Industrials

• INOX India Limited (INOX IN) or IIL is into design, engineering and manufacturing of cryogenic tanks and equipment. These are used in industrial gases, LNG, green hydrogen, metallurgy industries, etc
• The company came up with its IPO in December 2023 and has posted a decent growth in the last few years.
• One should however remain cautious about WC trend, receivables provisioning, RPT with promoters, etc.

• Forward Air, a prominent player in the freight forwarding industry, finds itself at a critical juncture, facing increasing pressure from activist investors to explore strategic alternatives, including a potential sale.
• The company has been navigating turbulent waters following its controversial $3.2 billion acquisition of Omni Logistics, which has drawn criticism from shareholders and led to significant financial strain.
• With key investors like Ancora Holdings, which owns a 4% stake, pushing for a strategic review, Forward Air’s future seems uncertain.

• Intuitive Machines has recently become one of the hottest stocks on Reddit, driven by its impressive earnings report and ambitious plans in the space industry.
• The company, known for its pioneering work in space commercialization, has seen a surge in interest as it continues to make significant strides in lunar exploration and data transmission services.
• With a strong balance sheet, no debt, and a growing backlog of contracts, Intuitive Machines presents a compelling investment case.

• Old Dominion Freight Line reported resilient financial performance in the second quarter of 2024, marked by consistent revenue growth and operational enhancements despite a stagnant domestic economy.
• The quarter’s results exemplify the company’s ability to navigate economic headwinds while focusing on long-term strategic goals, which have been anchored by a steadfast commitment to superior service quality and prudent management practices.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• INOX India Limited (INOX IN) or IIL is into design, engineering and manufacturing of cryogenic tanks and equipment. These are used in industrial gases, LNG, green hydrogen, metallurgy industries, etc
• The company came up with its IPO in December 2023 and has posted a decent growth in the last few years.
• One should however remain cautious about WC trend, receivables provisioning, RPT with promoters, etc.

• Forward Air, a prominent player in the freight forwarding industry, finds itself at a critical juncture, facing increasing pressure from activist investors to explore strategic alternatives, including a potential sale.
• The company has been navigating turbulent waters following its controversial $3.2 billion acquisition of Omni Logistics, which has drawn criticism from shareholders and led to significant financial strain.
• With key investors like Ancora Holdings, which owns a 4% stake, pushing for a strategic review, Forward Air’s future seems uncertain.

• Intuitive Machines has recently become one of the hottest stocks on Reddit, driven by its impressive earnings report and ambitious plans in the space industry.
• The company, known for its pioneering work in space commercialization, has seen a surge in interest as it continues to make significant strides in lunar exploration and data transmission services.
• With a strong balance sheet, no debt, and a growing backlog of contracts, Intuitive Machines presents a compelling investment case.

• Old Dominion Freight Line reported resilient financial performance in the second quarter of 2024, marked by consistent revenue growth and operational enhancements despite a stagnant domestic economy.
• The quarter’s results exemplify the company’s ability to navigate economic headwinds while focusing on long-term strategic goals, which have been anchored by a steadfast commitment to superior service quality and prudent management practices.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.
• Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.
• This trade isn’t risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.

• SITC International (1308 HK)‘s management guided for a promising outlook for 2H24, with strong load performance in Jul-Aug, and better long-term contract rates YoY.  
• Gross margin expanded 4.5pp in 1H24 despite a 5.3% drop in average freight rate, thanks to good cost control with lower chartered-in costs and more self-owned vessels.
• Net cash increased 195% from end-FY23, and we are confident that its 70% payout ratio can be maintained. Its P/B is still below the 5-year average.

• Another set of strong results from YMM, revenue and core earnings both up
• Need to monitor orders per MAU; reason for decline in Q224 unclear
• Maintain US$9.45/ADS target price, ADSs are attractive closer to US$7

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Nexans’ ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

• KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.
• Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.
• This trade isn’t risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.

