Category

Industrials

Jan 12
0

Industrials: China Infrastructure & Logistics Group , SM Investments, Hyundai Engineering Co Ltd, Bangkok Expressway and Metro, Mitsubishi UFJ Financial (MUFG), MonotaRO Co Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • China Infrastructure & Logistics Group (1719 HK): Potential Unconditional MGO
  • FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March
  • Hyundai Engineering IPO Initiation: Building on Good Foundations
  • BEM: Expect 4Q21 Earnings to Recover Strongly and Onward to 2022
  • 8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a…
  • MonotaRO (3064): December Sales Announced.

China Infrastructure & Logistics Group (1719 HK): Potential Unconditional MGO

By David Blennerhassett

  • After shares were halted midday on the 30 December pursuant to the Takeovers Code, China Infrastructure & Logistics Group (1719 HK) (“CILG”) has announced a possible MGO from Hubei Ports.
  • Hubei Ports has entered into a SPA with co-chairman Yan Zhi to acquire his 74.81% stake in CILG. Upon completion, this will trigger an unconditional MGO. The price is HK$1.15/share.
  • A key condition to the SPA is approval from SASAC of Wuhan, which is turn controls 82.8571% of Hubei Ports. This transaction is done.

FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March

By Brian Freitas

Hyundai Engineering IPO Initiation: Building on Good Foundations

By Arun George

  • Hyundai Engineering Co Ltd (HEC KS)/HEC is a leading global EPC (Engineering, Procurement and Construction) contractor. It is seeking to raise up to $1 billion.  
  • HEC is offering 16.0 million shares with a primary/secondary split of 25/75 at an indicative price range of KRW57,900-66,800 per share.
  • HEG has attractive fundamentals with a strong backlog, healthy book-to-bill, improving 3Q21 revenue growth and improving margins. 

BEM: Expect 4Q21 Earnings to Recover Strongly and Onward to 2022

By Research Group at Country Group Securities

  • We maintain BEM with a BUY rating and a target price of Bt10.30 derived from SOTP methodology, which is equivalent to 51.5xPE’22E.
  • We expect the company to report net profit of Bt290m in 4Q21. (+168%QoQ -49%YoY), the highest level in the past three quarters.
  • YoY contraction will be mainly due to impact from 3rd wave of COVID-19 widespread, which trimmed down average daily toll traffic to 984k trips/day(-13%YoY +47%QoQ) and MRT ridership to 175k 

8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a…

By BondEvalue

US equity markets mixed with the S&P down 0.1% and the Nasdaq flat. Healthcare led the gainers, up 1% while Industrials led the losers, down 1.2%. US 10Y Treasury yields were down 1bp to 1.76%. European markets were lower with the DAX, CAC and FTSE down 1.1%, 1.4% and 0.5% respectively. Brazil’s Bovespa was down 0.8%. In the Middle East, UAE’s ADX was down 1% while Saudi TASI was up 0.9%. Asian markets have opened mixed – Shanghai and Nikkei were down 0.1% and 0.9% while HSI and STI were up 0.1% and 0.3%. US IG CDS spreads were 0.1bp tighter and HY CDS spreads widened 4.6bp. EU Main CDS spreads were 0.6bp wider and Crossover CDS spreads were 1.3bp wider. Asia ex-Japan CDS spreads widened 1.1bp.

MonotaRO (3064): December Sales Announced.

By Mita Securities

  • Parent company sales in December were 16.678bn yen (+20.5% YoY), above the company’s target

  • The number of new customer acquisitions was 106.5 thousand accounts(-3.8% YoY), below the company’s target.

  • Jan-Dec cumulative parent sales were 182.467bn yen (+20.2% YoY), 97.7% vs. the full-year guidance of 186.759bn yen (+23.0% YoY)

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Jan 10
0

Industrials: Horiba Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Horiba (6856 JP): New Growth Opportunity in Hydrogen Energy

Horiba (6856 JP): New Growth Opportunity in Hydrogen Energy

By Scott Foster

  • Measurement and analysis to qualify hydrogen fuel cells, vehicle engines and fueling stations, electrolysis and other hydrogen production processes should be a new growth driver for Horiba.
  • Semiconductor equipment demand losing momentum, but should hold up in 2022. Weak demand for auto emission measurement systems is a key risk.
  • Reasonably valued at 15x EPS guidance for FY Dec-21 and 1.45x book value, with a dividend yield of 2.0%.

