Category

Industrials

Sep 09
0

Daily Brief Industrials: Dongfang Electric, Model Solution, Cummins Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Dongfang Electric (1072 HK): At Full Throttle
  • Model Solution IPO Valuation Analysis
  • Cummins Inc: The Meritor Acquisition & Other Drivers

Dongfang Electric (1072 HK): At Full Throttle

By Osbert Tang, CFA

  • Strong new orders in 2H22 and FY23 are the drivers for Dongfang Electric (1072 HK) after it posted a 31.6% earnings growth and new orders of Rmb36.7bn in 1H22.
  • Demand outlook for its major products including coal-fired, gas turbine, renewable, pumped storage and hydrogen energy are all very encouraging. 
  • We estimate order backlog will equal to 1.6x FY22F revenue by year-end. Despite solid outperformance, DEC is still cheap at 12.6x and 9.8x PERs for FY22 and FY23.

Model Solution IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Model Solution is implied market cap of 156 billion won and target price of 24,417 won. 
  • The IPO valuation range is from 24,000 won to 27,000 won and our target price would be close to the low end of the IPO price range.
  • Given the low upside relative to the IPO price range, we have a Negative view of this IPO. 

Cummins Inc: The Meritor Acquisition & Other Drivers

By Baptista Research

  • Cummins delivered a third consecutive all-around beat in a quarter that was marked by a number of significant developments including many ke partnerships.
  • The company announced partnerships with Daimler Truck, Scania, and North America for delivering fuel cell electric powertrains for heavy-duty truck applications, with Komatsu on developing haulage equipment zero-emission which includes hydrogen fuel cell solutions for the large mining haul truck applications.
  • It also achieved a significant milestone in the quarter related to two acquisitions, namely Meritor and Jacobs Vehicle Systems.

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Sep 08
0

Daily Brief Industrials: Hitachi Transport System, SG Holdings, CALB, InterGlobe Aviation Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hitachi Transport (9086 JP) – Tender Launch Likely Soon But Watch for Flow
  • SG Holdings Placement – Had Suffered from Weak Price Momentum, Buyback Should Support Share Price
  • CALB IPO: The Bear Case
  • Interglobe Aviation (Indigo) Placement – The Beginning of the End of the Overhang

Hitachi Transport (9086 JP) – Tender Launch Likely Soon But Watch for Flow

By Travis Lundy

  • Hitachi Transport System (9086 JP) has had a “long” wait to get its approvals, but EC and China are in, any remaining should be in shortly. 
  • Yesterday, as a footnote on the SG Holdings offering document, there was a comment about SG Holdings selling shares. This was likely more good corporate governance hygiene than warning.
  • Shares are down this morning. I’d expect final approvals and launch quite soon. I would therefore look to buy the dip on flow – block or not.

SG Holdings Placement – Had Suffered from Weak Price Momentum, Buyback Should Support Share Price

By Clarence Chu

  • MUFG Bank and Sumitomo Mitsui Banking Corp are looking to raise a combined US$210m from trimming their respective stakes in SG Holdings (9143 JP).
  • While representing 16 days of three month ADV, comprising only 10.1m shares, 1.57% of the firm’s current market cap, the deal is a small one on an absolute basis.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

CALB IPO: The Bear 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.
  • In CALB IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
  • The key elements of the bear case rest on its small scale, low profitability and high FCF burn compared to listed peers.   

Interglobe Aviation (Indigo) Placement – The Beginning of the End of the Overhang

By Sumeet Singh

  • InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal aims to raise around US$250m via selling 2.8% of the company.
  • He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with the other co-founder Rahul Bhatia. 
  • In this note, we will talk about the placement and run the deal through our ECM framework.

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Sep 08
0

Daily Brief Industrials: Hitachi Transport System, SG Holdings, CALB, InterGlobe Aviation Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hitachi Transport (9086 JP) – Tender Launch Likely Soon But Watch for Flow
  • SG Holdings Placement – Had Suffered from Weak Price Momentum, Buyback Should Support Share Price
  • CALB IPO: The Bear Case
  • Interglobe Aviation (Indigo) Placement – The Beginning of the End of the Overhang

Hitachi Transport (9086 JP) – Tender Launch Likely Soon But Watch for Flow

By Travis Lundy

  • Hitachi Transport System (9086 JP) has had a “long” wait to get its approvals, but EC and China are in, any remaining should be in shortly. 
  • Yesterday, as a footnote on the SG Holdings offering document, there was a comment about SG Holdings selling shares. This was likely more good corporate governance hygiene than warning.
  • Shares are down this morning. I’d expect final approvals and launch quite soon. I would therefore look to buy the dip on flow – block or not.

