Industrials

Diversified across sectors and regions, Hitachi Ltd. is a proxy for the global economy going into recession.
Restructuring nearly complete, but little margin expansion so far. DX revenues growing rapidly, but more profit supporter than driver.
Weak 1Q and worsening economic situation casts doubt on FY Mar-23 guidance.

Jiangsu Expressway (177 HK): A Simple yet Attractive Yield Play

By Osbert Tang, CFA

With share price of Jiangsu Expressway (H) (177 HK) now back to the 2013-2014 level, the stock is very attractive on secured yield of 8.6% based on its dividend record.
Fundamentally, we expect sequential recovery in earnings in 2H22. Its diversification into clean energy will provide a quality earnings stream. Longer-term, new projects will add to earnings.
It has a healthy gearing level and the Rmb denominated borrowings means it will benefit from lower interest rate and lack of exposure to Rmb depreciation.

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Oct 09

Daily Brief Industrials: HMM Co., Ltd., Keppel Corp, Hitachi Transport System and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea
Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax

Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea

By Sanghyun Park

Chairman Kim of the FSC mentioned potential rule changes in disclosing the names of short sellers at the state audit last Thursday.
The first is to reveal the identity of short sellers who traded through a swap contract with a broker, which is currently exempt from the short-selling disclosure obligation.
The second is to disclose the identity of investors caught in illegal short-selling activities, mostly naked short-selling and wall-crossing.

Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport

SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
Jardine Cycle & Carriage (JCNC SP) is expensive here – relative to historical values – and from an implied stub perspective, has only briefly been exceeded twice in the last decade.
Expect Keppel (KEP SP) to re-rate after the spinoff. The Sembcorp Marine (SMM SP) distribution supported by both better profitability and much larger order books can be managed reasonably cleanly.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax

There are 48 – 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 discussed this week: San Miguel (SMC PM)‘s MTO for Eagle Cement (EAGLE PM), Idemitsu (5019 JP)‘s Offer for Toa Oil (5008 JP), and O2Micro (OIIM US)‘s MBO.
Key updates took place for Tassal (TGR AU), Hitachi Transport System (9086 JP), Shidax Corp (4837 JP), Toyo Construction (1890 JP), and Singapore Medical (SMG SP).

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Oct 09

Daily Brief Industrials: HMM Co., Ltd., Keppel Corp, Hitachi Transport System and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea
Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax

Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea

By Sanghyun Park

Chairman Kim of the FSC mentioned potential rule changes in disclosing the names of short sellers at the state audit last Thursday.
The first is to reveal the identity of short sellers who traded through a swap contract with a broker, which is currently exempt from the short-selling disclosure obligation.
The second is to disclose the identity of investors caught in illegal short-selling activities, mostly naked short-selling and wall-crossing.

Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport

SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
Jardine Cycle & Carriage (JCNC SP) is expensive here – relative to historical values – and from an implied stub perspective, has only briefly been exceeded twice in the last decade.
Expect Keppel (KEP SP) to re-rate after the spinoff. The Sembcorp Marine (SMM SP) distribution supported by both better profitability and much larger order books can be managed reasonably cleanly.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax

There are 48 – 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 discussed this week: San Miguel (SMC PM)‘s MTO for Eagle Cement (EAGLE PM), Idemitsu (5019 JP)‘s Offer for Toa Oil (5008 JP), and O2Micro (OIIM US)‘s MBO.
Key updates took place for Tassal (TGR AU), Hitachi Transport System (9086 JP), Shidax Corp (4837 JP), Toyo Construction (1890 JP), and Singapore Medical (SMG SP).

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✓ Company Data and News
✓ Events & Webinars

Oct 07

Daily Brief Industrials: Keppel Corp, Renesas Electronics, Sichuan Road&Bridge Co Lt A and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel O&M Spin-Off Approaching Quickly
Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata
State Construction Firm to Buy 50% of East African Potash Mine

Keppel O&M Spin-Off Approaching Quickly

After 18mos of hints, and two rights recapitalisations at Sembcorp Marine (SMM SP), SMM and Keppel Corp (KEP SP) announced a deal to merge their O&M businesses at end-April.
Keppel shareholders would receive ~18 shares of SMM per share of Keppel owned, Keppel spins out the equity of its legacy rig assets and leaves the O&M biz clean.
The structure announced lets us examine “forward KEP”, and anticipate interest and valuations post-spin, which is “supposed to” happen in Q4. We’re in Q4 now, and Keppel is interesting here.

Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata

Acquisition of Steradian Semiconductors complements Renesas’ partnership with Tata Group and expands its presence in India.
Follows purchase of Reality Analytics of the U.S. and Celeno Communications of Israel. Global footprint growing, technological sophistication rising to meet ADAS, AI and IIoT requirements.
P/E below 10x on current guidance, but vulnerable to semiconductor down-cycle. Accumulate for long-term potential.

