Industrials

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
• Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

• Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
• We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
• IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

• As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
• In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
• We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
• Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

• Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
• We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
• IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

• As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
• In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
• We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) launched the Tatsuta Electric Wire & Cable (5809 JP) tender offer at unchanged JPY720, 4.9% below the last close price.  
• The Board requested a bump, but Eneos refused due to Tatsuta’s missed targets, no competing offer and the supportive updated IFA valuation
• The lack of a bump, no vocal opposition, deal fatigue, the Board’s unexpected recommendation, weak earnings and 73.9% takeover premium will help acceptance.

• ENEOS announced its deal for Tatsuta Electric Wire & Cable (5809 JP) 18mos ago. China approval took a while. Now they have launched. 
• The TOPIX Non-Ferrous Metals sector has returned 60%. TOPIX 50%. There is a new TSE Sheriff in town asking for PBR 1.0x. BVPS is up. Presumably, forward CF is up.
• But the TOB Price is unchanged. That is disappointing. One reason why a higher price was rejected was that no other buyer approached to take over the company. 🤷🏻‍♂️

• Cyan Renewables has bumped its Mma Offshore (MRM AU) offer to A$2.70 per share, a 3.8% premium to the previous A$2.60 offer.
• The bump is derisory in the context of recent earnings upgrades. Since the binding proposal, MMA has upgraded its FY24 EBITDA and EBIT guidance by 9.8% and 15.5%, respectively.
• The AFR reported that around 30% of the register opposed the previous offer. A cursory 3.8% bump is unlikely to sway most of these dissenters to change their views.

• SharkNinja is a newly listed company with popular consumer brands Shark and Ninja
• Despite challenges in brand-building and international markets, the company achieved a 15% operating margin in 2023
• Analysts project an annualized return of 18-20% based on current earnings yield and expected organic earnings growth

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.

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) launched the Tatsuta Electric Wire & Cable (5809 JP) tender offer at unchanged JPY720, 4.9% below the last close price.  
• The Board requested a bump, but Eneos refused due to Tatsuta’s missed targets, no competing offer and the supportive updated IFA valuation
• The lack of a bump, no vocal opposition, deal fatigue, the Board’s unexpected recommendation, weak earnings and 73.9% takeover premium will help acceptance.

• ENEOS announced its deal for Tatsuta Electric Wire & Cable (5809 JP) 18mos ago. China approval took a while. Now they have launched. 
• The TOPIX Non-Ferrous Metals sector has returned 60%. TOPIX 50%. There is a new TSE Sheriff in town asking for PBR 1.0x. BVPS is up. Presumably, forward CF is up.
• But the TOB Price is unchanged. That is disappointing. One reason why a higher price was rejected was that no other buyer approached to take over the company. 🤷🏻‍♂️

• Cyan Renewables has bumped its Mma Offshore (MRM AU) offer to A$2.70 per share, a 3.8% premium to the previous A$2.60 offer.
• The bump is derisory in the context of recent earnings upgrades. Since the binding proposal, MMA has upgraded its FY24 EBITDA and EBIT guidance by 9.8% and 15.5%, respectively.
• The AFR reported that around 30% of the register opposed the previous offer. A cursory 3.8% bump is unlikely to sway most of these dissenters to change their views.

• SharkNinja is a newly listed company with popular consumer brands Shark and Ninja
• Despite challenges in brand-building and international markets, the company achieved a 15% operating margin in 2023
• Analysts project an annualized return of 18-20% based on current earnings yield and expected organic earnings growth

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.

• Innospace reported solid IPO bookbuilding results. Innospace’s IPO price has been determined at 43,300 won won, which is at the high end of the IPO price range.
• Our base case valuation of Innospace is target price of 51,481 won per share (12 month view), which is 19% higher than the IPO price.
• Innospace is involved in the satellite launch vehicle production and launch service business.

• All the business fundamentals continue to trend in the right direction
• The sector has sold off with the general commodity sell-off
• Investors not giving the benefit of the doubt to future oil demand

• Deep-Sea container rates surged in May, yielding best read since June 2022
• But volume growth into North American WC ports slowed noticeably…
• We believe Q224 results will impress, and still like our Long/Short pairs

• Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
• The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
• Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

• Enerpac Tool Group (EPAC) designs, manufactures, and distributes hydraulic tools with a strong market position and reputation for reliability
• Despite its strong competitive position, growth opportunities, and operational execution, Enerpac’s P/E multiple is at a five-year low, offering a significant discount to its peers
• With a new management team implementing operational improvements, investors have the opportunity to invest in a potentially undervalued stock with long-term potential for growth and value creation

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.

