Industrials

Skymark Airlines (9204 JP) is looking to raise approximately US$218m in its upcoming Japan IPO.
Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
In this note, we talk about the company’s past performance.

ZTO Express (2057 HK/ZTO US): Solid Upward Momentum Stays Intact

By Osbert Tang, CFA

ZTO Express Cayman Inc (2057 HK)‘s 63.1% surge in 3Q22 adjusted net profit demonstrated its ability to thrive even amid the challenging operating environment.
It is positive on FY23 outlook and believes industry volume can return to double-digit growth. ZTO is confident of market share gain, better cost management and stable pricing.
We think its premium valuations are highly justified by strong cash generating ability. The increase of US$500m and lengthening of one year in share repurchase are very welcomed.

Laser Photonics Inc. – Investment Thesis

This is our first report on Laser Photonics and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
The revenues of Laser Photonics have more than doubled in the last two years.
We believe that there is a good chance the company’s offering may become universally accepted in the years to come.

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Nov 23

Daily Brief Industrials: Skymark Airlines, ZTO Express Cayman Inc, Laser Photonics and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Skymark Airlines Pre-IPO – Highly Leveraged with a History of Bankruptcy
ZTO Express (2057 HK/ZTO US): Solid Upward Momentum Stays Intact
Laser Photonics Inc. – Investment Thesis

Skymark Airlines Pre-IPO – Highly Leveraged with a History of Bankruptcy

Skymark Airlines (9204 JP) is looking to raise approximately US$218m in its upcoming Japan IPO.
Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
In this note, we talk about the company’s past performance.

ZTO Express (2057 HK/ZTO US): Solid Upward Momentum Stays Intact

By Osbert Tang, CFA

ZTO Express Cayman Inc (2057 HK)‘s 63.1% surge in 3Q22 adjusted net profit demonstrated its ability to thrive even amid the challenging operating environment.
It is positive on FY23 outlook and believes industry volume can return to double-digit growth. ZTO is confident of market share gain, better cost management and stable pricing.
We think its premium valuations are highly justified by strong cash generating ability. The increase of US$500m and lengthening of one year in share repurchase are very welcomed.

Laser Photonics Inc. – Investment Thesis

This is our first report on Laser Photonics and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
The revenues of Laser Photonics have more than doubled in the last two years.
We believe that there is a good chance the company’s offering may become universally accepted in the years to come.

💡 Before it’s here, it’s on Smartkarma

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✓ Company Data and News
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Nov 22

Daily Brief Industrials: Taiwan Secom, Far Eastern New Century, Taiwan Glass Industry, Daiei Kankyo, Woodside Energy Group Ltd, True Velocity Ammunition and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER
FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO
Taiwan Div+ Index Dec22 Rebal Trade Up 6% So Far – Small Changes To Basket But HODL Til The End
Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation
Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers
Ready, Aim, Fire

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
Considering the combined effect of expected index changes and capping flows, there could be 27 potential inflows names and 28 potential outflow names with total one-way flow size of US$2.45bn.
There are multiple names on both sides with several days of volume to trade.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO

By Brian Freitas

Today is the review cutoff and we expect Far Eastern New Century (1402 TT) to replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index in December.
Passive Taiwan 50 trackers will need to buy nearly 6 days ADV on Far Eastern New Century (1402 TT) and sell 1.6 days of ADV on AU Optronics (2409 TT).
There will be same way flows from the FTSE TWSE Taiwan Dividend+ Index trackers and will substantially add to the impact on the stocks.

Taiwan Div+ Index Dec22 Rebal Trade Up 6% So Far – Small Changes To Basket But HODL Til The End

By Travis Lundy

The Taiwan Div+ cutoff date for the data used to calculate the Dec 2022 rebalance was yesterday’s close. Janaghan Jeyakumar, CFA has published two updates.
I recommended a long vs short basket on 26 October. So far that long vs short basket is +6.1%. I recommend adjusting the basket to new names and continuing.
Historically, the pattern from cutoff to date to Inclusion and then Inclusion to Inclusion+20 is quite clean. I would not expect differently this time.

Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation

By Sumeet Singh

Daiei Kankyo (9336 JP) , a waste management company, aims to raise around US$280m 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 note, we looked at the company’s past performance. In this note, we undertake a peer comparison and talk about valuations.

Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on Australian Energy major, Woodside Energy.
Increased production volumes and increased pricing resulted in an increase in sales volume.
Woodland Energy to collaborate to secure a steady energy supply for Japan.

Ready, Aim, Fire

By subSPAC

Since the boom in 2020, SPACs have been instrumental in taking high-risk, technologically disruptive companies public.
This includes space startups building rockets focused on carrying payloads to space, Quantum Computing firms creating solutions for challenging tasks, and a host of Electric Vehicle Makers looking to challenge Tesla’s crown in building environmentally sound vehicles.
Texas-based True Velocity Ammo, which develops and markets composite-case ammunition, aims to disrupt the highly mature ammunition industry on the same scale as these other emerging firms, delivering lighter and more efficient solutions to the public and military.

💡 Before it’s here, it’s on Smartkarma

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

Nov 22

Daily Brief Industrials: Taiwan Secom, Far Eastern New Century, Taiwan Glass Industry, Daiei Kankyo, Woodside Energy Group Ltd, True Velocity Ammunition and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER
FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO
Taiwan Div+ Index Dec22 Rebal Trade Up 6% So Far – Small Changes To Basket But HODL Til The End
Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation
Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers
Ready, Aim, Fire

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
Considering the combined effect of expected index changes and capping flows, there could be 27 potential inflows names and 28 potential outflow names with total one-way flow size of US$2.45bn.
There are multiple names on both sides with several days of volume to trade.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO

By Brian Freitas

Today is the review cutoff and we expect Far Eastern New Century (1402 TT) to replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index in December.
Passive Taiwan 50 trackers will need to buy nearly 6 days ADV on Far Eastern New Century (1402 TT) and sell 1.6 days of ADV on AU Optronics (2409 TT).
There will be same way flows from the FTSE TWSE Taiwan Dividend+ Index trackers and will substantially add to the impact on the stocks.

Taiwan Div+ Index Dec22 Rebal Trade Up 6% So Far – Small Changes To Basket But HODL Til The End

By Travis Lundy

The Taiwan Div+ cutoff date for the data used to calculate the Dec 2022 rebalance was yesterday’s close. Janaghan Jeyakumar, CFA has published two updates.
I recommended a long vs short basket on 26 October. So far that long vs short basket is +6.1%. I recommend adjusting the basket to new names and continuing.
Historically, the pattern from cutoff to date to Inclusion and then Inclusion to Inclusion+20 is quite clean. I would not expect differently this time.

Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation

By Sumeet Singh

Daiei Kankyo (9336 JP) , a waste management company, aims to raise around US$280m 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 note, we looked at the company’s past performance. In this note, we undertake a peer comparison and talk about valuations.

Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on Australian Energy major, Woodside Energy.
Increased production volumes and increased pricing resulted in an increase in sales volume.
Woodland Energy to collaborate to secure a steady energy supply for Japan.

Ready, Aim, Fire

By subSPAC

Since the boom in 2020, SPACs have been instrumental in taking high-risk, technologically disruptive companies public.
This includes space startups building rockets focused on carrying payloads to space, Quantum Computing firms creating solutions for challenging tasks, and a host of Electric Vehicle Makers looking to challenge Tesla’s crown in building environmentally sound vehicles.
Texas-based True Velocity Ammo, which develops and markets composite-case ammunition, aims to disrupt the highly mature ammunition industry on the same scale as these other emerging firms, delivering lighter and more efficient solutions to the public and military.

💡 Before it’s here, it’s on Smartkarma

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

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

Nov 21

Daily Brief Industrials: Halcyon Agri, Selamat Sempurna, Somfy SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery
Despature Family/Somfy: Lowball Simplified Takeout, Timetable

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

By Arun George

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), 111 Inc (YI US), Perpetual Ltd (PPT AU).
Lowest spreads – Tyro Payments (TYR AU), Warrego Energy (WGO AU), Jinke Smart Services (9666 HK), Nitro Software Ltd (NTO AU), Uzabase Inc (3966 JP), PTB Group Ltd (PTB AU).

Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery

By Angus Mackintosh

Selamat Sempurna (SMSM IJ) remains one of the best quality Indonesian industrial companies, as the leading auto and heavy equipment filter producers for both OEM and the aftermarket.
The company booked a strong set of 9M2022 results, with sales up +21% YoY and net profit increasing +30% YoY, driven by both domestic and export markets.
Selamat Sempurna (SMSM IJ) maintains it FY2022 target for 15% sales and profits growth for FY2022, which looks conservative after the performance at 9M stage despite potential global headwinds.

