Industrials

• Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
• Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
• 57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

• ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
• June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different. 
• The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement. 

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.   
• The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
• A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.  

• On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
• Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
• The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD. 

• With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
• Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
• There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

• The worst is behind Beijing Capital International Airport. We believe it is on track to achieve breakeven on quarterly basis in 2H24.
• We see recent parking fee hikes at Daxing Airport as a signal that more will come, which is not in the price and can bring in extra option value.
• Boom-And-Bust in China property sector is behind the airport’s share price cycle. The airport is at the cusp of a steady recovery driving mean reversion of valuation .

• Revenue: JPY13.0bn (-3.8% YoY); Operating profit: JPY185mn (+564.7% YoY); Recurring profit: JPY181mn (+449.7% YoY); Net income: JPY65mn (+67.6% YoY).
• Revenue: JPY5.5bn (-8.0% YoY); Operating profit: JPY475mn (+22.4% YoY); Segment profit margin: 8.7% (+2.2pp YoY).
• Revenue: JPY2.3bn (+19.9% YoY); Operating profit: JPY232mn (JPY104mn loss in 1H FY10/23); Segment profit margin: 9.9%.

• Kirby Corporation (KEX) is undervalued and has a strong historical performance in the tugboat and tank barge industry
• Despite industry challenges including oversupply and Covid-19 impacts, KEX is expected to benefit from rising demand and falling supply
• With a recession-resilient track record and potential for earnings growth, KEX presents a compelling long-term investment opportunity

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.

• Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
• Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
• 57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

• ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
• June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different. 
• The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement. 

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.   
• The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
• A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.  

• On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
• Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
• The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD. 

• With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
• Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
• There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

• The worst is behind Beijing Capital International Airport. We believe it is on track to achieve breakeven on quarterly basis in 2H24.
• We see recent parking fee hikes at Daxing Airport as a signal that more will come, which is not in the price and can bring in extra option value.
• Boom-And-Bust in China property sector is behind the airport’s share price cycle. The airport is at the cusp of a steady recovery driving mean reversion of valuation .

• Revenue: JPY13.0bn (-3.8% YoY); Operating profit: JPY185mn (+564.7% YoY); Recurring profit: JPY181mn (+449.7% YoY); Net income: JPY65mn (+67.6% YoY).
• Revenue: JPY5.5bn (-8.0% YoY); Operating profit: JPY475mn (+22.4% YoY); Segment profit margin: 8.7% (+2.2pp YoY).
• Revenue: JPY2.3bn (+19.9% YoY); Operating profit: JPY232mn (JPY104mn loss in 1H FY10/23); Segment profit margin: 9.9%.

• Kirby Corporation (KEX) is undervalued and has a strong historical performance in the tugboat and tank barge industry
• Despite industry challenges including oversupply and Covid-19 impacts, KEX is expected to benefit from rising demand and falling supply
• With a recession-resilient track record and potential for earnings growth, KEX presents a compelling long-term investment opportunity

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.

• In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
• Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
• Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness. 

• GFL Environmental Inc., having begun the year with strong performance, has reported first quarter results that exceeded expectations, driven by robust execution and strategic growth initiatives.
• The company showcases a balanced approach between organic growth and strategic acquisitions, which could attract potential suitors, considering the company is exploring sales options.
• GFL Environmental’s Q1 revenue reached $1.8 billion, a 6.5% increase year-over-year, driven by better-than anticipated pricing and volume adjustments.

• In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
• Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
• Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness. 

• GFL Environmental Inc., having begun the year with strong performance, has reported first quarter results that exceeded expectations, driven by robust execution and strategic growth initiatives.
• The company showcases a balanced approach between organic growth and strategic acquisitions, which could attract potential suitors, considering the company is exploring sales options.
• GFL Environmental’s Q1 revenue reached $1.8 billion, a 6.5% increase year-over-year, driven by better-than anticipated pricing and volume adjustments.

• Patel Engineering (PEC IN) ‘s large order book, strategic sectors focus, and successful debt reduction through QIP and restructuring.
• Strong financial resilience, projected revenue growth, and robust order pipeline signal promising future prospects.
• Poised for growth strong order pipeline and increased government focus on Infrastructure, Hydro Power segment and Irrigation segment.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
• These block deals generally include selling promoters and big funds at a price discount to its current market price.
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Independent Director’s resignation highlights the lack of strong corporate governance practices within Suzlon. 
• Suzlon Energy’s response to the outgoing director’s concerns demonstrates a willingness to address issues and make necessary changes to enhance corporate governance.
• Though it does not raise concerns on any financial irregularities and legal violation but resolution of issues remains a key event to watch for.

