Industrials

Late last week aviation engine repair play PTB Group Ltd (PTB AU) entered into a Scheme Implementation Deed (SID) with PAG Holding Corp.
PAG is offering $1.595/share, a 40.5% premium to last close.
Apart from PTB shareholder approval, PAG’s Offer requires FIRB. This looks done. PTB’s board unanimously recommends the Scheme.

Orient Overseas Intl (316 HK): Don’t Overlook the Downhill Risks

By Osbert Tang, CFA

1H22 is a fantastic period for Orient Overseas International (316 HK) with record earnings. However, with retreat in freight rates YTD, it is likely to mark the cycle peak.
OOIL has not seen the usual peak season for transpacific market yet. Also, supply pressure is mounting as record vessel delivery is scheduled for the next two years.
The elevated share price has not reflected that profitability will decline in FY23 and FY24. We see significant downside risk as the market becomes more realistic on earnings.

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Aug 21

Daily Brief Industrials: Huitongda and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

By Brian Freitas

There are 24 adds and 14 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
19 of the 24 HSCI inclusions will be added to Southbound Stock Connect, while 12 of the 14 HSCI deletions will be removed from Southbound Stock Connect.
Five of the HSCI constituents could be removed from Southbound Stock Connect only since the average market cap over the last year is less than HK$5bn.

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Aug 21

Daily Brief Industrials: Huitongda and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

By Brian Freitas

There are 24 adds and 14 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
19 of the 24 HSCI inclusions will be added to Southbound Stock Connect, while 12 of the 14 HSCI deletions will be removed from Southbound Stock Connect.
Five of the HSCI constituents could be removed from Southbound Stock Connect only since the average market cap over the last year is less than HK$5bn.

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Aug 20

Daily Brief Industrials: Ptb Group Ltd, Cleanaway Waste Management, SKYX Platforms, Plug Power Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

PTB Group’s Binding Offer from PAG
Cleanaway Waste Management Placement – Accretive Acquisition Could Outweigh Weak Momentum
SKYX Platforms Corp: An Electrical Engineering Innovator That Could Prove To Be A Disruptor In Its Domain
Plug Power Inc: The IRA Upside

PTB Group’s Binding Offer from PAG

Ptb Group Ltd (PTB AU) entered a scheme implementation deed (SID) with Precision Aviation Group (PAG). The offer comprises A$1.595 + dividend up to A$0.03 per share (total of A$1.625).
The offer price is attractive. The key conditions are shareholder approvals and FIRB approval. The scheme meeting is on 16 November.
This is a done deal. At last close and for the 2 December payment, the gross and annualised spread to the offer + div is 3.8% and 13.5%, respectively.

Cleanaway Waste Management Placement – Accretive Acquisition Could Outweigh Weak Momentum

By Clarence Chu

Cleanaway Waste Management (CWY AU) is looking to raise US$242m (A$350m) to fund its acquisition of Global Renewables Holdings (GRL) and for funding its Blueprint 2030 initiatives.
Cleanaway Waste Management (CWY) had recently released its update for the Blueprint 2030 initiative. Short interest on the stock has been on the rise as well.
The deal is relatively large at 21.3 days of three month ADV, representing 6.3% of current mcap.

SKYX Platforms Corp: An Electrical Engineering Innovator That Could Prove To Be A Disruptor In Its Domain

This research note is our first on SKYX Platforms, formerly known as Sky Technologies.
The company is a distinguished player within the field of electrical engineering and caters mainly to the residential market.
Most modern-day smart homes today rely on a large number of IoT (Internet of Things) gadgets coming from different companies and target high-income populations.

Plug Power Inc: The IRA Upside

Plug Power had a disappointing quarter in terms of its financial results but the shareholders of the company are rejoicing.
After President Joe Biden signed the Inflation Reduction Act (IRA) which includes clean energy tax credits, the company’s stock price has zoomed.
The newly enacted bill would establish a clean hydrogen production tax credit, or PTC, to encourage clean hydrogen production and benefit Plug Power.

