Industrials

• We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young. 
• Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending. 
• It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.

• APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
• FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
• The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.  

• We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young. 
• Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending. 
• It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.

• APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
• FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
• The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.  

• The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
• Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
• The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

• APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, holding ~30%, have entered a Scheme at A$1.45/share, in cash.
• That’s a 74.7% premium to undisturbed; and a $0.05/share increase over Madison Dearborn’s April 8th A$1.40/share NBIO, a price the Independent Board Committee (IBC) previously considered disappointing.
• A scrip option is afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option if the Scheme is implemented. The IBC is supportive. 

• Cosco Shipping Energy Transp. Co. Ltd. (H) (1138 HK)‘s 1.25x 12-month forward P/B is more than 2SD above historical average. Though earnings have improved, this still appears rich.
• The market expects this upcycle will sustain for at least 5 years, but as a cyclical stock, CSET has never had such a long cycle in the last 10 years. 
• While VLCC rate has gained 36% YTD, the average for FY24 is just in line with 2H22 and 1H23. However, earnings projections are 57% higher than that time.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone

• Array Technologies stock fell from $45 to below $13 based on Mason’s recommendation in December 2020
• Mason advised exiting the position at $17 in August 2021 after improvements seen
• Stock currently trading at $14 a share with potential for 50-60% upside to fair value as second largest global solar tracking company

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 June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
• Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
• The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

• APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, holding ~30%, have entered a Scheme at A$1.45/share, in cash.
• That’s a 74.7% premium to undisturbed; and a $0.05/share increase over Madison Dearborn’s April 8th A$1.40/share NBIO, a price the Independent Board Committee (IBC) previously considered disappointing.
• A scrip option is afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option if the Scheme is implemented. The IBC is supportive. 

• Cosco Shipping Energy Transp. Co. Ltd. (H) (1138 HK)‘s 1.25x 12-month forward P/B is more than 2SD above historical average. Though earnings have improved, this still appears rich.
• The market expects this upcycle will sustain for at least 5 years, but as a cyclical stock, CSET has never had such a long cycle in the last 10 years. 
• While VLCC rate has gained 36% YTD, the average for FY24 is just in line with 2H22 and 1H23. However, earnings projections are 57% higher than that time.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone

• Array Technologies stock fell from $45 to below $13 based on Mason’s recommendation in December 2020
• Mason advised exiting the position at $17 in August 2021 after improvements seen
• Stock currently trading at $14 a share with potential for 50-60% upside to fair value as second largest global solar tracking company

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.

• Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
• Two activist shareholders. And long only upping its stake. Heavily discounted China Merchants China Direct Investments (133 HK) is in play.
• A HUGE new buyback for Kansai Paint (4613 JP). Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop. 

• On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.  
• The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal. 
• The register is not controlled by any one party or group of investors other than retail. That makes this interesting.

• Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
• Two activist shareholders. And long only upping its stake. Heavily discounted China Merchants China Direct Investments (133 HK) is in play.
• A HUGE new buyback for Kansai Paint (4613 JP). Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop. 

• On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.  
• The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal. 
• The register is not controlled by any one party or group of investors other than retail. That makes this interesting.

• Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
• That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid. 
• SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities. 

• We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
• These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
• The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico. 

• Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer. 
• SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x. 
• The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium. 

Braemar’s FY24 results were in line with expectations with revenues flat, but operating profits down, having been hit by one-off costs and strong comparatives. The underlying operations continue to expand and diversify, which drove an 8% increase in FY24 fixtures, and the company remains well-positioned to drive its future growth strategy. The trading outlook for FY25 is promising and Braemar should be able to leverage its strong balance sheet in pursuit of strategic growth. We have maintained our underlying revenue and operating profit estimates for FY25 and FY26, but rolled over the base year for the valuation, which results in a modest increase in the valuation from 500p to 535p per share, offering c 70% upside.

• This is a special one-time report on Stericycle as the company is exploring a sale.
• Its recent results paint a largely positive picture for the company, with some minor setbacks due to the implementation of the new ERP system.
• As Stericycle explores a potential sale, the company continues to target improvements in operations to increase efficiency and reduce costs, with expectations of improved results in the coming quarters.

• Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
• That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid. 
• SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities. 

• We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
• These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
• The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico. 

• Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer. 
• SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x. 
• The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium. 

Braemar’s FY24 results were in line with expectations with revenues flat, but operating profits down, having been hit by one-off costs and strong comparatives. The underlying operations continue to expand and diversify, which drove an 8% increase in FY24 fixtures, and the company remains well-positioned to drive its future growth strategy. The trading outlook for FY25 is promising and Braemar should be able to leverage its strong balance sheet in pursuit of strategic growth. We have maintained our underlying revenue and operating profit estimates for FY25 and FY26, but rolled over the base year for the valuation, which results in a modest increase in the valuation from 500p to 535p per share, offering c 70% upside.

• This is a special one-time report on Stericycle as the company is exploring a sale.
• Its recent results paint a largely positive picture for the company, with some minor setbacks due to the implementation of the new ERP system.
• As Stericycle explores a potential sale, the company continues to target improvements in operations to increase efficiency and reduce costs, with expectations of improved results in the coming quarters.

• Action Construction – a leader in construction and heavy equipment theme is going for transformation with a defence foray and new product launches
• With strong guidance and the historical success of good execution makes a good bet on the current infrastructure and manufacturing theme
• The risk includes a slowdown in the election period and stiff competition from larger players

• BQE reported Q1 financial results yesterday where the highlight was 114% YoY growth in its recurring operation services segment.
• Technical services revenue was weak however, leading to a slight miss on proportional revenue ($3.4M vs. $3.8M expected) and margins.
• Management’s outlook remained bullish, expecting operation services revenue continuing to grow rapidly and technical services revenue catch back up in H2.

• Action Construction – a leader in construction and heavy equipment theme is going for transformation with a defence foray and new product launches
• With strong guidance and the historical success of good execution makes a good bet on the current infrastructure and manufacturing theme
• The risk includes a slowdown in the election period and stiff competition from larger players

• BQE reported Q1 financial results yesterday where the highlight was 114% YoY growth in its recurring operation services segment.
• Technical services revenue was weak however, leading to a slight miss on proportional revenue ($3.4M vs. $3.8M expected) and margins.
• Management’s outlook remained bullish, expecting operation services revenue continuing to grow rapidly and technical services revenue catch back up in H2.