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Jan 09
0

Industrials: Mitsubishi Heavy Industries, Mitsui O.S.K. Lines and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MHI (7011 JP): Opportunity or Value Trap?
  • Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea

MHI (7011 JP): Opportunity or Value Trap?

By Scott Foster

  • MHI is selling at 9.9x EPS guidance and 0.7x book value, with a dividend yield of 3.0%. We see potential upside of at least 25% beyond the New Years bounce.
  • The shares have underperformed for several years due to serious managerial errors. But the mess is being cleaned up and new growth opportunities have emerged.
  • Risks include limited margins in the energy and aerospace & defense sectors and the possibility of renewed investment in the failed regional jet aircraft project.

Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea

By Brian Freitas

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Jan 08
0

Industrials: Jinchuan Group International Resources, Toshiba Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Jinchuan International (2362 HK): Thoughts On A Rumoured Offer
  • Toshiba – The 3D Dilemma

Jinchuan International (2362 HK): Thoughts On A Rumoured Offer

By David Blennerhassett

  • Shares have declined ~9% since copper/cobalt miner Jinchuan Group International Resources (2362 HK) said it was unaware Jinchuan Group, its largest shareholder, was proposing a privatisation plan.
  • As the world moves towards alternative energy sources, copper will remain in high demand. Jinchuan is also China’s third-largest cobalt refiner, whose output is used in lithium-ion batteries.
  • Jinchuan is not expensive. And taking the company private is not a significant outlay for Jinchuan Group. Especially ahead of the copper/cobalt Musonoi project coming online next year.

Toshiba – The 3D Dilemma

By Mio Kato

  • After a brief respite in their never-ending drama over the holiday period Toshiba is again in the news as 3D reiterates their demands for a “review of all options”. 
  • We have lost count of the number of reviews which haven’t resulted in a PE sale.
  • The question is exactly why 3D appears to be so aggressive even relative to other less than bashful activists.

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Jan 07
0

Industrials: Precious Shipping, Asia High Yield Bond Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • PSL: Healthy Freight Rate Is Expected to Be Remained in 2022 and 2023
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

PSL: Healthy Freight Rate Is Expected to Be Remained in 2022 and 2023

By Research Group at Country Group Securities

  • We anticipate TCE rate for small-medium ships (Handysize and Supramax) to stay at high profitable level throughout 2022-23E supported by an absence of fleet supply glut issue given
  • We expect China’s imports of iron ore and agriculture products to remain muted at least until 1H22,which is likely to pressured TCE rate for dry bulk carriers to come down
  • We expect PSL to report 4Q21 net profit at Bt1,431m (-5%QoQ, +5120%YoY), a slight drop from all-time high level in 3Q21.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets ended sharply lower, with the S&P and Nasdaq down 1.9% and 3.3% respectively. All sectors were in the red with Real Estate, IT and Communication Services down ~3% each. US 10Y Treasury yields continued to rise, by 7bp to 1.71%. The sharp moves in US equities and Treasuries come after the December’s FOMC minutes showed that the Fed may need to raise interest rates “sooner or at a faster pace” than officials had initially anticipated.   European markets were higher with the DAX, CAC and FTSE up 0.7%, 0.8% and 0.2% respectively. Brazil’s Bovespa was down 2.4%. In the Middle East, UAE’s ADX was flat while Saudi TASI was up 0.9%. Asian markets have opened broadly lower today – Shanghai, HSI and Nikkei were down 0.2%, 0.4% and 2.2% respectively while STI was up 0.6%. US IG CDS spreads widened 2.2bp and HY CDS spreads widened 10bp. EU Main CDS spreads were 0.7bp wider and Crossover CDS spreads were 3.2bp wider. Asia ex-Japan CDS spreads widened 0.4bp.

