Category

Industrials

Jul 30
0

Daily Brief Industrials: MACA Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • ACS/Thiess/MACA: Generous Premium

ACS/Thiess/MACA: Generous Premium

By Jesus Rodriguez Aguilar

  • Thiess is launching an agreed offer to acquire 100% of MACA Ltd (MLD AU) at AUD 1.025/share, in cash, cum dividend, a 28% premium, 2.8x EV/Fwd EBITDA. Minimum acceptance condition is 90%.
  • Thiess is gaining scale with the acquisition of MACA. I believe that in the future ACS/Hochtief/CIMIC will seek to acquire the whole of Thiess.
  • Gross spread (as of 29 July) is 2.43%, for a deal with high chances to complete. I would be long at this price.

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Jul 29
0

Daily Brief Industrials: MonotaRO Co Ltd, Daewoo Shipbuilding & Marine Engineering, WCP, Nocera, Pacific Basin Shipping, Growatt Technology and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MonotaRO (3064) | Another Decade of Secular Growth
  • Analyzing 51-Day Strike of Daewoo Shipbuilding & Marine Engineering Co.(DSME) From ESG Perspective
  • WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable
  • Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22
  • Pacific Basin Shipping (2343 HK): Continue to Thrive in a Sound Market
  • Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

MonotaRO (3064) | Another Decade of Secular Growth

By Mark Chadwick

  • MonotaRo is well placed to monetise the shift of enterprise MRO spending as it moves increasingly online
  • The company’s new distribution centre will enable the company to increase capacity, speed up deliveries, and offer improved services to enterprise clients
  • Structural growth stories are few and far between in Japan. MonotaRo is one of them and appears expensive on most valuation metrics. Our LT DCF model suggests 30% upside

Analyzing 51-Day Strike of Daewoo Shipbuilding & Marine Engineering Co.(DSME) From ESG Perspective

By Emily Jiwon Kim

  • Subcontract workers of DSME went on strike demanding a 30 percent wage increase from the beginning of June which lasted for 51 days. 
  • The strike was captured as 2 ESG risk issues: ‘Working conditions’ and ‘Supply chain’ risks among 17 ESG risk issues. 
  • Although the agreement between the company and the union was reached last week, the conflict between the two parties over the sales losses during the strike is ongoing. 

WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable

By Arun George

  • WCP (WCP KS), a lithium-ion batteries separator company, has pushed back its KRW900 billion (US$692 million) KRX IPO timeline from August to mid-September.
  • We previously discussed the IPO In WCP IPO: Hooked on Lithium and WCP IPO: Valuation Insights. 
  • In this note, we benchmark WCP vs its peers in terms of historical and forecasted financials along with multiples. Our valuation analysis suggests that the IPO price range remains unattractive.

Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22

By Ishan Majumdar

  • This is our first report on Nocera and we look to provide a detailed account of the various industries that the company operates in and the key macro-economic factors.
  • While Nocera did report a net loss and incurred one-time costs related to its listing last year, things ought to be entirely different in 2022.
  • However, given how quickly the company’s revenues are increasing, the stock price should also rise quickly.

Pacific Basin Shipping (2343 HK): Continue to Thrive in a Sound Market

By Osbert Tang, CFA

  • Pacific Basin Shipping (2343 HK) had an impressive 1H22 with 204.2% YoY growth in underlying profit. Overall dividend payout ratio of 75% is also ahead of expectations.
  • It covered 58% Handysize days and 64% for Supramax for 2H22, though rates are lower HoH as spot market retreated. However, low costs mean it’s still enjoying very fat margin.  
  • Its 0.96x P/B for FY22 and 0.85x for FY23 look well justified by ROEs of 40.4% and 25.6%. Strong profitability and cash flow will allow for sustained high dividend yield.

Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

By Ethan Aw

  • Growatt Technology (1833969D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO. 
  • Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption and energy digitalization. 
  • The firm has seen strong revenue growth on the backdrop of global PV inverter and energy storage industry tailwinds despite the effects of COVID-19.