• Based on a rigorous examination of Core & Main’s first quarter fiscal 2024 results, a nuanced investment thesis for the company can be deduced by delving into various facets of its operations and financial performance.
• Core & Main, a prominent distributor of water, wastewater, storm drainage, and fire protection products, has marketed itself effectively as an indispensable partner to municipalities, private water companies, and professional contractors.
• Positively, Core & Main reported a robust 11% growth in net sales reaching a record $1.74 billion for the quarter.

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.

• Innospace reported solid IPO bookbuilding results. Innospace’s IPO price has been determined at 43,300 won won, which is at the high end of the IPO price range.
• Our base case valuation of Innospace is target price of 51,481 won per share (12 month view), which is 19% higher than the IPO price.
• Innospace is involved in the satellite launch vehicle production and launch service business.

• All the business fundamentals continue to trend in the right direction
• The sector has sold off with the general commodity sell-off
• Investors not giving the benefit of the doubt to future oil demand

• Deep-Sea container rates surged in May, yielding best read since June 2022
• But volume growth into North American WC ports slowed noticeably…
• We believe Q224 results will impress, and still like our Long/Short pairs

• Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
• The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
• Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

• Enerpac Tool Group (EPAC) designs, manufactures, and distributes hydraulic tools with a strong market position and reputation for reliability
• Despite its strong competitive position, growth opportunities, and operational execution, Enerpac’s P/E multiple is at a five-year low, offering a significant discount to its peers
• With a new management team implementing operational improvements, investors have the opportunity to invest in a potentially undervalued stock with long-term potential for growth and value creation

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.

• Based on a rigorous examination of Core & Main’s first quarter fiscal 2024 results, a nuanced investment thesis for the company can be deduced by delving into various facets of its operations and financial performance.
• Core & Main, a prominent distributor of water, wastewater, storm drainage, and fire protection products, has marketed itself effectively as an indispensable partner to municipalities, private water companies, and professional contractors.
• Positively, Core & Main reported a robust 11% growth in net sales reaching a record $1.74 billion for the quarter.

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.

• On 14 June, KeiStone Partners sold 2.51 million shares (3.7% of outstanding shares) of LS Materials at the block deal sales price of 26,350 won per share.
• In the next several weeks/months, there will likely be increased concerns about additional selling of LS Materials by KeiStone Partners. 
• Due to recent block deal sale, higher short selling volume, and concerns about additional selling by Keistone Partners, LS Materials shares could face further weakness in the next 6-12 months. 

• In the first quarter of 2024, 3M reported significant achievements and detailed the financial impacts of strategic decisions, including the successful spin-off of its Health Care business, now known as Solventum.
• The separation into two distinct entities is designed to enhance focused growth and improve capital allocation tailored to different market dynamics, thereby representing a strategic realignment to boost shareholder value.
• This quarter also saw the company addressing its legal challenges with settlements in the Public Water Suppliers and Combat Arms litigation, resulting in predictable future cash flows related to these issues.

• Despite some more mixed signals, a majority of market dynamics still suggests a risk-on environment. Our bullish outlook since early November 2023 remains intact with SPX and QQQ uptrends intact.
• Near-Term we continue to expect to see support at the 20-day MA and 21-day EMA on the SPX (currently 5325-5330) and QQQ (currently $460-462).
• Longer-Term, we’re bullish as long as the SPX is above 5191 and QQQ is above $449. We’d need to see breakdowns below these levels in order to shift to neutral.

• Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
• Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
• HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management’s resilience in the future.

• FY2024/3 Earnings Result Summary: COPRO-HOLDINGS. Co., Ltd., (hereafter, the Company) announced the full year results for FY2024/3 after the market close on Tuesday, May 14, 2024.
• The key consolidated figures include net sales of ¥24,098 mn (+28.2% YoY), operating profit of ¥2,141 mn (+62.0% YoY), ordinary profit of ¥2,211 mn (+67.0% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥1,463 mn (+69.3% YoY).
• Having posted a dramatic increase in net sales due to record hiring, COPRO CONSTRUCTION. Co., Ltd., which operates the Company’s core construction technician dispatching business, made substantial contributions to increased earnings.