SG Holdings Placement – Had Suffered from Weak Price Momentum, Buyback Should Support Share Price

By Clarence Chu

  • MUFG Bank and Sumitomo Mitsui Banking Corp are looking to raise a combined US$210m from trimming their respective stakes in SG Holdings (9143 JP).
  • While representing 16 days of three month ADV, comprising only 10.1m shares, 1.57% of the firm’s current market cap, the deal is a small one on an absolute basis.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

CALB IPO: The Bear 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.
  • In CALB IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
  • The key elements of the bear case rest on its small scale, low profitability and high FCF burn compared to listed peers.   

Interglobe Aviation (Indigo) Placement – The Beginning of the End of the Overhang

By Sumeet Singh

  • InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal aims to raise around US$250m via selling 2.8% of the company.
  • He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with the other co-founder Rahul Bhatia. 
  • In this note, we will talk about the placement and run the deal through our ECM framework.

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Sep 07
0

Daily Brief Industrials: CALB, ZTO Express Cayman Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • CALB IPO: The Bull Case
  • ZTO Express (2057 HK/​ZTO US): Quality Speaks for Itself

CALB IPO: 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.
  • According to Frost & Sullivan, in terms of installed capacity in 2021, CALB ranked seventh globally among EV battery companies with a 3.2% market share.
  • The key elements of the bull case rest on a large and growing market, rising market share, explosive top-line growth and ambitious capacity expansion plans.

ZTO Express (2057 HK/​ZTO US): Quality Speaks for Itself

By Osbert Tang, CFA

  • The Aug China Express Development Index points to further industry recovery; and as the leader with 23% (+2pp YoY) market share, ZTO Express (2057 HK) should ride on the uptrend. 
  • Sustained volume outperformance, upside on pricing and excellent cost control capability are drivers in 2H22. We are also comfortable with its solid financial position. 
  • ZTO Express has above-average earnings quality and enjoys benefits from industry consolidation. Its on par valuation with the industry makes the stock appealing.

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Sep 07
0

Daily Brief Industrials: CALB, ZTO Express Cayman Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • CALB IPO: The Bull Case
  • ZTO Express (2057 HK/​ZTO US): Quality Speaks for Itself

CALB IPO: 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.
  • According to Frost & Sullivan, in terms of installed capacity in 2021, CALB ranked seventh globally among EV battery companies with a 3.2% market share.
  • The key elements of the bull case rest on a large and growing market, rising market share, explosive top-line growth and ambitious capacity expansion plans.

ZTO Express (2057 HK/​ZTO US): Quality Speaks for Itself

By Osbert Tang, CFA

  • The Aug China Express Development Index points to further industry recovery; and as the leader with 23% (+2pp YoY) market share, ZTO Express (2057 HK) should ride on the uptrend. 
  • Sustained volume outperformance, upside on pricing and excellent cost control capability are drivers in 2H22. We are also comfortable with its solid financial position. 
  • ZTO Express has above-average earnings quality and enjoys benefits from industry consolidation. Its on par valuation with the industry makes the stock appealing.

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Sep 06
0

Daily Brief Industrials: SMC Corp, Nidec Corp, Hanwha Aerospace, CRB Commodity Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Nikkei 225 Index Rebalance: Mostly on Expected Lines
  • Nikkei 225 Review Results: Nidec, SMC, Hoya IN
  • KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation
  • The Commodity Report #67

Nikkei 225 Index Rebalance: Mostly on Expected Lines

By Brian Freitas

Nikkei 225 Review Results: Nidec, SMC, Hoya IN

By Travis Lundy

KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation

By Sanghyun Park

  • The results are pretty much in line with the predictions, except for Hanwha Aerospace which made it to LARGE instead of Hyundai Marine & Fire Insurance.
  • Assuming that ten names, including Hyundai Marine, were traded in a LONG/SHORT basket with equal weight, the yield from August 17 to the last close would have been 4.6%.
  • I would still approach with an equal-weighted basket trading until this Thursday. This flow trading usually loses its effect rapidly after rebalancing. So, I wouldn’t carry it beyond this Thursday.

The Commodity Report #67

By The Commodity Report

  • Global food prices fell for the fifth month but remain at highly elevated levels.
  • On a nominal basis, we’re basically now back to levels seen last time at the peak of the Arab Spring back in 2011.
  • Meanwhile, we should keep in mind that we should keep an eye on the spread between farmers’ input costs for growing stuff and the selling prices based on the futures market.