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Aug 20

Daily Brief Industrials: Ptb Group Ltd, Cleanaway Waste Management, SKYX Platforms, Plug Power Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

PTB Group’s Binding Offer from PAG
Cleanaway Waste Management Placement – Accretive Acquisition Could Outweigh Weak Momentum
SKYX Platforms Corp: An Electrical Engineering Innovator That Could Prove To Be A Disruptor In Its Domain
Plug Power Inc: The IRA Upside

PTB Group’s Binding Offer from PAG

Ptb Group Ltd (PTB AU) entered a scheme implementation deed (SID) with Precision Aviation Group (PAG). The offer comprises A$1.595 + dividend up to A$0.03 per share (total of A$1.625).
The offer price is attractive. The key conditions are shareholder approvals and FIRB approval. The scheme meeting is on 16 November.
This is a done deal. At last close and for the 2 December payment, the gross and annualised spread to the offer + div is 3.8% and 13.5%, respectively.

Cleanaway Waste Management Placement – Accretive Acquisition Could Outweigh Weak Momentum

By Clarence Chu

Cleanaway Waste Management (CWY AU) is looking to raise US$242m (A$350m) to fund its acquisition of Global Renewables Holdings (GRL) and for funding its Blueprint 2030 initiatives.
Cleanaway Waste Management (CWY) had recently released its update for the Blueprint 2030 initiative. Short interest on the stock has been on the rise as well.
The deal is relatively large at 21.3 days of three month ADV, representing 6.3% of current mcap.

SKYX Platforms Corp: An Electrical Engineering Innovator That Could Prove To Be A Disruptor In Its Domain

This research note is our first on SKYX Platforms, formerly known as Sky Technologies.
The company is a distinguished player within the field of electrical engineering and caters mainly to the residential market.
Most modern-day smart homes today rely on a large number of IoT (Internet of Things) gadgets coming from different companies and target high-income populations.

Plug Power Inc: The IRA Upside

Plug Power had a disappointing quarter in terms of its financial results but the shareholders of the company are rejoicing.
After President Joe Biden signed the Inflation Reduction Act (IRA) which includes clean energy tax credits, the company’s stock price has zoomed.
The newly enacted bill would establish a clean hydrogen production tax credit, or PTC, to encourage clean hydrogen production and benefit Plug Power.

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Aug 19

Daily Brief Industrials: MACA Ltd, Alliance Aviation Services, Volkswagen (Pref), Renewi PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

MACA (MLD AU): NRW’s Offer Rejected
Alliance Aviation – Selloff Provides Optionality on ACCC Approval
Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report
FTSE UK Quiddity Leaderboard Sep 2022: Avast, Meggitt, Brewin, and a Busy Rebalance Month

MACA (MLD AU): NRW’s Offer Rejected

MACA Ltd (MLD AU) has indicated that NRW Holdings (NWH AU)‘s A$1.085/share Offer is inferior to Thiess’ conditional A$1.025/share takeover offer.
The reasons for the rejection are expected to be fleshed out at MACA’s full years results briefing.
NRW’s Offer is higher, has a lower shareholder approval, and provides MACA shareholders the option of cash, scrip or a combination of both. But is subject to scaling.

Alliance Aviation – Selloff Provides Optionality on ACCC Approval

The ACCC has raised concerns about Qantas Airways (QAN AU) proposed acquisition of Alliance Aviation Services (AQZ AU). The ACCC’s final decision is on 17 November.
Qantas knew a lengthy ACCC approval process was highly likely and committed to an additional special dividend in the SID to reflect this risk.
Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas securing ACCC approval.

Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report

Since mid-July, spreads have generally tightened across our liquid universe, including those flagged in July (Investor AB, Roche and Volkswagen).
Trade recommendations long ords / short prefs: Fuchs Petrolub, SSAB Svenska Stal.
Recommendations Long prefs / short ords: Sixt, VW, MFE-Media for Europe, Telecom Italia, Ericsson.