• SITC International (1308 HK)‘s management guided for a promising outlook for 2H24, with strong load performance in Jul-Aug, and better long-term contract rates YoY.  
• Gross margin expanded 4.5pp in 1H24 despite a 5.3% drop in average freight rate, thanks to good cost control with lower chartered-in costs and more self-owned vessels.
• Net cash increased 195% from end-FY23, and we are confident that its 70% payout ratio can be maintained. Its P/B is still below the 5-year average.

• Another set of strong results from YMM, revenue and core earnings both up
• Need to monitor orders per MAU; reason for decline in Q224 unclear
• Maintain US$9.45/ADS target price, ADSs are attractive closer to US$7

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Nexans’ ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

• The Logisteed/KKR entity received its approvals between the last week of July and this past week, and told Alps Logistics (9055 JP) it wanted to launch its tender 22 August.
• It will do so. Approvals were reasonably quick (as expected) and the Special Committee and Board decided nothing material had changed. No reason to change their opinion.
• This is still a HUGE price. And everyone will be out by mid-October if they want. This is an easy deal. And a GIGANTIC win for minorities.

• Ecom Express Limited (1062300D IN) is looking to raise about US$310m in its upcoming India IPO. The deal will be run by Axis, IIFL Securities, Kotak and UBS.
• Ecom Express operates a pan-India express logistics network covering first-mile pick-up, mid-mile transportation and last-mile delivery as well as reverse logistics (returns) and fulfilment services (warehousing).
• According to Redseer, the company had the widest pan-India coverage and in Tier 2+ regions compared to its peers, covering over 27,000 PIN codes, as of March 31, 2024.

• Headline numbers for ZTO in Q224 were +10% Revenue, +12% EBITDA
• But gross margin in core express segment fell, as did Operating Cash Flow
• ZTO left guidance unchanged for FY24; we recommend investors AVOID it

• Chinese airports are enjoying a steady passenger traffic growth of 5% YTD; Shenzhen and Shanghai airports are growing much faster.  
• Shanghai International Airport (600009 CH)is our top pick given its size, liquidity, strong balance sheet, and its strong earnings growth potential.  
• Our target price for Shanghai International Airport (600009 CH) is CNY44, pegged to global airport peer average FY25 EV/EBITDA of 12x.   

The Q125 results shine a light on the latest initiatives to underpin the inherent value within Singapore Post, which include a review of the Australian operations and ongoing discussions with the Singapore government on postal services. SingPost’s transformation from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. Our forecasts and valuation are unchanged and we believe there is now c 60% upside in the share price.

• SharkNinja reported its second quarter 2024 earnings with a remarkably robust performance, significantly accelerating its financial growth and expanding its market presence.
• The company achieved a 38% increase in adjusted net sales and a substantial 48% rise in adjusted EBITDA, indicating strong organic growth.
• Adjusted earnings per share also soared by 51%, reflecting a successful operational strategy focused on innovation and market expansion.

• Parker-Hannifin Corporation delivered a robust performance in fiscal 2024, continually strengthening through strategic portfolio transformation and a particularly standout year for the Aerospace Systems segment.
• Although the company saw low single-digit sales growth overall, it succeeded in expanding margins significantly by 200 basis points in its Aerospace sector.
• This was highlighted by an 18% increase in earnings per share, a notable achievement following a 15% earnings growth in the previous fiscal year, and generating a record free cash flow of $3 billion.

• The Logisteed/KKR entity received its approvals between the last week of July and this past week, and told Alps Logistics (9055 JP) it wanted to launch its tender 22 August.
• It will do so. Approvals were reasonably quick (as expected) and the Special Committee and Board decided nothing material had changed. No reason to change their opinion.
• This is still a HUGE price. And everyone will be out by mid-October if they want. This is an easy deal. And a GIGANTIC win for minorities.