State Construction Firm to Buy 50% of East African Potash Mine

By Caixin Global

State-owned infrastructure construction firm Sichuan Road and Bridge Group Co. Ltd. (SRBG) is planning to acquire a 50% stake in a major potash mine in East Africa in its latest push into the mining industry.
Chengdu-headquartered SRBG has signed a $166 million deal to acquire half the stake in the Colluli Potash Project in Eritrea from Australian fertilizer developer Danakali Ltd.
Once the deal is finalized, the Colluli potash mine will be SRBG’s second mining project in Eritrea

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Oct 07

Daily Brief Industrials: Keppel Corp, Renesas Electronics, Sichuan Road&Bridge Co Lt A and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel O&M Spin-Off Approaching Quickly
Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata
State Construction Firm to Buy 50% of East African Potash Mine

Keppel O&M Spin-Off Approaching Quickly

After 18mos of hints, and two rights recapitalisations at Sembcorp Marine (SMM SP), SMM and Keppel Corp (KEP SP) announced a deal to merge their O&M businesses at end-April.
Keppel shareholders would receive ~18 shares of SMM per share of Keppel owned, Keppel spins out the equity of its legacy rig assets and leaves the O&M biz clean.
The structure announced lets us examine “forward KEP”, and anticipate interest and valuations post-spin, which is “supposed to” happen in Q4. We’re in Q4 now, and Keppel is interesting here.

Renesas (6723 JP): Steradian Acquisition Supports Alliance with Tata

Acquisition of Steradian Semiconductors complements Renesas’ partnership with Tata Group and expands its presence in India.
Follows purchase of Reality Analytics of the U.S. and Celeno Communications of Israel. Global footprint growing, technological sophistication rising to meet ADAS, AI and IIoT requirements.
P/E below 10x on current guidance, but vulnerable to semiconductor down-cycle. Accumulate for long-term potential.

State Construction Firm to Buy 50% of East African Potash Mine

By Caixin Global

State-owned infrastructure construction firm Sichuan Road and Bridge Group Co. Ltd. (SRBG) is planning to acquire a 50% stake in a major potash mine in East Africa in its latest push into the mining industry.
Chengdu-headquartered SRBG has signed a $166 million deal to acquire half the stake in the Colluli Potash Project in Eritrea from Australian fertilizer developer Danakali Ltd.
Once the deal is finalized, the Colluli potash mine will be SRBG’s second mining project in Eritrea

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Oct 06

Daily Brief Industrials: Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle

Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle

Canon’s reported capital spending plan suggest that commercial production of nanoimprint lithography tools could start in time for the next semiconductor up-cycle.
If this is the case, Kioxia is likely to be the main beneficiary. In the meantime, LightStream recommends that investors in Toshiba hedge against tech/semi weakness.
Technical hurdles remain formidable, but nanoimprint lithography has the potential to be much cheaper than EUV.

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Oct 06

Daily Brief Industrials: Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle

Toshiba (6502 JP): Kioxia Nanoimprint Update – Look to the Next Cycle

Canon’s reported capital spending plan suggest that commercial production of nanoimprint lithography tools could start in time for the next semiconductor up-cycle.
If this is the case, Kioxia is likely to be the main beneficiary. In the meantime, LightStream recommends that investors in Toshiba hedge against tech/semi weakness.
Technical hurdles remain formidable, but nanoimprint lithography has the potential to be much cheaper than EUV.

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Oct 04

Daily Brief Industrials: Toshiba Corp, Lasertec Corp, ACCO Brands, CRB Commodity Index and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Two Bits of Non-Bullish Toshiba News
Lasertec (6920 JP): Accumulate for the Long Term
ACCO: Adjusting for Macroenvironment
The Commodity Report #71

Two Bits of Non-Bullish Toshiba News

On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts.

Lasertec (6920 JP): Accumulate for the Long Term

The shares are down 58% from their January high. Our 3-year forecast brings valuations down to levels not seen since FY Jun-18.
The great surge in orders is coming to an end, but EUV lithography and SiC power devices should keep demand for Lasertec’s mask inspection systems at high levels.
The severity of the emerging semiconductor down-cycle and global recession remain to be seen, but the company’s long-term potential warrants another look.

ACCO: Adjusting for Macroenvironment

By Hamed Khorsand

The business climate has not improved for Acco Brands (ACCO) in Europe since the Company reported second quarter results, and thus could result in lower than expected third quarter numbers
The macroenvironment has been volatile in a quarter dependent on back-to-school sales and more people working from their offices.
We are updating our earnings model for the rest of the year. Our third quarter sales estimate is now $517.1 million

The Commodity Report #71

By The Commodity Report

We expect the oil crisis to worsen once economic activity resumes again. Till then some months will probably pass.
Nevertheless, the industry hasn’t increased production significantly enough, and the SPR release by the Biden administration veiled the actual grim picture in the oil market.
Those stories from Bloomberg show how relaxed the sentiment seems to be again. I have the feeling that this sentiment won’t age well at all.

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Oct 04

Daily Brief Industrials: Toshiba Corp, Lasertec Corp, ACCO Brands, CRB Commodity Index and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Two Bits of Non-Bullish Toshiba News
Lasertec (6920 JP): Accumulate for the Long Term
ACCO: Adjusting for Macroenvironment
The Commodity Report #71

Two Bits of Non-Bullish Toshiba News

On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts.

Lasertec (6920 JP): Accumulate for the Long Term