Industrials

• I see Jardine Matheson Holdings (JM SP)‘s discount to NAV and implied stub at 12-month lows.
• Recent interim results were okay. Stripping out DFI Retail Group Holdings (DFI SP)‘s outperformance, the remainder of the Jardine stable delivered weaker numbers. 
• Further afield, the implied stub is marginally below the long-term average since the Jardine Strategic Holdings (JS SP) circularity was collapsed in April 2021. 

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder, Rakesh Gangwal, aims to raise around US$850m via selling around 3.8% stake in Indigo.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. He has sold many times before.
• In this note, we will talk about the lockup dynamics and possible placement.

• IGI (India) Limited (2261751D IN) is looking to raise about US$480m in its upcoming India IPO. The deal will be run by Axis, Kotak, MS, and SBI Caps.
• IGI India is part of the International Gemmological Institute (IGI) group. As of 22nd August 2024, IGI India handled operations of the IGI business in India and Türkiye.
• Its primary business is in provision of services related to certification and accreditation of natural diamonds, laboratory-grown diamonds, studded jewellery and coloured stones as well as offering of educational programs.

• Reflecting strengths and weaknesses – Q1 FY3/25 results presented contrasting elements in Duskin’s business.
• Despite high hurdles YoY, the Food Group demonstrated sustained sales growth driven by the ‘Mister Donut’ chain.
• However, cost inflation (involving personnel and manufacturing amongst others) and challenges in new customer acquisition at the Direct Selling Group contributed to a 7.5% decline in OP YoY. 

Epwin’s H124 trading update confirmed that management expects to achieve full-year expectations despite market headwinds. Long-term, well-established growth trends imply that the company is well-placed to leverage increasing demand for its energy-efficient and low-maintenance building products. It offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 8.8x, materially below the long-term average of 10.5x, and yields nearly 6%. The share buyback programme should help support the share price.

• BQE reported Q2 financial results that beat our expectations on revenue and were in line on EBITDA.
• The quarter was once again led by the recurring operations segment which grew 79% YoY and 43% QoQ.
• Technical services revenue was soft again, but management expects a rebound in H2 as larger projects have been initiated in Q3.

• Allient, formerly Allied Motion, is a niche industrial company in motion/power/controls industry
• Strong returns on tangible capital and run by owner/operator Dick Warzala
• Undervalued at $26.75 per share, with potential for 20%+ IRRs over 3-4 year period

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.

• I see Jardine Matheson Holdings (JM SP)‘s discount to NAV and implied stub at 12-month lows.
• Recent interim results were okay. Stripping out DFI Retail Group Holdings (DFI SP)‘s outperformance, the remainder of the Jardine stable delivered weaker numbers. 
• Further afield, the implied stub is marginally below the long-term average since the Jardine Strategic Holdings (JS SP) circularity was collapsed in April 2021. 

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder, Rakesh Gangwal, aims to raise around US$850m via selling around 3.8% stake in Indigo.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. He has sold many times before.
• In this note, we will talk about the lockup dynamics and possible placement.

• IGI (India) Limited (2261751D IN) is looking to raise about US$480m in its upcoming India IPO. The deal will be run by Axis, Kotak, MS, and SBI Caps.
• IGI India is part of the International Gemmological Institute (IGI) group. As of 22nd August 2024, IGI India handled operations of the IGI business in India and Türkiye.
• Its primary business is in provision of services related to certification and accreditation of natural diamonds, laboratory-grown diamonds, studded jewellery and coloured stones as well as offering of educational programs.

• Reflecting strengths and weaknesses – Q1 FY3/25 results presented contrasting elements in Duskin’s business.
• Despite high hurdles YoY, the Food Group demonstrated sustained sales growth driven by the ‘Mister Donut’ chain.
• However, cost inflation (involving personnel and manufacturing amongst others) and challenges in new customer acquisition at the Direct Selling Group contributed to a 7.5% decline in OP YoY. 

Epwin’s H124 trading update confirmed that management expects to achieve full-year expectations despite market headwinds. Long-term, well-established growth trends imply that the company is well-placed to leverage increasing demand for its energy-efficient and low-maintenance building products. It offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 8.8x, materially below the long-term average of 10.5x, and yields nearly 6%. The share buyback programme should help support the share price.

