won and 228 billion won in this IPO. The book building for the institutional investors lasts from 9 to 15 July. 
• Sanil Electric is best known for making special transformers used for special purposes in environments with severe weather changes, such as offshore wind power, solar power, and offshore plants. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Asia Cement China (743 HK), A8 New Media (800 HK), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), Nagatanien Holdings (2899 JP), Chilled & Frozen Logistics Holdings (9099 JP).

• With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
• Recovery is decent with passenger traffic rising 37.5% in 5M24. CX’s capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
• YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  

• Sanil Electric is getting ready to complete its IPO in late July in KOSPI. The IPO price range is from 24,000 won to 30,000 won per share. 
• The company is planning is raise between 182.4 billion won and 228 billion won in this IPO. The book building for the institutional investors lasts from 9 to 15 July. 
• Sanil Electric is best known for making special transformers used for special purposes in environments with severe weather changes, such as offshore wind power, solar power, and offshore plants. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Asia Cement China (743 HK), A8 New Media (800 HK), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), Nagatanien Holdings (2899 JP), Chilled & Frozen Logistics Holdings (9099 JP).

• With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
• Recovery is decent with passenger traffic rising 37.5% in 5M24. CX’s capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
• YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.