• The WTR Sustainable Index was down 1.7% W/W versus the S&P 500 Index (up 1.6%), the Russell 2000 Index (down 1.0%), and the Nasdaq Index (up 3.5%).
• Energy Technology (14.8% of the index) was down by 0.6%, while Industrial Climate and Ag Technology (59.7% of the index) was up by 0.3%, ClimateTech Mining was down 11.4%, and Advanced Transportation Solutions (19.9% of index) was down 6.6%.
• Top 10 Performers: NRM, LICY, BRDS, KULR, NEOV, PSIX, AMSC, FLUX, EOSE, VLI

• Stanley Black & Decker’s first quarter of 2024 revealed a financial landscape marked by both strategic progress and ongoing market challenges.
• The company’s emphasis on gross margin expansion and cash flow enhancement is key to navigating an uncertain macroeconomic environment that has negatively impacted market demand, particularly in the consumer and DIY sectors.
• On a positive note, Stanley Black & Decker’s global cost reduction program is advancing well, with $1.2 billion of the planned $2 billion in cost savings already achieved.

• On 14 June, KeiStone Partners sold 2.51 million shares (3.7% of outstanding shares) of LS Materials at the block deal sales price of 26,350 won per share.
• In the next several weeks/months, there will likely be increased concerns about additional selling of LS Materials by KeiStone Partners. 
• Due to recent block deal sale, higher short selling volume, and concerns about additional selling by Keistone Partners, LS Materials shares could face further weakness in the next 6-12 months. 

• In the first quarter of 2024, 3M reported significant achievements and detailed the financial impacts of strategic decisions, including the successful spin-off of its Health Care business, now known as Solventum.
• The separation into two distinct entities is designed to enhance focused growth and improve capital allocation tailored to different market dynamics, thereby representing a strategic realignment to boost shareholder value.
• This quarter also saw the company addressing its legal challenges with settlements in the Public Water Suppliers and Combat Arms litigation, resulting in predictable future cash flows related to these issues.

• Despite some more mixed signals, a majority of market dynamics still suggests a risk-on environment. Our bullish outlook since early November 2023 remains intact with SPX and QQQ uptrends intact.
• Near-Term we continue to expect to see support at the 20-day MA and 21-day EMA on the SPX (currently 5325-5330) and QQQ (currently $460-462).
• Longer-Term, we’re bullish as long as the SPX is above 5191 and QQQ is above $449. We’d need to see breakdowns below these levels in order to shift to neutral.

• Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
• Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
• HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management’s resilience in the future.

• FY2024/3 Earnings Result Summary: COPRO-HOLDINGS. Co., Ltd., (hereafter, the Company) announced the full year results for FY2024/3 after the market close on Tuesday, May 14, 2024.
• The key consolidated figures include net sales of ¥24,098 mn (+28.2% YoY), operating profit of ¥2,141 mn (+62.0% YoY), ordinary profit of ¥2,211 mn (+67.0% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥1,463 mn (+69.3% YoY).
• Having posted a dramatic increase in net sales due to record hiring, COPRO CONSTRUCTION. Co., Ltd., which operates the Company’s core construction technician dispatching business, made substantial contributions to increased earnings.

• The WTR Sustainable Index was down 1.7% W/W versus the S&P 500 Index (up 1.6%), the Russell 2000 Index (down 1.0%), and the Nasdaq Index (up 3.5%).
• Energy Technology (14.8% of the index) was down by 0.6%, while Industrial Climate and Ag Technology (59.7% of the index) was up by 0.3%, ClimateTech Mining was down 11.4%, and Advanced Transportation Solutions (19.9% of index) was down 6.6%.
• Top 10 Performers: NRM, LICY, BRDS, KULR, NEOV, PSIX, AMSC, FLUX, EOSE, VLI

• Stanley Black & Decker’s first quarter of 2024 revealed a financial landscape marked by both strategic progress and ongoing market challenges.
• The company’s emphasis on gross margin expansion and cash flow enhancement is key to navigating an uncertain macroeconomic environment that has negatively impacted market demand, particularly in the consumer and DIY sectors.
• On a positive note, Stanley Black & Decker’s global cost reduction program is advancing well, with $1.2 billion of the planned $2 billion in cost savings already achieved.