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Jul 29
0

Daily Brief Industrials: MonotaRO Co Ltd, Daewoo Shipbuilding & Marine Engineering, WCP, Nocera, Pacific Basin Shipping, Growatt Technology and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MonotaRO (3064) | Another Decade of Secular Growth
  • Analyzing 51-Day Strike of Daewoo Shipbuilding & Marine Engineering Co.(DSME) From ESG Perspective
  • WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable
  • Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22
  • Pacific Basin Shipping (2343 HK): Continue to Thrive in a Sound Market
  • Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

MonotaRO (3064) | Another Decade of Secular Growth

By Mark Chadwick

  • MonotaRo is well placed to monetise the shift of enterprise MRO spending as it moves increasingly online
  • The company’s new distribution centre will enable the company to increase capacity, speed up deliveries, and offer improved services to enterprise clients
  • Structural growth stories are few and far between in Japan. MonotaRo is one of them and appears expensive on most valuation metrics. Our LT DCF model suggests 30% upside

Analyzing 51-Day Strike of Daewoo Shipbuilding & Marine Engineering Co.(DSME) From ESG Perspective

By Emily Jiwon Kim

  • Subcontract workers of DSME went on strike demanding a 30 percent wage increase from the beginning of June which lasted for 51 days. 
  • The strike was captured as 2 ESG risk issues: ‘Working conditions’ and ‘Supply chain’ risks among 17 ESG risk issues. 
  • Although the agreement between the company and the union was reached last week, the conflict between the two parties over the sales losses during the strike is ongoing. 

WCP IPO: Kicking the Can Down the Road Through a Revised IPO Timetable

By Arun George

  • WCP (WCP KS), a lithium-ion batteries separator company, has pushed back its KRW900 billion (US$692 million) KRX IPO timeline from August to mid-September.
  • We previously discussed the IPO In WCP IPO: Hooked on Lithium and WCP IPO: Valuation Insights. 
  • In this note, we benchmark WCP vs its peers in terms of historical and forecasted financials along with multiples. Our valuation analysis suggests that the IPO price range remains unattractive.

Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22

By Ishan Majumdar

  • This is our first report on Nocera and we look to provide a detailed account of the various industries that the company operates in and the key macro-economic factors.
  • While Nocera did report a net loss and incurred one-time costs related to its listing last year, things ought to be entirely different in 2022.
  • However, given how quickly the company’s revenues are increasing, the stock price should also rise quickly.

Pacific Basin Shipping (2343 HK): Continue to Thrive in a Sound Market

By Osbert Tang, CFA

  • Pacific Basin Shipping (2343 HK) had an impressive 1H22 with 204.2% YoY growth in underlying profit. Overall dividend payout ratio of 75% is also ahead of expectations.
  • It covered 58% Handysize days and 64% for Supramax for 2H22, though rates are lower HoH as spot market retreated. However, low costs mean it’s still enjoying very fat margin.  
  • Its 0.96x P/B for FY22 and 0.85x for FY23 look well justified by ROEs of 40.4% and 25.6%. Strong profitability and cash flow will allow for sustained high dividend yield.

Growatt Technology Pre-IPO – Impressive Profitability Growth from Riding on Industry Tailwinds

By Ethan Aw

  • Growatt Technology (1833969D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO. 
  • Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption and energy digitalization. 
  • The firm has seen strong revenue growth on the backdrop of global PV inverter and energy storage industry tailwinds despite the effects of COVID-19.

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Jul 28
0

Daily Brief Industrials: WCP, MACA Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • WCP Delays IPO
  • MACA: Thiess’s Friendly Cash Offer
  • WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

WCP Delays IPO

By Douglas Kim

  • WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August previously).
  • Our guess for the delay is because the company may have tapped some major institutions and they may not have been so bullish on the IPO at current IPO valuation.
  • Our base case valuation of WCP is price of 87,805 won. Given the lack of upside relative to the IPO price range, we would PASS on this IPO deal.

