Category

Industrials

Sep 20
0

Daily Brief Industrials: Toshiba Corp, WCP and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
  • Toshiba – Japan Industrial Partners The Only Real Bid?
  • WCP IPO: Final IPO Price Set, Still an Avoid

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely

By Travis Lundy

  • Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
  • If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
  • I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.

Toshiba – Japan Industrial Partners The Only Real Bid?

By Mio Kato

  • Since the second of Jun Toshiba is down 14.7% while TOPIX is up 0.7%. 
  • This underperformance against TOPIX and industry peers suggests that some of the implied acquisition premium has dissipated. 
  • With reasonable potential for some form of bid coming through we consider the news about Japan Industrial Partners growing its consortium.

WCP IPO: Final IPO Price Set, Still an Avoid

By Arun George

  • WCP (WCP KS), a lithium-ion batteries separator company, has set its IPO price at KRW60,000 per share, a hefty 25-40% discount on the “desired” IPO price range of KRW80,000-100,000. 
  • The target raise has declined from KRW720-900 billion (US$517-646 million) to KRW432 billion (US$310 million) due to the lower IPO price and offer shares.
  • While the final IPO price is now reasonable, the process smacks desperation and calls into question the credibility of the syndicate’s forecasts. This is still an avoid.

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Sep 19
0

Daily Brief Industrials: Sembcorp Marine and more

By | Daily Briefs, Industrials

In today’s briefing:

  • FTSE Straits Times Index (STI): Quiddity Primer

FTSE Straits Times Index (STI): Quiddity Primer

By Janaghan Jeyakumar, CFA

  • FTSE Straits Times Index (STI) (STI INDEX) consists of the 30 largest companies listed in the Singapore Stock Exchange (SGX).
  • This is one of the well-known national blue-chip indices in the Asia-Pacific region.
  • In this insight, we will have a look at the selection criteria and the historical price performance of past Rebalance Events.

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Sep 19
0

Daily Brief Industrials: Sembcorp Marine and more

By | Daily Briefs, Industrials

In today’s briefing:

  • FTSE Straits Times Index (STI): Quiddity Primer

FTSE Straits Times Index (STI): Quiddity Primer

By Janaghan Jeyakumar, CFA

  • FTSE Straits Times Index (STI) (STI INDEX) consists of the 30 largest companies listed in the Singapore Stock Exchange (SGX).
  • This is one of the well-known national blue-chip indices in the Asia-Pacific region.
  • In this insight, we will have a look at the selection criteria and the historical price performance of past Rebalance Events.

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Sep 18
0

Daily Brief Industrials: Keda Industrial Group, CALB, Itochu Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies
  • Keda Industrial Group: Concerns About Downturn in Ceramics Machinery Market & Uncompelling Valuation
  • ECM Weekly (18th Sep 2022) – CALB, Onewo, Leapmotor, WCP, Biogene, Socionext, Prop Guru, PayMate
  • Itochu Grabs Eddie Bauer and Barbour

Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies

By Osbert Tang, CFA

  • Through its 43.58% ownership in lithium carbonate producer Lanke Lithium Industry, Keda Industrial Group (600499 CH) is well placed to benefit from the increase in lithium demand.
  • Lanke’s capacity has recently been upgraded to 30,000 tonnes. Also, Keda is adding capacity to its own integrated anode materials factory in Fujian to capture the ever-rising demand. 
  • Overseas ceramic business will see solid growth from key markets in Africa as Keda raises capacity by 65% by FY23. The stock’s valuations are inexpensive relative to peers. 

Keda Industrial Group: Concerns About Downturn in Ceramics Machinery Market & Uncompelling Valuation

By Douglas Kim

  • We are Negative on Keda Industrial over the next year due to a potential downturn in the ceramics machinery market, uncompelling valuations, and concerns about expansion into lithium battery materials. 
  • Keda Industrial Group is one of the world’s leading suppliers of building ceramic machinery and equipment.
  • Its A-Shares listed on Shanghai Stock Exchange and it completed a private placement of GDRs listing the shares in SIX Swiss Exchange in July 2022. 

ECM Weekly (18th Sep 2022) – CALB, Onewo, Leapmotor, WCP, Biogene, Socionext, Prop Guru, PayMate

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, a few large Hong Kong IPOs are rumoured to be aiming to launch their bookbuild next week.
  • There was only the Atlas Arteria (ALX AU) mega entitlement offer this week, on the placements front.

Itochu Grabs Eddie Bauer and Barbour

By Michael Causton

  • A few years back, Itochu Corp (8001 JP) announced its intention to aggressively grow its consumer brand business. 
  • It has just confirmed deals with Eddie Bauer and Barbour after a year in which it also signed Reebok and Under Armour.
  • Although a small part of the Itochu empire, the consumer brand business, alongside retail interests such as Familymart, are key to the trading firm’s longer term profits.