• Ecom Express Limited (1062300D IN) is looking to raise about US$310m in its upcoming India IPO. The deal will be run by Axis, IIFL Securities, Kotak and UBS.
• Ecom Express operates a pan-India express logistics network covering first-mile pick-up, mid-mile transportation and last-mile delivery as well as reverse logistics (returns) and fulfilment services (warehousing).
• According to Redseer, the company had the widest pan-India coverage and in Tier 2+ regions compared to its peers, covering over 27,000 PIN codes, as of March 31, 2024.

• Headline numbers for ZTO in Q224 were +10% Revenue, +12% EBITDA
• But gross margin in core express segment fell, as did Operating Cash Flow
• ZTO left guidance unchanged for FY24; we recommend investors AVOID it

• Chinese airports are enjoying a steady passenger traffic growth of 5% YTD; Shenzhen and Shanghai airports are growing much faster.  
• Shanghai International Airport (600009 CH)is our top pick given its size, liquidity, strong balance sheet, and its strong earnings growth potential.  
• Our target price for Shanghai International Airport (600009 CH) is CNY44, pegged to global airport peer average FY25 EV/EBITDA of 12x.   

The Q125 results shine a light on the latest initiatives to underpin the inherent value within Singapore Post, which include a review of the Australian operations and ongoing discussions with the Singapore government on postal services. SingPost’s transformation from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. Our forecasts and valuation are unchanged and we believe there is now c 60% upside in the share price.

• SharkNinja reported its second quarter 2024 earnings with a remarkably robust performance, significantly accelerating its financial growth and expanding its market presence.
• The company achieved a 38% increase in adjusted net sales and a substantial 48% rise in adjusted EBITDA, indicating strong organic growth.
• Adjusted earnings per share also soared by 51%, reflecting a successful operational strategy focused on innovation and market expansion.

• Parker-Hannifin Corporation delivered a robust performance in fiscal 2024, continually strengthening through strategic portfolio transformation and a particularly standout year for the Aerospace Systems segment.
• Although the company saw low single-digit sales growth overall, it succeeded in expanding margins significantly by 200 basis points in its Aerospace sector.
• This was highlighted by an 18% increase in earnings per share, a notable achievement following a 15% earnings growth in the previous fiscal year, and generating a record free cash flow of $3 billion.

• The APM Human Services (APM AU) IE considers Madison Dearborn Partners (MDP)’s A$1.45 offer fair and reasonable as it is within the A$1.40 to A$1.74 valuation range. 
• The offer is conditional on FIRB, US HSR and shareholder approval. FIRB approval should be forthcoming as MDP is the second-largest shareholder.
• While the offer remains underwhelming, rollover shareholders and quiet retail boards should ensure the vote passes. At last close and for the 10 October payment, the gross/annualised spread is 1.4%/10.1%.

• Back on the 31st May, employment and disability services play APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, entered a Scheme at A$1.45/share, in cash.
• That’s a 74.7% premium to undisturbed. A scrip option was afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option, if the Scheme is implemented. 
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th September. Expected implementation on the 10 October. The IE says fair & reasonable.

• CJ Darcl Logistics Limited (1506129D IN) is looking to raise around US$100m in its upcoming India IPO.
• CJ Darcl Logistics (CJDL) is a diversified logistics company in India, with market leadership in full truck load (FTL) vertical in terms of revenue for FY23, according to CRISIL.
• In this note, we talk about the company’s historical performance.

• J.B. Hunt Transport Services recently reported the second quarter result of 2024, outlining both achievements and challenges faced during the period.
• As the fifth leader in the company’s 62-year history, the new CEO reaffirmed a commitment to long-term growth strategies, focusing on enhancing the foundational pillars of people, technology, and capacity.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• J&T Global Express this week reported a strong Y/Y improvement in EBITDA
• The most dramatic improvement came at the company’s China operation
• But the drivers of this improvement appear odd, even contradictory; AVOID

• The APM Human Services (APM AU) IE considers Madison Dearborn Partners (MDP)’s A$1.45 offer fair and reasonable as it is within the A$1.40 to A$1.74 valuation range. 
• The offer is conditional on FIRB, US HSR and shareholder approval. FIRB approval should be forthcoming as MDP is the second-largest shareholder.
• While the offer remains underwhelming, rollover shareholders and quiet retail boards should ensure the vote passes. At last close and for the 10 October payment, the gross/annualised spread is 1.4%/10.1%.