MACA: Thiess’s Friendly Cash Offer

By David Blennerhassett

  • MACA Ltd (MLD AU) recently announced a friendly off-market cash offer from fellow contractor Thiess, at A$1.025/share, a 28.1% premium to previous close.
  • The Offer is subject to limited conditions, including FIRB , ACCC sign-off, no prescribed occurrences, no issue of convertible securities, derivatives, or other rights, and 90% minimum acceptances.
  • The Offer has unanimous support from MACA’s board. Applications to FIRB and the ACCC have already been submitted. The announcement suggests MACA remains open to alternative approaches.

WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

By Sumeet Singh

  • WCP aims to raise around US$690m via selling a mix of primary and secondary shares in its Korean IPO.
  • WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries
  • In this note, we talk about the recent refiling updates, peer comparison and valuations.

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Jul 28
0

Daily Brief Industrials: WCP, MACA Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • WCP Delays IPO
  • MACA: Thiess’s Friendly Cash Offer
  • WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

WCP Delays IPO

By Douglas Kim

  • WCP announced today that it will delay its IPO. The book building for the institutional investors will start on 14 September (from 1 August previously).
  • Our guess for the delay is because the company may have tapped some major institutions and they may not have been so bullish on the IPO at current IPO valuation.
  • Our base case valuation of WCP is price of 87,805 won. Given the lack of upside relative to the IPO price range, we would PASS on this IPO deal.

MACA: Thiess’s Friendly Cash Offer

By David Blennerhassett

  • MACA Ltd (MLD AU) recently announced a friendly off-market cash offer from fellow contractor Thiess, at A$1.025/share, a 28.1% premium to previous close.
  • The Offer is subject to limited conditions, including FIRB , ACCC sign-off, no prescribed occurrences, no issue of convertible securities, derivatives, or other rights, and 90% minimum acceptances.
  • The Offer has unanimous support from MACA’s board. Applications to FIRB and the ACCC have already been submitted. The announcement suggests MACA remains open to alternative approaches.

WCP IPO – Peer Comparison and Valuation – Needs a Price Cut Not a Timeline Extension

By Sumeet Singh

  • WCP aims to raise around US$690m via selling a mix of primary and secondary shares in its Korean IPO.
  • WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries
  • In this note, we talk about the recent refiling updates, peer comparison and valuations.

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Jul 27
0

Daily Brief Industrials: CIMC Vehicle Group Co Ltd, MACA Ltd, AKR Corporindo and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hong Kong CEO & Director Dealings – 26th July 2022
  • MACA’s Recommended $1.025 Per Share Takeover Offer from Thiess
  • AKR Results (AKRA IJ) – Fuelled by Smelters and Industry

Hong Kong CEO & Director Dealings – 26th July 2022

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website. 
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
  • These insights also flags those companies where shares have been pledged, both recently and ongoing.

MACA’s Recommended $1.025 Per Share Takeover Offer from Thiess

By Arun George

  • MACA Ltd (MLD AU) has recommended a A$1.025 per share offer from Thiess. The offer price represents a 28.1% premium to the unaffected price of A$0.80 (on 25 July).
  • The offer is conditional on a 90% minimum acceptance condition and regulatory approvals (FIRB and ACCC). The target statement will be released in late August.
  • We think that the offer is reasonable in the context of historical share prices and multiples. At the last close, the gross spread is 3.5%.

AKR Results (AKRA IJ) – Fuelled by Smelters and Industry

By Angus Mackintosh

  • AKR Corporindo (AKRA IJ) 1H2022 results were impressive, with sales up +107% YoY and profit by +74% YoY driven by strong demand for both petroleum products and chemicals.
  • Land sales for its JIIPE industrial estate were slow at 3.5 hectares in 1H2022 but expect FY2022 sales to hit over 40 hectares, with a 37-hectare plot due in 3Q2022.
  • AKR Corporindo (AKRA IJ) gives high-quality exposure to Indonesia’s economy across its major sectors and especially to the rapid growth in smelters which require chemicals in abundance.