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Jan 06
0

Industrials: Katakura Industries, Shenzhen International, Asia High Yield Bond Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later
  • Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued
  • Reliance, AAHK, Kexim Launch $ Bonds; Macro; Rating Changes; New Issues; Talking Heads; Top Gaine…

Katakura Tender Offer Bump Now Looks Off. It Is Take-The-Loss or Hold-On-For-Later

By Travis Lundy

  • The Katakura Industries (3001 JP) MBO was launched in early November at a price which was too light but activist/long-time holder Oasis agreed to sell (with an up-and-out exception).  
  • Another would-be activist bought Oasis’ shares at a premium to the Tender, encouraging hopes of a bump in the Tender Offer Price. 
  • Yesterday, the bidder dashed those hopes, and today the shares fell, but not to the TOB Price. This has longer-term designs.

Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued

By Osbert Tang, CFA

  • By deconsolidating Shenzhen Expressway (548 HK) (SZX) from Shenzhen International (152 HK) (SZI), SZI’s net book value reached HK$16.4bn. Its current market cap of HK$18.9bn implies SZX is almost free. 
  • SZI’s high gearing is primarily due to SZX. Excluding SZX, SZI’s gearing is just 32.3%. As Shenzhen’s flagship SOE, there is consistent monitoring and huge support from the local government.   
  • SZI’s 0.47x P/B is more than 2SD below historical average; but it has proven capability to realise value of underlying assets. Excluding SZX, SZI is on even cheaper 0.32x P/B. 

Reliance, AAHK, Kexim Launch $ Bonds; Macro; Rating Changes; New Issues; Talking Heads; Top Gaine…

By BondEvalue

US equity markets ended broadly lower, with the S&P and Nasdaq down 0.1% and 1.3% respectively. Energy led the gainers, up 3.5% while Healthcare and IT fell 1.4% and 1.1%. US 10Y Treasury yields continued to rise, by 4bp to 1.65%. Almost $1.2bn was pulled out of the TLT ETF (iShares 20+ Year Treasury Bond ETF) on Monday, the third-biggest outflow since its launch in 2002. European markets were higher with the DAX, CAC and FTSE up 0.8%, 1.4% and 1.6% respectively. Brazil’s Bovespa was down 0.4%. In the Middle East, UAE’s ADX was down 0.7% while Saudi TASI was up 0.3%. Asian markets have opened lower today – Shanghai, HSI and STI were down 0.2-0.4% while Nikkei was flat. US IG CDS spreads were flat and HY CDS spreads widened 1.3bp. EU Main CDS spreads were 0.2bp tighter and Crossover CDS spreads were 1.9bp tighter. Asia ex-Japan CDS spreads tightened 1.8bp.

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Jan 05
0

Industrials: JL Mag Rare-Earth Co Ltd, Hyundai Engineering Co Ltd, Credit Agricole Sa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • JL Mag Rare-Earth A/​H Listing – High-End a No Go, Post Correction
  • Hyundai Engineering IPO Valuation Analysis
  • Nomura, Credit Agricole, NAB Launch $ Bonds; Macro; Rating Changes; New Bond Issues; Top Gainers …

JL Mag Rare-Earth A/​H Listing – High-End a No Go, Post Correction

By Sumeet Singh

  • JL Mag Rare-earth Co. Ltd (JLM) aims to raise up to US$650m via its H-shares listing. 
  • JLM is a producer of high-performance REPMs. It ranked first in the world by high-performance REPM production volume in 2020 with a market share of approximately 14.5%.
  • In this note, we look at the pricing and other deal dynamics.

Hyundai Engineering IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Hyundai Engineering Co Ltd is EV of 3.3 trillion won, implied market cap of 5.4 trillion won, and target price of 67,475 won per share. 
  • This is within the IPO price range of 57,900 won and 75,700 won per share. Given the lack of upside, we have a Negative view of this IPO.
  • Our base case valuation is based on 6.3x EV/EBITDA valuation multiple using 2022 estimated EBITDA of 526 billion won.

Nomura, Credit Agricole, NAB Launch $ Bonds; Macro; Rating Changes; New Bond Issues; Top Gainers …

By BondEvalue

US equity markets ended higher, with the S&P and Nasdaq up 0.6% and 1.2% respectively. Energy and Consumer Discretionary led the gainers, up 3.1% and 2.8% while Materials led the losers, down 1.4%. US 10Y Treasury yields soared 11bp to 1.62%. European markets were mostly higher with the DAX and CAC up 0.9% each while FTSE was down 0.3%. Brazil’s Bovespa was down 0.9%. In the Middle East, UAE’s ADX was down 0.3% while Saudi TASI was flat. Asian markets have opened mixed – Shanghai and HSI were down 0.6% and 0.3% while HSI and Nikkei were up 1.1% and 1.4% respectively. US IG CDS spreads were flat and HY CDS spreads widened 0.1bp. EU Main CDS spreads were flat and Crossover CDS spreads were 0.2bp wider. Asia ex-Japan CDS spreads tightened 2.7bp.