• Back on the 31st May, employment and disability services play APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, entered a Scheme at A$1.45/share, in cash.
• That’s a 74.7% premium to undisturbed. A scrip option was afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option, if the Scheme is implemented. 
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th September. Expected implementation on the 10 October. The IE says fair & reasonable.

• CJ Darcl Logistics Limited (1506129D IN) is looking to raise around US$100m in its upcoming India IPO.
• CJ Darcl Logistics (CJDL) is a diversified logistics company in India, with market leadership in full truck load (FTL) vertical in terms of revenue for FY23, according to CRISIL.
• In this note, we talk about the company’s historical performance.

• J.B. Hunt Transport Services recently reported the second quarter result of 2024, outlining both achievements and challenges faced during the period.
• As the fifth leader in the company’s 62-year history, the new CEO reaffirmed a commitment to long-term growth strategies, focusing on enhancing the foundational pillars of people, technology, and capacity.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• J&T Global Express this week reported a strong Y/Y improvement in EBITDA
• The most dramatic improvement came at the company’s China operation
• But the drivers of this improvement appear odd, even contradictory; AVOID

• Even after the 28% surge in share price since the 1H24 result, JD Logistics (2618 HK) still deserves a look as fundamentals have improved, especially with better cost control.
• JDL is riding on scale economies with higher asset utilisation. Quarterly margins have sustained an uptrend, reaching the highest levels since 1Q21 and it will continue.
• We like its lower reliance on JD.com (9618 HK) and net cash of HK$2.83/share (28% of the share price). There is a massive upside in consensus forecasts too.

• Rockwell Automation’s latest quarterly earnings underscore both strengths and challenges within its business environment, indicating a mixed financial landscape that investors need to consider.
• On the positive side, Rockwell Automation has shown adeptness in managing costs amidst lower order volumes, which has helped sustain margin performance.
• The company has continued to push forward with its cost-cutting initiatives, anticipating $100 million in savings in the latter half of this fiscal year, alongside projections for an additional $120 million in savings next year.

• Q1-2FY12/24 results were a positive surprise in our view.
• Quarterly Q2 FY12/24 OPM of 4% returned to positive territory after four consecutive quarters of losses, driven by a combination of price hikes, revision to the product line-up to improve sales mix, restructuring measures, and sales volume expansion with a marked jump in China demand for electronic discharge machines.
• We believe Sodick has begun to transform to become more resilient and operationally efficient. 

• Even after the 28% surge in share price since the 1H24 result, JD Logistics (2618 HK) still deserves a look as fundamentals have improved, especially with better cost control.
• JDL is riding on scale economies with higher asset utilisation. Quarterly margins have sustained an uptrend, reaching the highest levels since 1Q21 and it will continue.
• We like its lower reliance on JD.com (9618 HK) and net cash of HK$2.83/share (28% of the share price). There is a massive upside in consensus forecasts too.

• Rockwell Automation’s latest quarterly earnings underscore both strengths and challenges within its business environment, indicating a mixed financial landscape that investors need to consider.
• On the positive side, Rockwell Automation has shown adeptness in managing costs amidst lower order volumes, which has helped sustain margin performance.
• The company has continued to push forward with its cost-cutting initiatives, anticipating $100 million in savings in the latter half of this fiscal year, alongside projections for an additional $120 million in savings next year.

• Q1-2FY12/24 results were a positive surprise in our view.
• Quarterly Q2 FY12/24 OPM of 4% returned to positive territory after four consecutive quarters of losses, driven by a combination of price hikes, revision to the product line-up to improve sales mix, restructuring measures, and sales volume expansion with a marked jump in China demand for electronic discharge machines.
• We believe Sodick has begun to transform to become more resilient and operationally efficient.