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Sep 18
0

Daily Brief Industrials: Keda Industrial Group, CALB, Itochu Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies
  • Keda Industrial Group: Concerns About Downturn in Ceramics Machinery Market & Uncompelling Valuation
  • ECM Weekly (18th Sep 2022) – CALB, Onewo, Leapmotor, WCP, Biogene, Socionext, Prop Guru, PayMate
  • Itochu Grabs Eddie Bauer and Barbour

Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies

By Osbert Tang, CFA

  • Through its 43.58% ownership in lithium carbonate producer Lanke Lithium Industry, Keda Industrial Group (600499 CH) is well placed to benefit from the increase in lithium demand.
  • Lanke’s capacity has recently been upgraded to 30,000 tonnes. Also, Keda is adding capacity to its own integrated anode materials factory in Fujian to capture the ever-rising demand. 
  • Overseas ceramic business will see solid growth from key markets in Africa as Keda raises capacity by 65% by FY23. The stock’s valuations are inexpensive relative to peers. 

Keda Industrial Group: Concerns About Downturn in Ceramics Machinery Market & Uncompelling Valuation

By Douglas Kim

  • We are Negative on Keda Industrial over the next year due to a potential downturn in the ceramics machinery market, uncompelling valuations, and concerns about expansion into lithium battery materials. 
  • Keda Industrial Group is one of the world’s leading suppliers of building ceramic machinery and equipment.
  • Its A-Shares listed on Shanghai Stock Exchange and it completed a private placement of GDRs listing the shares in SIX Swiss Exchange in July 2022. 

ECM Weekly (18th Sep 2022) – CALB, Onewo, Leapmotor, WCP, Biogene, Socionext, Prop Guru, PayMate

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, a few large Hong Kong IPOs are rumoured to be aiming to launch their bookbuild next week.
  • There was only the Atlas Arteria (ALX AU) mega entitlement offer this week, on the placements front.

Itochu Grabs Eddie Bauer and Barbour

By Michael Causton

  • A few years back, Itochu Corp (8001 JP) announced its intention to aggressively grow its consumer brand business. 
  • It has just confirmed deals with Eddie Bauer and Barbour after a year in which it also signed Reebok and Under Armour.
  • Although a small part of the Itochu empire, the consumer brand business, alongside retail interests such as Familymart, are key to the trading firm’s longer term profits.

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Sep 17
0

Daily Brief Industrials: S.F. Holding and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Shanghai/​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

Shanghai/​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

By David Blennerhassett

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Sep 17
0

Daily Brief Industrials: S.F. Holding and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Shanghai/​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

Shanghai/​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (15 September 2022)

By David Blennerhassett

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Sep 16
0

Daily Brief Industrials: CALB and more

By | Daily Briefs, Industrials

In today’s briefing:

  • CALB IPO: Updates Support the Bull Case
  • CALB Pre-IPO – Thoughts on Valuation

CALB IPO: Updates Support the Bull Case

By Arun George

  • CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
  • We previously discussed the IPO in CALB IPO: The Bull Case and CALB IPO: The Bear Case. This note updates our view for the PHIP and recent developments.
  • The 1Q and truncated 1H numbers outline the highest growth among peers, customer diversification and sequential improvement in gross margin. The IPO is worth a look.

CALB Pre-IPO – Thoughts on Valuation

By Sumeet Singh

  • CALB aims to raise around US$1.5bn in its Hong Kong IPO.
  • CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
  • In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.

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Sep 16
0

Daily Brief Industrials: CALB and more

By | Daily Briefs, Industrials

In today’s briefing:

  • CALB IPO: Updates Support the Bull Case
  • CALB Pre-IPO – Thoughts on Valuation

CALB IPO: Updates Support the Bull Case

By Arun George

  • CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
  • We previously discussed the IPO in CALB IPO: The Bull Case and CALB IPO: The Bear Case. This note updates our view for the PHIP and recent developments.
  • The 1Q and truncated 1H numbers outline the highest growth among peers, customer diversification and sequential improvement in gross margin. The IPO is worth a look.

CALB Pre-IPO – Thoughts on Valuation

By Sumeet Singh

  • CALB aims to raise around US$1.5bn in its Hong Kong IPO.
  • CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
  • In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.

