Industrials

Doosan Bobcat Inc (241560 KS) aims to sell a US$145m block. Its recent price momentum is strong but past deals have shown mixed results.
The deal doesn’t appear to be well flagged and is a relatively large one to digest, representing 20.9 days of its three month ADV.
In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

StubWorld: Iljin Holdings – Discounts On Discounts

Iljin Holdings (015860 KS)‘s implied stub is around levels just prior to the onset of Covid, despite strong subsequent deconsolidated earnings. 50.1%-held Iljin Diamond (081000 KS) is itself heavily discounted.
Preceding my comments on Iljin are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Bobcat Block Deal Sale – Overhang Remains

By Douglas Kim

Doosan Bobcat Inc (241560 KS) announced a block deal sale of 5 million shares. representing 5% of outstanding shares.
There are three major reasons why we have a negative view of the block deal sale and on Doosan Bobcat.
Two of these reasons include an overhang associated with remaining shares which could be sold as well as a potential downturn in construction markets in North America and Europe.

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Nov 28

Daily Brief Industrials: Keppel Corp, Beijing-Shanghai High Speed Railway-A, HMM Co., Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Sembcorp Marine Takeover of Keppel O&M – Almost There
SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

Sembcorp Marine Takeover of Keppel O&M – Almost There

By Travis Lundy

Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
I still like Keppel. I think investors will find it attractive post-spin.

SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions

By Brian Freitas

There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

By Sanghyun Park

The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn’t be significant.
From a flow trading standpoint, the KOSPI 50’s HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.

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Nov 28

Daily Brief Industrials: Keppel Corp, Beijing-Shanghai High Speed Railway-A, HMM Co., Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Sembcorp Marine Takeover of Keppel O&M – Almost There
SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

Sembcorp Marine Takeover of Keppel O&M – Almost There

By Travis Lundy

Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
I still like Keppel. I think investors will find it attractive post-spin.

SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions

By Brian Freitas

There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points

By Sanghyun Park

The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn’t be significant.
From a flow trading standpoint, the KOSPI 50’s HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.

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Nov 27

Daily Brief Industrials: Hong Kong Hang Seng Index, JL Mag Rare Earth, Keppel Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

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

Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent

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 JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).

Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, 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 – Lygend Resources & Technology (2245 HK) raised US$470 million, Growatt Technology (1833969D CH) and Weilong Delicious Global (WDG HK) pre-market IPOs.
Event-Driven developments –Chip Eng Seng Corp (CHIP SP), Keppel Corp (KEP SP), Singapore Medical (SMG SP), Link Administration (LNK AU), Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), DTAC/True.

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Nov 27

Daily Brief Industrials: Hong Kong Hang Seng Index, JL Mag Rare Earth, Keppel Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, Weilong

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

Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent

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 JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).

Weekly Deals Digest (27 Nov) – Keppel, Chip Eng Seng, Link Admin, DTAC/True, Growatt, 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 – Lygend Resources & Technology (2245 HK) raised US$470 million, Growatt Technology (1833969D CH) and Weilong Delicious Global (WDG HK) pre-market IPOs.
Event-Driven developments –Chip Eng Seng Corp (CHIP SP), Keppel Corp (KEP SP), Singapore Medical (SMG SP), Link Administration (LNK AU), Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), DTAC/True.

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Nov 26

Daily Brief Industrials: Chip Eng Seng Corp, Growatt Technology, TS Group (Global) and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Chip Eng Seng: Low-Balled MBO At $0.72/Share
Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation
TS Group (Global) Pre-IPO Tearsheet

Chip Eng Seng: Low-Balled MBO At $0.72/Share

Conglomerate Chip Eng Seng Corp (CHIP SP) (CES) has announced a voluntary Offer of S$0.72/share from a Tang family-owned entity. The price is a 1.4% premium to last close.
The Tang’s hold 38.23% and the Offer is conditional on a 50% acceptance condition.
The Offer price is a 27.3% discount to CES’ NAV as of 30 June 2022 – no such mention in the announcement. The Offer price has not been declared final.

Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation

Growatt Technology (1833969D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption, as well as energy digitalization.
In our previous notes, we looked at various aspects of the company’s performance. In this note, we’ll provide our updated thoughts on the company’s valuation.

TS Group (Global) Pre-IPO Tearsheet

By Clarence Chu

TS Group (Global) (TS HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The bookrunners are JPM, and China Merchant Securities.
TS Group (Global) is a container shipping firm primarily focusing on the Asia region, which as per the Drewry report, is the largest and one of the fastest growing regions.
As of Jun 2022, it had a total of 52 vessels, consisting of 26 owned vessels and 26 chartered-in vessels, with a total capacity of 107,907 total equivalent units (TEU).

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Nov 26

Daily Brief Industrials: Chip Eng Seng Corp, Growatt Technology, TS Group (Global) and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Chip Eng Seng: Low-Balled MBO At $0.72/Share
Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation
TS Group (Global) Pre-IPO Tearsheet

Chip Eng Seng: Low-Balled MBO At $0.72/Share

Conglomerate Chip Eng Seng Corp (CHIP SP) (CES) has announced a voluntary Offer of S$0.72/share from a Tang family-owned entity. The price is a 1.4% premium to last close.
The Tang’s hold 38.23% and the Offer is conditional on a 50% acceptance condition.
The Offer price is a 27.3% discount to CES’ NAV as of 30 June 2022 – no such mention in the announcement. The Offer price has not been declared final.