• Minieye Technology (1426169D CH) is looking to raise US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are Citic Securities and CICC.
• Minieye Technology (Minieye) is an intelligent driving and cabin solutions provider in China, offering solutions for critical aspects of the driving experience, including piloting, parking and in-cabin functions.
• Providing Level 0-Level 2++ intelligent driving solutions that are full-stack in-house developed and proven by mass production, the firm has also been developing advanced Level 4 autonomous driving technologies.

• AL provides airlines with flexibility in fleet planning and finance
• Recent challenges such as the Boeing 737 Max grounding and global pandemic have impacted AL’s financial performance
• AL is well-positioned for future growth and improvement in returns due to strong management, diverse aircraft portfolio, positive industry trends, lower interest rates, and self-help initiatives.

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.

• Patel Engineering (PEC IN) ‘s large order book, strategic sectors focus, and successful debt reduction through QIP and restructuring.
• Strong financial resilience, projected revenue growth, and robust order pipeline signal promising future prospects.
• Poised for growth strong order pipeline and increased government focus on Infrastructure, Hydro Power segment and Irrigation segment.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
• These block deals generally include selling promoters and big funds at a price discount to its current market price.
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Independent Director’s resignation highlights the lack of strong corporate governance practices within Suzlon. 
• Suzlon Energy’s response to the outgoing director’s concerns demonstrates a willingness to address issues and make necessary changes to enhance corporate governance.
• Though it does not raise concerns on any financial irregularities and legal violation but resolution of issues remains a key event to watch for.

• Minieye Technology (1426169D CH) is looking to raise US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are Citic Securities and CICC.
• Minieye Technology (Minieye) is an intelligent driving and cabin solutions provider in China, offering solutions for critical aspects of the driving experience, including piloting, parking and in-cabin functions.
• Providing Level 0-Level 2++ intelligent driving solutions that are full-stack in-house developed and proven by mass production, the firm has also been developing advanced Level 4 autonomous driving technologies.

• AL provides airlines with flexibility in fleet planning and finance
• Recent challenges such as the Boeing 737 Max grounding and global pandemic have impacted AL’s financial performance
• AL is well-positioned for future growth and improvement in returns due to strong management, diverse aircraft portfolio, positive industry trends, lower interest rates, and self-help initiatives.

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.

• The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
• While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
• In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.

• In this insight we cover recent earnings results, revenue mix, YTD trends
• Fluctuating performance of its international segment impacted FY23 and Q124
• Improving international segment could boost overall momentum in Q2-Q4 2024

• Japanese semiconductor equipment stocks have started to drop back, but device maker Rohm is already down 25% year-to-date and down 43% from its 52-week high. 
• Rohm’s operating profit fell 53% last fiscal year and management is guiding for a 68% decline in in FY Mar-25. Investment in power devices remains strong despite weak sales.
• 1H guidance is for an 80% year-on-year decline in operating profit on a 6% decline in sales. Buy into this weakness. Recovery should start in 2H.

• There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
• Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
• After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

• The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
• While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
• In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.

• In this insight we cover recent earnings results, revenue mix, YTD trends
• Fluctuating performance of its international segment impacted FY23 and Q124
• Improving international segment could boost overall momentum in Q2-Q4 2024

• Japanese semiconductor equipment stocks have started to drop back, but device maker Rohm is already down 25% year-to-date and down 43% from its 52-week high. 
• Rohm’s operating profit fell 53% last fiscal year and management is guiding for a 68% decline in in FY Mar-25. Investment in power devices remains strong despite weak sales.
• 1H guidance is for an 80% year-on-year decline in operating profit on a 6% decline in sales. Buy into this weakness. Recovery should start in 2H.

• There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
• Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
• After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

• Regardless of the divorce proceedings, SK still urgently needs SK Inc’s stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
• SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
• SK Inc’s involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.

• Generac Holdings delivered a mixed performance for the first quarter of 2024.
• Strength in the Home Standby Generator segment and operational improvements played favorable roles, while declines in the global portable generators and domestic energy storage markets were notable drags on revenue.
• Generac’s consistent effort in expanding its dealer and installer networks, alongside investments in both traditional and emerging product lines, solidifies its market leadership and positions it well for long-term growth.

• Regardless of the divorce proceedings, SK still urgently needs SK Inc’s stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
• SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
• SK Inc’s involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.

• Generac Holdings delivered a mixed performance for the first quarter of 2024.
• Strength in the Home Standby Generator segment and operational improvements played favorable roles, while declines in the global portable generators and domestic energy storage markets were notable drags on revenue.
• Generac’s consistent effort in expanding its dealer and installer networks, alongside investments in both traditional and emerging product lines, solidifies its market leadership and positions it well for long-term growth.