FTSE UK Quiddity Leaderboard Sep 2022: Avast, Meggitt, Brewin, and a Busy Rebalance Month

By Janaghan Jeyakumar, CFA

With roughly two more weeks for the September 2022 Rebalance event, we take a look at the names leading the race to become ADDs/DELs for FTSE 100 and FTSE 250.
Avast PLC (AVST LN), Meggitt PLC (MGGT LN), and Brewin Dolphin Holdings (BRW LN) could get deleted before the end of September and cause intra-review index changes too.
I expect many interesting developments in the next few weeks as we approach a busy rebalance month with multiple intra-review index changes likely to happen.

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Aug 19

Daily Brief Industrials: MACA Ltd, Alliance Aviation Services, Volkswagen (Pref), Renewi PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

MACA (MLD AU): NRW’s Offer Rejected
Alliance Aviation – Selloff Provides Optionality on ACCC Approval
Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report
FTSE UK Quiddity Leaderboard Sep 2022: Avast, Meggitt, Brewin, and a Busy Rebalance Month

MACA (MLD AU): NRW’s Offer Rejected

MACA Ltd (MLD AU) has indicated that NRW Holdings (NWH AU)‘s A$1.085/share Offer is inferior to Thiess’ conditional A$1.025/share takeover offer.
The reasons for the rejection are expected to be fleshed out at MACA’s full years results briefing.
NRW’s Offer is higher, has a lower shareholder approval, and provides MACA shareholders the option of cash, scrip or a combination of both. But is subject to scaling.

Alliance Aviation – Selloff Provides Optionality on ACCC Approval

The ACCC has raised concerns about Qantas Airways (QAN AU) proposed acquisition of Alliance Aviation Services (AQZ AU). The ACCC’s final decision is on 17 November.
Qantas knew a lengthy ACCC approval process was highly likely and committed to an additional special dividend in the SID to reflect this risk.
Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas securing ACCC approval.

Liquid Universe of European Ordinary and Preferred Shares: August ‘22 Report

Since mid-July, spreads have generally tightened across our liquid universe, including those flagged in July (Investor AB, Roche and Volkswagen).
Trade recommendations long ords / short prefs: Fuchs Petrolub, SSAB Svenska Stal.
Recommendations Long prefs / short ords: Sixt, VW, MFE-Media for Europe, Telecom Italia, Ericsson.

FTSE UK Quiddity Leaderboard Sep 2022: Avast, Meggitt, Brewin, and a Busy Rebalance Month

By Janaghan Jeyakumar, CFA

With roughly two more weeks for the September 2022 Rebalance event, we take a look at the names leading the race to become ADDs/DELs for FTSE 100 and FTSE 250.
Avast PLC (AVST LN), Meggitt PLC (MGGT LN), and Brewin Dolphin Holdings (BRW LN) could get deleted before the end of September and cause intra-review index changes too.
I expect many interesting developments in the next few weeks as we approach a busy rebalance month with multiple intra-review index changes likely to happen.

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Aug 17

Daily Brief Industrials: Xiamen International Port H, RS Group plc, WCP, Avalon Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Xiamen Port’s Pre-Condition Satisfied
Takeover Interest
WCP IPO: Updated Prospectus, Solid 1H22, Unchanged and Unattractive Price Range
Avalon Technologies Pre-IPO Tearsheet

Xiamen Port’s Pre-Condition Satisfied

The pre-condition for Xiamen International Port H (3378 HK)’s privatisation offer from Xiamen Port Holding is satisfied. The offer is HK$2.25 per H share.
The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
The offer is attractive. At last close and for a 21 October payment, the gross and annualised spread to the offer is 2.7% and 16.0%, respectively.