• BQE reported Q2 financial results that beat our expectations on revenue and were in line on EBITDA.
• The quarter was once again led by the recurring operations segment which grew 79% YoY and 43% QoQ.
• Technical services revenue was soft again, but management expects a rebound in H2 as larger projects have been initiated in Q3.

• Allient, formerly Allied Motion, is a niche industrial company in motion/power/controls industry
• Strong returns on tangible capital and run by owner/operator Dick Warzala
• Undervalued at $26.75 per share, with potential for 20%+ IRRs over 3-4 year period

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.

• Keppel Infrastructure Trust (KIT SP) is looking to raise around S$206m (US$158m) in its primary placement.
• Proceeds will be used to pay down its bridge loan facility linked to its Ventura acquisition. KIT also appears to have secured its unitholders’ approval for the raising earlier. 
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Hynix’s potential 15% stake in Kioxia doesn’t violate the 20% rule because KFTC’s mandatory stake rule doesn’t apply to foreign investments.
• SK Group may transfer Hynix’s 15% Kioxia stake to SK Square by splitting Hynix and merging its investment arm with SK Square for future AI investments.
• SK Square may attract more attention than Hynix short-term, as Kioxia’s stake via Hynix could boost market expectations for value transfer to SK Square.

• Manjushree Technopack (MTPL IN) is looking to raise about US$360m in its upcoming India IPO. The deal will be run by Avendus, Citi, GS, JM Fin and ICICI Sec.
• Manjushree Technopack Limited is a one stop packaging solutions provider with end-to-end capabilities (from design to delivery) across containers, preforms, caps and closures, pumps and dispensers and captive recycling capabilities.
• It is the largest rigid plastic packaging (RPP) player in terms of installed capacity in India as of March 31, 2024, according to the Technopak Report.

• Backed by strong US demand, spot container rates remain very firm
• On top of higher average freight rates, carriers now enjoying lower fuel prices
• Dispersion of returns on carrier shares is eye-opening, only a few performed

• The next leader of Japan’s ruling LDP, who will almost certainly become prime minister in October, will probably not make major changes to the nation’s defense policy.
• Guidance remains unchanged after 1Q results that suggest the possibility of a better than expected order flow but also a material negative impact from a stronger yen.
• MHI’s valuation is not yet in speculative territory, but neither is it compelling. If the yen remains stable, we expect the share price to test its recent highs.

• OHBA (hereafter, the Company) reported profit lines slightly above initial forecasts.
• In FY24/5, operating profit rose 7.4% YoY to ¥1.84 bn against its initial plan of ¥1.8 bn, with profit attributable to owners of parent (hereafter, Profit ATOP) rising 24.6% YoY to ¥1.34 bn versus its initial plan of ¥1.15 bn.
• On the other hand, sales fell just short of plan. 

• Keppel Infrastructure Trust (KIT SP) is looking to raise around S$206m (US$158m) in its primary placement.
• Proceeds will be used to pay down its bridge loan facility linked to its Ventura acquisition. KIT also appears to have secured its unitholders’ approval for the raising earlier. 
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Hynix’s potential 15% stake in Kioxia doesn’t violate the 20% rule because KFTC’s mandatory stake rule doesn’t apply to foreign investments.
• SK Group may transfer Hynix’s 15% Kioxia stake to SK Square by splitting Hynix and merging its investment arm with SK Square for future AI investments.
• SK Square may attract more attention than Hynix short-term, as Kioxia’s stake via Hynix could boost market expectations for value transfer to SK Square.

• Manjushree Technopack (MTPL IN) is looking to raise about US$360m in its upcoming India IPO. The deal will be run by Avendus, Citi, GS, JM Fin and ICICI Sec.
• Manjushree Technopack Limited is a one stop packaging solutions provider with end-to-end capabilities (from design to delivery) across containers, preforms, caps and closures, pumps and dispensers and captive recycling capabilities.
• It is the largest rigid plastic packaging (RPP) player in terms of installed capacity in India as of March 31, 2024, according to the Technopak Report.

• Backed by strong US demand, spot container rates remain very firm
• On top of higher average freight rates, carriers now enjoying lower fuel prices
• Dispersion of returns on carrier shares is eye-opening, only a few performed

• The next leader of Japan’s ruling LDP, who will almost certainly become prime minister in October, will probably not make major changes to the nation’s defense policy.
• Guidance remains unchanged after 1Q results that suggest the possibility of a better than expected order flow but also a material negative impact from a stronger yen.
• MHI’s valuation is not yet in speculative territory, but neither is it compelling. If the yen remains stable, we expect the share price to test its recent highs.

