Industrials

• The FTSE TWSE Taiwan Dividend+ Index is a funky one that weights stocks by dividend yield. Given dependency on dividends and stock prices, the potential adds/deletes can change often.
• We currently see three changes to the index in December, with another stock very close to deletion zone. Given the difference in market cap and dividend yield, impacts are big.
• There will be large flows on the current index names at the September rebalance due to capping.

• Yesterday, United Tractors (UNTR IJ) announced a large share buyback. It’s a big buyback but perhaps not as big as the headlines (which say “up to 20%”). 
• The buyback is for 5 trillion rupiah which is about 5% of market cap, and will be conducted on-market over the next three months.
• Looking at the early market reaction, my opinion is that the market does not seem to understand the consequences.

• WCP (WCP KS), a lithium-ion batteries separator company, is planning to launch a KRW900 billion (US$692 million) IPO in August.  
• The price range of KRW80,000-100,000 implies a market cap of KRW2.7-3.4 trillion (US$2.1-2.6 billion).
• WCP has attractive fundamentals due to the favourable demand/supply balance, technology, strong revenue growth and improving margins. 

• Renesas and Tata Group companies have announced a new partnership in electronic systems and wireless telecom for automotive and other applications.
• Specifically, they are working on the development of electric vehicles and industrial system solutions combining their semiconductor, IT system and manufacturing expertise.
• This should provide a significant boost to their business in India and global markets. As Mio Kato wrote in late April, Renesas – Like We Said… Accelerating 

• 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 will talk about the positive aspects of the deal.

• Bharat FIH (BFIH) aims to raise around US$660m in its India IPO via selling a mix of both primary and secondary shares. BFIH is a subsidiary of Foxconn.
• Its initial operations were focussed on mobile phones, of late it has been expanding its portfolio to include mechanics, electric vehicles, televisions and hearables. 
• In this note, we will talk about the positive aspects of the deal.

• Bharat FIH (BFIH) aims to raise around US$660m in its India IPO via selling a mix of both primary and secondary shares. BFIH is a subsidiary of Foxconn.
• Its initial operations were focussed on mobile phones, of late it has been expanding its portfolio to include mechanics, electric vehicles, televisions and hearables. 
• In this note, we will talk about the positive aspects of the deal.

• Eva Precision Industrial Holdings (838 HK) is a supplier of office and automotive equipment (seat/battery frames and moulds), trading at 8.1x PE FY22 with an inflection point in earnings growth.
• As a supplier to Tesla Motors (TSLA US), Great Wall Motor (2333 HK), and Lucid, it is a play on the expansion of the EV space.
• Legacy business of office equipment will also experience growth due to the exit of foreign businesses like Fuji and Samsung enabling the company to have 25% CAGR revenue growth.

• SIME has proposed to divest its entire stake in Weifang Port companies for RMB1.92b (MYR1.27b) cash, marking its full exit from the non-core seaport business.
• We view the exit positively, in line with SIME’s strategy to redeploy capital to its core Automotive and Industrials businesses.
• We keep our FY22E/FY23E earnings forecasts for now. Reiterate OP. We keep our SoP-TP unchanged at RM2.60

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• We initiate coverage on TRC Synergy with a BUY recommendation and TP of RM0.40/share based on our SOP calculation with a deep 50% discount; reflecting small cap status and heavy public sector reliance.
• Job opportunities are poised for an inflection buoyed by MRT3 to which we consider TRC a strong contender
• TRC’s market cap trades at a -15% discount to its net cash position (1QFY22), we believe the market has ascribed a negative value to TRC’s real estate assets which we think is unwarranted.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• Eva Precision Industrial Holdings (838 HK) is a supplier of office and automotive equipment (seat/battery frames and moulds), trading at 8.1x PE FY22 with an inflection point in earnings growth.
• As a supplier to Tesla Motors (TSLA US), Great Wall Motor (2333 HK), and Lucid, it is a play on the expansion of the EV space.
• Legacy business of office equipment will also experience growth due to the exit of foreign businesses like Fuji and Samsung enabling the company to have 25% CAGR revenue growth.

• SIME has proposed to divest its entire stake in Weifang Port companies for RMB1.92b (MYR1.27b) cash, marking its full exit from the non-core seaport business.
• We view the exit positively, in line with SIME’s strategy to redeploy capital to its core Automotive and Industrials businesses.
• We keep our FY22E/FY23E earnings forecasts for now. Reiterate OP. We keep our SoP-TP unchanged at RM2.60

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• We initiate coverage on TRC Synergy with a BUY recommendation and TP of RM0.40/share based on our SOP calculation with a deep 50% discount; reflecting small cap status and heavy public sector reliance.
• Job opportunities are poised for an inflection buoyed by MRT3 to which we consider TRC a strong contender
• TRC’s market cap trades at a -15% discount to its net cash position (1QFY22), we believe the market has ascribed a negative value to TRC’s real estate assets which we think is unwarranted.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• It is hard to understand why WCP uses future EBITDA in the peer valuation while all the peers are based on the 1Q22 LTM figures.
• Not only that, of the eight valuation peers, only SKIET and Shenzhen Senior Tech are the only ones with sufficient business relevance to WCP.
• WCP’s intrinsic market cap is ₩2.35T with a price per share of ₩69,141, implying that the bankers’ indicative price band is rather at a 15.7-44.6% premium.

• Most changes expected at the MSCI August QIR are in China. This will be the last QIR using the current methodology. The Feb 2023 QIR will use the comprehensive methodology.
• There are a lot of changes expected to the FTSE All-World and All-Cap indices at the September SAIR and we list out potential inclusions and exclusions.
• Inflows to the KraneShares CSI China Internet ETF (KWEB US) continue as sentiment around China stocks, especially tech, improves.

• LRT Capital is a fundamental investment hedge fund. We invest only in companies with durable competitive advantages, i.e. “moats.”.
• June’s strong results were driven primarily by our hedges, with our portfolio companies declining much less than the market as a whole.
• What is likely to determine the directions of stocks over the short-term (the next 6 months), is the outlook for inflation and interest rates over the coming year.
• We will happily own many technology companies if their valuations become more attractive.

• The Palm Valley Capital Fund invests in small cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.
• Investors’ faith in central banks is currently being tested by the highest U.S. inflation in over 40 years.
• Two-thirds of the nonfinancial members in the Russell 2000 Index are either unprofitable or trade above 20x EV/EBIT.
• The median EBIT growth since 2019 for small caps in the sub 10x EV/EBIT bucket is an astonishing 194%.
• Small caps didn’t sell off enough to create compelling opportunities across the board and the market simply unwound its undeserved gains from 2021.

• Deewin Tianxia (2418 HK) is looking to raise up to US$147m in its Hong Kong IPO.
• Deewin Tianxia (DT) is a service provider in the commercial automobile service industry in China. 
• Listing sentiment hasn’t been the greatest as of late and the tepid cornerstone list doesn’t help. 

• ACCO has no exposure to the apparel overstocked inventory at retailers this year. ACCO manufactures supplies for schools and offices
• ACCO’s back to school sell-in season began before retailers were worried about consumer spending. Orders were received earlier than usual to compensate for longer supply chain issues
• There is the risk of retailers facing a decline in consumer spending due to inflationary pressures on consumer staples. This risk could cause retailers to become cautious to inventory stocking,

• Deewin Tianxia (2418 HK) is looking to raise up to US$147m in its Hong Kong IPO.
• Deewin Tianxia (DT) is a service provider in the commercial automobile service industry in China. 
• The firm continues to generate the bulk of its revenue from its controlling shareholder and the latter’s associates.