Takeover Interest

On 13 August, The Times reported of bid speculation around RS Group and specifically mentioned an offer at £15/share, a sizable premium to the prior closing share price.
The shares trade on 19.6x Fwd P/E and 12.7x EV/Fwd EBITDA (source: Refinitiv). My fair value estimate is 1,229p, which implies 29% upside.
I believe the shares offer value with good growth prospects, as the company takes advantage of operational leverage, and bolt-on M&A, with the potential upside risk of a bid. LONG.

WCP IPO: Updated Prospectus, Solid 1H22, Unchanged and Unattractive Price Range

WCP (WCP KS), a lithium-ion batteries separator company, has released an updated prospectus for its IPO of KRW900 billion (US$692 million).
The updated prospectus discloses 1H22 results and a marginal increase in the syndicate’s intrinsic value. Revenue growth and margin improved in 1Q22.
The IPO price range of KRW80,000-100,000 remains unchanged. While the fundamentals are sound, the IPO price range remains unattractive.

Avalon Technologies Pre-IPO Tearsheet

By Ethan Aw

Avalon Technologies (6594468Z IN) is looking to raise about US$130m in its upcoming India IPO. The deal will be run by JM Financial, DAM Capital, IIFL Securities and Nomura.
Avalon Technologies (AT) is a fully integrated Electronic Manufacturing Services (EMS) company with end-to-end capabilities in delivering box build solutions in India, with a focus on precision engineered products.
As of the date of this Draft Red Herring Prospectus (9th Aug 2022), it has 12 manufacturing units located across the US and India.

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Aug 17

Daily Brief Industrials: Xiamen International Port H, RS Group plc, WCP, Avalon Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Xiamen Port’s Pre-Condition Satisfied
Takeover Interest
WCP IPO: Updated Prospectus, Solid 1H22, Unchanged and Unattractive Price Range
Avalon Technologies Pre-IPO Tearsheet

Xiamen Port’s Pre-Condition Satisfied

The pre-condition for Xiamen International Port H (3378 HK)’s privatisation offer from Xiamen Port Holding is satisfied. The offer is HK$2.25 per H share.
The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
The offer is attractive. At last close and for a 21 October payment, the gross and annualised spread to the offer is 2.7% and 16.0%, respectively.

Takeover Interest

On 13 August, The Times reported of bid speculation around RS Group and specifically mentioned an offer at £15/share, a sizable premium to the prior closing share price.
The shares trade on 19.6x Fwd P/E and 12.7x EV/Fwd EBITDA (source: Refinitiv). My fair value estimate is 1,229p, which implies 29% upside.
I believe the shares offer value with good growth prospects, as the company takes advantage of operational leverage, and bolt-on M&A, with the potential upside risk of a bid. LONG.

WCP IPO: Updated Prospectus, Solid 1H22, Unchanged and Unattractive Price Range

WCP (WCP KS), a lithium-ion batteries separator company, has released an updated prospectus for its IPO of KRW900 billion (US$692 million).
The updated prospectus discloses 1H22 results and a marginal increase in the syndicate’s intrinsic value. Revenue growth and margin improved in 1Q22.
The IPO price range of KRW80,000-100,000 remains unchanged. While the fundamentals are sound, the IPO price range remains unattractive.

Avalon Technologies Pre-IPO Tearsheet

By Ethan Aw

Avalon Technologies (6594468Z IN) is looking to raise about US$130m in its upcoming India IPO. The deal will be run by JM Financial, DAM Capital, IIFL Securities and Nomura.
Avalon Technologies (AT) is a fully integrated Electronic Manufacturing Services (EMS) company with end-to-end capabilities in delivering box build solutions in India, with a focus on precision engineered products.
As of the date of this Draft Red Herring Prospectus (9th Aug 2022), it has 12 manufacturing units located across the US and India.

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Aug 16

Daily Brief Industrials: Jardine Matheson Holdings, Posco International Corporation, Bangkok Expressway and Metro and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Jardine Matheson (JM SP): MSCI Blues
POSCO International + POSCO Energy = A Value Enhancing M&A Deal
Bangkok Express and Metro (BEM): Marching On

Jardine Matheson (JM SP): MSCI Blues