• OHBA (hereafter, the Company) reported profit lines slightly above initial forecasts.
• In FY24/5, operating profit rose 7.4% YoY to ¥1.84 bn against its initial plan of ¥1.8 bn, with profit attributable to owners of parent (hereafter, Profit ATOP) rising 24.6% YoY to ¥1.34 bn versus its initial plan of ¥1.15 bn.
• On the other hand, sales fell just short of plan. 

• The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August. Only 4 trading days to go.
• We see 7 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 12 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
• The upward migrations have underperformed the downward migrations over the last month as a few stocks have sold off hard. Some despite being included in global indices.

• The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
• Today is the base date for determining constituent weights/capping for the TDIV index September 2024 index rebal event.
• We expect one deletion in September 2024 and we estimate the one-way capping flow to be around US$253mn.

• JSW Cement Limited (9858514Z IN) is looking to raise about US$480m in upcoming India IPO. The deal will be run by JMFin, Axis, Citi, DAM, GS, Jefferies, Kotak, SBI Caps.
• JSW Cement (JSWC) is a cement manufacturing company in India focused on manufacturing green cementitious products comprising blended cement, ordinary portland cement, ground granulated blast furnace slag among other products.
• According to CRISIL, JSWC was the fastest growing cement manufacturing company in India, in terms of increase in installed grinding capacity and sales volume from FY14-24.

• Deutsche Post (DHL GR) and Reckitt Benckiser (RKT LN) are the top two candidates for deletion with 7-9% below the exit threshold. Forecasted supply is $200m and 2 ADV.
• Intesa Sanpaolo (ISP IM) and London Stock Exchange (LSEG LN) are the top two candidates for addition by replacement. Forecasted demand is $330m and 1-2 ADV.
• The highest ranked between Banco Bilbao Vizcaya Argentaria (BBVA SM) and Industria De Diseno Textil (ITX SM) could become the third addition, conditional on the deletion of BASF (BAS GR).

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.

• ABM Investama
• Nickel Industries
• Road King Infrastructure

• The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August. Only 4 trading days to go.
• We see 7 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 12 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
• The upward migrations have underperformed the downward migrations over the last month as a few stocks have sold off hard. Some despite being included in global indices.

• The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
• Today is the base date for determining constituent weights/capping for the TDIV index September 2024 index rebal event.
• We expect one deletion in September 2024 and we estimate the one-way capping flow to be around US$253mn.

• JSW Cement Limited (9858514Z IN) is looking to raise about US$480m in upcoming India IPO. The deal will be run by JMFin, Axis, Citi, DAM, GS, Jefferies, Kotak, SBI Caps.
• JSW Cement (JSWC) is a cement manufacturing company in India focused on manufacturing green cementitious products comprising blended cement, ordinary portland cement, ground granulated blast furnace slag among other products.
• According to CRISIL, JSWC was the fastest growing cement manufacturing company in India, in terms of increase in installed grinding capacity and sales volume from FY14-24.

• Deutsche Post (DHL GR) and Reckitt Benckiser (RKT LN) are the top two candidates for deletion with 7-9% below the exit threshold. Forecasted supply is $200m and 2 ADV.
• Intesa Sanpaolo (ISP IM) and London Stock Exchange (LSEG LN) are the top two candidates for addition by replacement. Forecasted demand is $330m and 1-2 ADV.
• The highest ranked between Banco Bilbao Vizcaya Argentaria (BBVA SM) and Industria De Diseno Textil (ITX SM) could become the third addition, conditional on the deletion of BASF (BAS GR).

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.

• ABM Investama
• Nickel Industries
• Road King Infrastructure

• FSS Governor Lee challenged the legality of the Robotics-Bobcat merger ratio, citing Article 176-5 of the Capital Markets Act, allowing a 10% premium or discount.
• Following the FSS Governor’s statements, Doosan must likely apply a 10% premium/discount to the Robotics-Bobcat merger, creating a 30% spread based on current stock prices.
• Doosan may still revise or cancel the merger, but the FSS Governor’s comments might boost Bobcat short-term. Given the uncertainty, aggressive trading is risky.