Despature Family/Somfy: Lowball Simplified Takeout, Timetable

By Jesus Rodriguez Aguilar

Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

💡 Before it’s here, it’s on Smartkarma

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

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

Nov 21

Daily Brief Industrials: Halcyon Agri, Selamat Sempurna, Somfy SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery
Despature Family/Somfy: Lowball Simplified Takeout, Timetable

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

By Arun George

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), 111 Inc (YI US), Perpetual Ltd (PPT AU).
Lowest spreads – Tyro Payments (TYR AU), Warrego Energy (WGO AU), Jinke Smart Services (9666 HK), Nitro Software Ltd (NTO AU), Uzabase Inc (3966 JP), PTB Group Ltd (PTB AU).

Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery

By Angus Mackintosh

Selamat Sempurna (SMSM IJ) remains one of the best quality Indonesian industrial companies, as the leading auto and heavy equipment filter producers for both OEM and the aftermarket.
The company booked a strong set of 9M2022 results, with sales up +21% YoY and net profit increasing +30% YoY, driven by both domestic and export markets.
Selamat Sempurna (SMSM IJ) maintains it FY2022 target for 15% sales and profits growth for FY2022, which looks conservative after the performance at 9M stage despite potential global headwinds.

Despature Family/Somfy: Lowball Simplified Takeout, Timetable

By Jesus Rodriguez Aguilar

Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

💡 Before it’s here, it’s on Smartkarma

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

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✓ Custom Watchlists
✓ Company Data and News
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Nov 20

Daily Brief Industrials: Halcyon Agri, Monadelphous and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software
S&P/ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

By David Blennerhassett

There are 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Three new deals were discussed on Smartkarma: Beach Energy’s tilt for Warrego (WGO AU), Sumitomo’s offer for Sumitomo Precision (6355 JP), and Hainan Rubber’s offer for Halcyon (HACL SP).
Key updates took place for: Perpetual Ltd (PPT AU) / Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), and OZ Minerals Ltd (OZL AU).

S&P/ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
The 6-month reference period for the December 2022 Rebalance is now complete.
I do not see any changes for ASX 20 or ASX 100. I see one ADD/DEL for ASX 50 and three ADDs/DELs for ASX 200.

💡 Before it’s here, it’s on Smartkarma

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✓ Company Data and News
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Nov 20

Daily Brief Industrials: Halcyon Agri, Monadelphous and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software
S&P/ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

By David Blennerhassett

There are 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Three new deals were discussed on Smartkarma: Beach Energy’s tilt for Warrego (WGO AU), Sumitomo’s offer for Sumitomo Precision (6355 JP), and Hainan Rubber’s offer for Halcyon (HACL SP).
Key updates took place for: Perpetual Ltd (PPT AU) / Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), and OZ Minerals Ltd (OZL AU).

S&P/ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
The 6-month reference period for the December 2022 Rebalance is now complete.
I do not see any changes for ASX 20 or ASX 100. I see one ADD/DEL for ASX 50 and three ADDs/DELs for ASX 200.

💡 Before it’s here, it’s on Smartkarma

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

Nov 19

Daily Brief Industrials: Archean Chemical Industries, VinFast and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year
Initial Thoughts on the Vinfast IPO

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year

Archean Chemical Industries (0810406D IN) has raised about US$178m in its India IPO.
Archean Chemical Industries (ACI) is a specialty marine chemical manufacturer in India focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world.
We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.

Initial Thoughts on the Vinfast IPO

By Douglas Kim

According to Bloomberg, VinFast is getting ready for an IPO in the US as soon as 1Q 2023.
Vinfast has secured approximately US$1.2 billion in incentives for its EV production facility in North Carolina which is expected to start production in 2024 (annual production of 150,000 vehicles).
Vinfast could raise more than US$1 billion in this IPO. If Vinfast is able to successfully complete this IPO, it would be one of the largest Asian IPOs in 2023.

💡 Before it’s here, it’s on Smartkarma

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Nov 19

Daily Brief Industrials: Archean Chemical Industries, VinFast and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year
Initial Thoughts on the Vinfast IPO

Archean Chemical Industries IPO Trading – One of the Highest Subscriptions for the Year