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Jan 04
0

Industrials: JL Mag Rare-Earth Co Ltd, Asia High Yield Bond Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • JL Mag Rare-Earth H-Share Listing: Valuation Insights
  • Macro; New Bond Issues; Rating Changes; Talking Heads; Top Gainers and Losers

JL Mag Rare-Earth H-Share Listing: Valuation Insights

By Arun George

  • JL Mag Rare-Earth Co Ltd (300748 CH) is a leading producer of high-performance rare earth permanent magnets. It has launched an H-Share listing to raise $570 million at the mid-point. 
  • In JL Mag Rare-Earth Secondary Listing: Magnetic Moments, we stated that it has attractive fundamentals and the secondary listing is worth a closer look. 
  • Our valuation analysis suggests that the H-Share price range is fair. Pricing is expected on 17 January with an H-Share listing on 14 January.

Macro; New Bond Issues; Rating Changes; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets ended lower on Friday, with the S&P and Nasdaq down 0.3% and 0.6% respectively. The indices ended 27% and 21% higher during the whole year 2021. US 10Y Treasury yields were flat at 1.51%. European markets were mixed with the DAX up 0.2% while CAC and FTSE were down 0.3% each. Brazil’s Bovespa was up 0.7%. In the Middle East, UAE’s ADX was up 0.5% and Saudi TASI ended 0.4% higher on Sunday. Asian markets have opened mixed – Shanghai and STI were up 0.6% and 0.3% while HSI and Nikkei were down 0.3% and 0.4% respectively. US IG CDS spreads tightened 0.2bp and HY CDS spreads tightened 1.7bp. EU Main CDS spreads were flat and Crossover CDS spreads were 0.2bp wider. Asia ex-Japan CDS spreads tightened 0.2bp.

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Jan 03
0

Industrials: Mitsui O.S.K. Lines and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review

MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review

By Brian Freitas

  • The review period runs from 18-31 January for the February QIR, the results will be announced on 10 February (Asia-time) with the changes implemented after the close on 28 February.
  • There are quite a few potential changes in China and Korea, with a couple in Japan and one in Indonesia. There are a few stocks close to the inclusion/exclusion thresholds.
  • Other big changes include a potential increase in the Foreign Inclusion Factor for SK Square (402340 KS) and an increase in the Index Inclusion Factor for Sea Ltd (SE US). 

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Apr 12
0

Brief Industrials: Company Visits: Berli Jucker, M Visions and more

By | Industrials

In this briefing:

  1. Company Visits: Berli Jucker, M Visions
  2. StubWorld: Wharf Under Pressure As Cooling Measures Bite
  3. Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent

1. Company Visits: Berli Jucker, M Visions

Bnk

We visited one big-cap stock, Berli Jucker, and one pip-squeak recent IPO M Vision today. A couple of highlights:

  • Slow revenue growth at BJC at under 5% largely driven by Big C (hypermarket), but earnings growth was strong at 28% mainly due to lower cost of palm oil in the snack business.
  • Good progress in Vietnam with expansion of the bottle capacity this year and SABECO increasing purchases of bottles.
  • Overall unimpressed. The company isn’t expecting to grow revenues more than 9% this year, and many of the cost cuts we saw in 2018 are clearly one-offs. Higher oil prices are likely to lead to rising palm oil prices this year too, since the two commodities are linked through substitution effect.
  • MVP underwent a bad year on the profit level, but their various businesses, at least on the top line level, looks like it could recover quickly this year.

2. StubWorld: Wharf Under Pressure As Cooling Measures Bite

Fy18

This week in StubWorld …

Preceding my comments on Wheelock and other stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.

These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent – of at least 20%.

3. Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent

Dividend

Dongzheng Automotive Finance (2718 HK) is raising up to US$428m in its upcoming IPO. We have covered the background of the company in Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth. 

In this insight, we will look into the company’s valuation, compare it to listed auto peers, and run the deal through our framework.

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