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Jul 27
0

Daily Brief Industrials: CIMC Vehicle Group Co Ltd, MACA Ltd, AKR Corporindo and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hong Kong CEO & Director Dealings – 26th July 2022
  • MACA’s Recommended $1.025 Per Share Takeover Offer from Thiess
  • AKR Results (AKRA IJ) – Fuelled by Smelters and Industry

Hong Kong CEO & Director Dealings – 26th July 2022

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website. 
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
  • These insights also flags those companies where shares have been pledged, both recently and ongoing.

MACA’s Recommended $1.025 Per Share Takeover Offer from Thiess

By Arun George

  • MACA Ltd (MLD AU) has recommended a A$1.025 per share offer from Thiess. The offer price represents a 28.1% premium to the unaffected price of A$0.80 (on 25 July).
  • The offer is conditional on a 90% minimum acceptance condition and regulatory approvals (FIRB and ACCC). The target statement will be released in late August.
  • We think that the offer is reasonable in the context of historical share prices and multiples. At the last close, the gross spread is 3.5%.

AKR Results (AKRA IJ) – Fuelled by Smelters and Industry

By Angus Mackintosh

  • AKR Corporindo (AKRA IJ) 1H2022 results were impressive, with sales up +107% YoY and profit by +74% YoY driven by strong demand for both petroleum products and chemicals.
  • Land sales for its JIIPE industrial estate were slow at 3.5 hectares in 1H2022 but expect FY2022 sales to hit over 40 hectares, with a 37-hectare plot due in 3Q2022.
  • AKR Corporindo (AKRA IJ) gives high-quality exposure to Indonesia’s economy across its major sectors and especially to the rapid growth in smelters which require chemicals in abundance.

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Jul 25
0

Daily Brief Industrials: Go-Ahead and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Clear Road for Kinetic/Globalvia Consortium

Clear Road for Kinetic/Globalvia Consortium

By Jesus Rodriguez Aguilar

  • On 21 July, a disciplined Kelsian dropped out of race for Go-Ahead, and won’t be able to bid for six months therefore Kinetic/Globalvia consortium should be unrivaled in the takeover offer.
  • At 7.7x EV/Fwd EBIT, consideration is below 8.6x EV/Fwd EBIT offered by DWS for struggling rival Stagecoach, but the market is now pricing that the Kinetic/Globalvia consortium will complete the deal. 
  • Gross spread is 0.93% and the estimated annual return would be 6.84% assuming settlement on 14 September (see timeline). Long.

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Jul 25
0

Daily Brief Industrials: Go-Ahead and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Clear Road for Kinetic/Globalvia Consortium

Clear Road for Kinetic/Globalvia Consortium

By Jesus Rodriguez Aguilar

  • On 21 July, a disciplined Kelsian dropped out of race for Go-Ahead, and won’t be able to bid for six months therefore Kinetic/Globalvia consortium should be unrivaled in the takeover offer.
  • At 7.7x EV/Fwd EBIT, consideration is below 8.6x EV/Fwd EBIT offered by DWS for struggling rival Stagecoach, but the market is now pricing that the Kinetic/Globalvia consortium will complete the deal. 
  • Gross spread is 0.93% and the estimated annual return would be 6.84% assuming settlement on 14 September (see timeline). Long.

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Jul 24
0

Daily Brief Industrials: Toshiba Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Last Week in Event SPACE: Toshiba, Swire, SOHO, Link Admin, DIDI Global, 51job

Last Week in Event SPACE: Toshiba, Swire, SOHO, Link Admin, DIDI Global, 51job

By David Blennerhassett

  • Toshiba Corp (6502 JP)‘s bidder list is out. It is Bain, Brookfield, JIP-JIC, and CVC. Overall, the impression of this pool of candidates is negative
  • Swire Pacific (A) (19 HK) is trading cheap at a look-through forward P/B of 0.26x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x. 
  • Soho China (410 HK)‘s name was toxic after SAMR dinged Blackstone’s deal. It is no less toxic now. Arguably the upside is greater than the downside. But on what timeframe?

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