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Sep 06
0

Daily Brief Industrials: SMC Corp, Nidec Corp, Hanwha Aerospace, CRB Commodity Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Nikkei 225 Index Rebalance: Mostly on Expected Lines
  • Nikkei 225 Review Results: Nidec, SMC, Hoya IN
  • KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation
  • The Commodity Report #67

Nikkei 225 Index Rebalance: Mostly on Expected Lines

By Brian Freitas

Nikkei 225 Review Results: Nidec, SMC, Hoya IN

By Travis Lundy

KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation

By Sanghyun Park

  • The results are pretty much in line with the predictions, except for Hanwha Aerospace which made it to LARGE instead of Hyundai Marine & Fire Insurance.
  • Assuming that ten names, including Hyundai Marine, were traded in a LONG/SHORT basket with equal weight, the yield from August 17 to the last close would have been 4.6%.
  • I would still approach with an equal-weighted basket trading until this Thursday. This flow trading usually loses its effect rapidly after rebalancing. So, I wouldn’t carry it beyond this Thursday.

The Commodity Report #67

By The Commodity Report

  • Global food prices fell for the fifth month but remain at highly elevated levels.
  • On a nominal basis, we’re basically now back to levels seen last time at the peak of the Arab Spring back in 2011.
  • Meanwhile, we should keep in mind that we should keep an eye on the spread between farmers’ input costs for growing stuff and the selling prices based on the futures market.

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Sep 05
0

Daily Brief Industrials: Kyocera Corp, Boskalis Westminster and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Kyocera (6971 JP): Strong Performance Unlikely to Last
  • HAL Holding/​​Royal Boskalis Westminster: Sweetened Offer

Kyocera (6971 JP): Strong Performance Unlikely to Last

By Scott Foster

  • It is hard to see how Kyocera can avoid a significant slowdown in sales and earnings growth given the weakness in electronics markets and the overall economy.
  • R&D and capital spending continue to rise, putting pressure on margins and offsetting gains from the weak yen.
  • Valuations are not compelling. Watch out as the share price drops back from its recent high.

HAL Holding/​​Royal Boskalis Westminster: Sweetened Offer

By Jesus Rodriguez Aguilar

  • HAL increased the offer price by 3.1%, to €33.00, as final price, which represent a premium of c. 32%. A surprising move, as guidance provided no reason for doing so.
  • HAL and Stichting Hyacinth own c.55.6% (27 July), vs. 46.2% upon offer announcement. Boskalis and HAL agreed that if HAL holds at least 95%, HAL will initiate a squeeze-out and delisting.
  • The offer is now recommended by Boskalis’ Boards and the acceptance period has been extended until 6 September (inclusive). Tender.

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Sep 05
0

Daily Brief Industrials: Kyocera Corp, Boskalis Westminster and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Kyocera (6971 JP): Strong Performance Unlikely to Last
  • HAL Holding/​​Royal Boskalis Westminster: Sweetened Offer

Kyocera (6971 JP): Strong Performance Unlikely to Last

By Scott Foster

  • It is hard to see how Kyocera can avoid a significant slowdown in sales and earnings growth given the weakness in electronics markets and the overall economy.
  • R&D and capital spending continue to rise, putting pressure on margins and offsetting gains from the weak yen.
  • Valuations are not compelling. Watch out as the share price drops back from its recent high.

HAL Holding/​​Royal Boskalis Westminster: Sweetened Offer

By Jesus Rodriguez Aguilar

  • HAL increased the offer price by 3.1%, to €33.00, as final price, which represent a premium of c. 32%. A surprising move, as guidance provided no reason for doing so.
  • HAL and Stichting Hyacinth own c.55.6% (27 July), vs. 46.2% upon offer announcement. Boskalis and HAL agreed that if HAL holds at least 95%, HAL will initiate a squeeze-out and delisting.
  • The offer is now recommended by Boskalis’ Boards and the acceptance period has been extended until 6 September (inclusive). Tender.

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Sep 03
0

Daily Brief Industrials: Mitsubishi Heavy Industries and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsubishi Heavy Industries (7011) | Green Transition Bonds

Mitsubishi Heavy Industries (7011) | Green Transition Bonds

By Mark Chadwick

  • MHI has a roadmap for becoming carbon neutral by 2040.  The transition to a decarbonized society will be funded by green/transition bonds
  • MHI has issued its first green/transition bond amounting to 10 billion yen
  • We remain bullish on MHI and believe it is a key beneficiary of decarbonization trends in Japan

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