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Sep 15
0

Daily Brief Industrials: Atlas Arteria, Moya Holdings Asia, Volkswagen (Pref), CALB, Hyundai Heavy Industries, China Conch Venture Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder
  • Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion
  • Moya Holding’s S$0.092 Delisting Offer
  • Moya Holdings: Anthoni Salim’s Exit Offer
  • EQD | Volkswagen (VOW3 GY): Porsche IPO Could Unlock Value-We Look at the Best Derivative Trades
  • CALB Pre-IPO – Peer Comparison – Top Growth, Bottom Margins, Fastest Expansion Plans
  • CALB IPO: Solid PHIP Results Offset by Further Market Downturn
  • Hyundai Heavy IPO Lock-Up – Last of the Lockups with Employees Coming Free
  • Conch Venture (586 HK): An Overlooked Value Play

Atlas Arteria Placement – How to Lose Friends and Alienate Your Largest Shareholder

By Sumeet Singh

  • Atlas Arteria (ALX) aims to raise around US$2bn (A$3bn) via a non-renounceable entitlement offer to fund the purchase of its majority interest in Chicago Skyway.
  • Over the past few months, ALX has garnered interest from IFM which has increased its stake to 19.99%. IFM had publicly opposed this acquisition.
  • In this note, we will talk about the deal dynamic and run the deal through our ECM framework.

Atlas Arteria (ALX AU): Acquisition, ANREO & ASX50 Inclusion

By Brian Freitas

  • Atlas Arteria (ALX AU) is acquiring 66.67% in Skyway Concession Company LLC, the concessionaire of the Chicago Skyway for an equity value of US$2.013bn (A$3.098bn).
  • The acquisition will be funded by a fully underwritten 1:1.95 ANREO to raise A$3.098bn. The offer price of A$6.3/share is a 13.7% discount to TERP and 19.3% discount to last.
  • The increase in market cap could result in Atlas Arteria (ALX AU) being added to the S&P/ASX 50 Index at the December rebalance.

Moya Holding’s S$0.092 Delisting Offer

By Arun George

  • Moya Holdings Asia (MHAL SP) received a delisting proposal from Tamaris Infrastructure (a 72.84% shareholder) at S$0.092 per share, a 41.5% premium to the undisturbed price (8 September).
  • The key condition is shareholder approval. Gateway Partners, which holds a blocking stake, will likely use the offer as an opportunity to exit an underperforming investment.
  • The offer price is attractive. At the last close price, the gross and annualised spread for a year-end effective date is 3.4% and 11.5%, respectively.

Moya Holdings: Anthoni Salim’s Exit Offer

By David Blennerhassett

  • Indonesian water treatment play Moya Holdings Asia (MHAL SP) has announced an Exit Offer from Tamaris Infrastructure, an Anthoni Salim-controlled entity.
  • The Offer price is S$0.092/share, a 41.5% premium to last close. The Offer price will not be increased.
  • The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.

EQD | Volkswagen (VOW3 GY): Porsche IPO Could Unlock Value-We Look at the Best Derivative Trades

By Simon Harris

  • Volkswagen are planning to IPO Porsche in order to address company valuation and to raise funds to further expand into the EV market.
  • The stock looks attractive on a valuation basis and the company has the potential to transform and future proof the business and gain a more favourable P/E ratio.
  • We look at the Derivatives Market for the best risk reward strategies.

CALB Pre-IPO – Peer Comparison – Top Growth, Bottom Margins, Fastest Expansion Plans

By Sumeet Singh

  • CALB aims to raise around US$1.5bn in its Hong Kong IPO.
  • CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
  • In this note, we undertake a peer comparison and talk about the company’s expansion plans.

CALB IPO: Solid PHIP Results Offset by Further Market Downturn

By Douglas Kim

  • CALB’s revenue surged by 266% YoY to reach 3.9 billion RMB in 1Q 2022. Its  operating profit also increased by 43.5% YoY in 1Q 2022, respectively. 
  • CALB also had the highest sales growth rate of 266.5% YoY in 1Q 2022 versus 154% growth YoY for CATL and 63% growth YoY for BYD in 1Q 2022.
  • CALB is one of the most interesting large cap IPOs globally in 2022. Despite horrible market conditions, the company is trying to complete its IPO in the next several weeks.

Hyundai Heavy IPO Lock-Up – Last of the Lockups with Employees Coming Free

By Sumeet Singh

  • Hyundai Heavy Industries (HHI) was listed on Korea Exchange on 17th September, 2021. Its one year lock-up will expire on 17th Sep, 2022.
  • Hyundai Heavy Industries (HHI) is a South Korean shipbuilder. The company is majority owned by Korea Shipbuilding & Offshore Engineering (009540 KS) after the latter’s spin-off in 2019.
  • In this note, we will talk about the upcoming lock-up expiry, along with recent updates.

Conch Venture (586 HK): An Overlooked Value Play

By Osbert Tang, CFA

  • China Conch Venture Holdings (586 HK) is now at negative stub value, the low-end since 2020. This is despite a 16.4% growth in 1H22 core earnings to Rmb542m.
  • The company’s waste-to-energy (WTE) capacity will increase by 25% in FY23 and its internal target calls for an earnings CAGR of 33% between FY21 and FY25 for WTE segment.
  • We should not underestimate the potential from new business initiatives including cathode and anode materials and lithium battery recycling. They have good medium-to-long term exposure to China’s new energy industry.

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