• There are 19 changes a side for the NIFTY Midcap 150 Index at the September rebalance. There are many stocks with same-way flows from passive trackers of other indices.
• Estimated one-way turnover is 9.8% resulting in a one-way trade of INR 8.2bn (US$98m). With US$40.1bn tracking the index actively, the impact on the stocks will be much larger.
• The adds have outperformed the deletes this year, though near-term performance has been meh. There was a similar trend in March and the adds could outperform nearer to implementation.

• There are 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that will be implemented at the close on 27 September. Changes are on expected lines.
• Estimated one-way turnover for the Nifty Next 50 Index (NIFTYJR INDEX) is 19.6% resulting in a one-way trade of INR 63.64bn (US$759m). Many stocks have over 1x ADV to trade.
• The adds have outperformed the deletes this year but there has been big underperformance over the last month as stocks expected to benefit from rural spending have rallied.

• CIMC Enric Holdings (3899 HK)‘s 1H24 result is below expectations, but the growth outlook is promising. Management also guided for a solid recovery in 2H24.
• Backlog and new orders rose 42.5% and 29.4%, respectively, with chemical and environmental orders rebounded sharply QoQ. The overall margin will be better in 2H24.
• Hydrogen revenue should reach Rmb1bn in FY24 (1H24: Rmb450m). New coke oven gas (COG) to hydrogen projects may generate Rmb10bn revenue by FY27, or 43% of FY23 revenue.

• FSS Governor Lee challenged the legality of the Robotics-Bobcat merger ratio, citing Article 176-5 of the Capital Markets Act, allowing a 10% premium or discount.
• Following the FSS Governor’s statements, Doosan must likely apply a 10% premium/discount to the Robotics-Bobcat merger, creating a 30% spread based on current stock prices.
• Doosan may still revise or cancel the merger, but the FSS Governor’s comments might boost Bobcat short-term. Given the uncertainty, aggressive trading is risky.

• There are 19 changes a side for the NIFTY Midcap 150 Index at the September rebalance. There are many stocks with same-way flows from passive trackers of other indices.
• Estimated one-way turnover is 9.8% resulting in a one-way trade of INR 8.2bn (US$98m). With US$40.1bn tracking the index actively, the impact on the stocks will be much larger.
• The adds have outperformed the deletes this year, though near-term performance has been meh. There was a similar trend in March and the adds could outperform nearer to implementation.

• There are 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that will be implemented at the close on 27 September. Changes are on expected lines.
• Estimated one-way turnover for the Nifty Next 50 Index (NIFTYJR INDEX) is 19.6% resulting in a one-way trade of INR 63.64bn (US$759m). Many stocks have over 1x ADV to trade.
• The adds have outperformed the deletes this year but there has been big underperformance over the last month as stocks expected to benefit from rural spending have rallied.

• CIMC Enric Holdings (3899 HK)‘s 1H24 result is below expectations, but the growth outlook is promising. Management also guided for a solid recovery in 2H24.
• Backlog and new orders rose 42.5% and 29.4%, respectively, with chemical and environmental orders rebounded sharply QoQ. The overall margin will be better in 2H24.
• Hydrogen revenue should reach Rmb1bn in FY24 (1H24: Rmb450m). New coke oven gas (COG) to hydrogen projects may generate Rmb10bn revenue by FY27, or 43% of FY23 revenue.

• Deere & Company reported its third-quarter earnings, revealing a mixed financial performance amid varied market conditions across its segments.
• Despite a tough macroeconomic environment, the company maintained a disciplined approach, particularly in managing inventory and costs, which was evident from an equipment operations margin of 18.5%.
• However, the reduced demand in both agricultural and construction sectors, coupled with price competition, led to a decline in net sales and revenues by 20% and 17% respectively, totaling $11.387 billion and $13.152 billion.

• Deere & Company reported its third-quarter earnings, revealing a mixed financial performance amid varied market conditions across its segments.
• Despite a tough macroeconomic environment, the company maintained a disciplined approach, particularly in managing inventory and costs, which was evident from an equipment operations margin of 18.5%.
• However, the reduced demand in both agricultural and construction sectors, coupled with price competition, led to a decline in net sales and revenues by 20% and 17% respectively, totaling $11.387 billion and $13.152 billion.