Growatt Technology Pre-IPO – Still Looks Good, Updated Thoughts on Valuation

Growatt Technology (1833969D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption, as well as energy digitalization.
In our previous notes, we looked at various aspects of the company’s performance. In this note, we’ll provide our updated thoughts on the company’s valuation.

TS Group (Global) Pre-IPO Tearsheet

By Clarence Chu

TS Group (Global) (TS HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The bookrunners are JPM, and China Merchant Securities.
TS Group (Global) is a container shipping firm primarily focusing on the Asia region, which as per the Drewry report, is the largest and one of the fastest growing regions.
As of Jun 2022, it had a total of 52 vessels, consisting of 26 owned vessels and 26 chartered-in vessels, with a total capacity of 107,907 total equivalent units (TEU).

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Nov 25

Daily Brief Industrials: Adani Enterprises, Sembcorp Marine, Skymark Airlines, Chip Eng Seng Corp, Growatt Technology, AviChina Industry & Technology H and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Adani Enterprises – A Record Follow-On Public Offering May Be in the Works
Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms
Skymark IPO – Ready For Takeoff
Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs
Growatt Technology Pre-IPO – PHIP Updates – Profitability Still Accelerating
2023 High Conviction: AviChina Industry (2357 HK) – The Sky Is the Limit

Adani Enterprises – A Record Follow-On Public Offering May Be in the Works

By Travis Lundy

Adani Enterprises (ADE IN) (“ADL”) on Tuesday announced a Board Meeting for Friday to consider capital raising options. Multiple media sources suggest a record Indian Follow-on Public Offering of INR200bn.
The company has bid for/bought multiple assets recently, and proposed investments plan of up to US$150bn in 10yrs in renewables, cement, airports, healthcare to aim at a US$1trln valuation.
This will get complicated, interesting, and is not necessarily going to come out well.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms

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 terms were revised recently and our latest expectation is for SMM to become an STI member in March 2023.
At present, SATS (SATS SP) and Keppel DC REIT (KDCREIT SP) are the lowest-ranked STI members – one of which could get removed due to SMM’s addition in March 2023.

Skymark IPO – Ready For Takeoff

By Mio Kato

Skymark will be re-listing following a successful turnaround under the guidance of ANA and Integral.
Listing proceeds will mainly be directed towards improving the fuel efficiency of its fleet.
Skymark offers an attractive play on reopening in Japan as it is geared into the simpler domestic market where elevated cargo rates and revenue per passenger are not downside risks.

Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs

Chip Eng Seng Corp (CHIP SP) disclosed a conditional VGO from the Tangs at S$0.720, a 6.7% premium to the undisturbed price (6 September). The price is not declared final.
Irrevocables and family represent 41.44% of outstanding shares. The VGO has a 50%+ minimum acceptance condition which requires around a 15% minorities acceptance rate.
While the last close is in line with the offer, it is attractive in the context of historical prices/multiples. Therefore, there is a good chance of hitting the 50% threshold.

Growatt Technology Pre-IPO – PHIP Updates – Profitability Still Accelerating

Growatt Technology (1833969D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption, as well as energy digitalization.
In our previous notes, we looked at the company’s past performance, peer comparison and our thoughts on valuation. In this note, we will talk about the updates from its PHIP.

2023 High Conviction: AviChina Industry (2357 HK) – The Sky Is the Limit

By Osbert Tang, CFA

AviChina Industry & Technology H (2357 HK) offers unique exposure to China’s aerospace and defense sector and it will ride on China’s ambition to solidify its military strengths.
We think the key drivers are increase in civil and defense demand, commercialisation of C919 aircraft, localisation of helicopters and potential for corporate restructuring.
The stock is undervalued with its holdings in four listed A-shares amounted to Rmb70.6bn, against its own market cap of HK$25bn. Also, earnings multiples are cheap relative to global peers.

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Nov 24

Daily Brief Industrials: Keppel Corp, SM Investments and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec
SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

Keppel Corp (KEP SP)’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “not prejudicial” to minorities.
Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is Sembcorp Marine (SMM SP) shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore).
The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.

SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

SM Investments (SM PM), the leading Filipino conglomerate, recently announced strong 9M22 earnings, buoyed by increased economic activity and strong consumer sentiment.
The standout was the unlisted SM Retail segment which recorded net income of PHP 11.5bn, exceeding 2019 pre-pandemic levels.
The implied stub/share – net of all listcos – of PHP 208/share compares to the five-year average of PHP 273/share, and the two-year average of PHP 252 preceding Covid.

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Nov 24

Daily Brief Industrials: Keppel Corp, SM Investments and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec
SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

Keppel Corp (KEP SP)’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “not prejudicial” to minorities.
Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is Sembcorp Marine (SMM SP) shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore).
The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.

SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels