Industrials

• Tax-Loss Selling‘s a subject of interest in Australia. Retail investors will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
• Investors are caught out as the Aussie government “approves” Hanwha Ocean (042660 KS) buyng Austal Ltd (ASB AU). There is evidently a lot more going on in the background. 
• West Japan Railway Co (9021 JP) announces a biggish buyback. One could buy dips, but one should probably not chase. For that, suggest this acts as a range trade.

• Carrier Global Corporation’s Q1 2024 results showed a robust start to the year with adjusted EPS growth of 19% on low-single-digit organic sales growth and 280 basis points of adjusted margin expansion.
• With the addition of 12,000 new members from Viessmann Climate Solutions, the company is poised for another year of significant margin expansion and solid growth.
• Its lean journey and sustained productivity have contributed greatly to these results.

• Caterpillar’s earnings for the first quarter of 2024 highlighted a strong quarter with sales and revenues maintaining levels consistent with the last year, largely meeting the company’s expectations.
• A key aspect was the continuation of healthy demand for its products and services across major end markets.
• Thanks to its robust balance sheet and free cash flow, the company was able to allocate a remarkable $5.1 billion for share repurchases and dividends during the quarter.

• Honeywell International Inc.’s first-quarter 2024 earnings reveals consistent growth in the company, exceeding its adjusted earning per share guidance and organic sales targets.
• Despite the dynamic macroeconomic environment, the robust execution of Honeywell’s Accelerator operating system and the company’s diversified technology portfolio has led to significant performance gains.
• With recovery in key areas of Honeywell’s short-cycle portfolio and sustained growth in its long-cycle Aerospace and energy businesses, the company demonstrates a positive momentum in its financial results.

• Northrop Grumman, a global aerospace and defense technology company, has reported a strong start for the financial quarter, with revenues increasing 9% year-over-year due to growth in all four of its sectors.
• The firm had implemented productivity and cost efficiency measures, which has led to its segment operating margin dollars increasing by 10%.
• These efforts have also resulted in 15% EPS growth.

• Union Pacific Corporation, one of the leading railroad operators in the United States, presents its Q1 2024 results with notable success in operating revenue and increased net income.
• Despite numerous economic challenges including reduced volumes and lower fuel surcharge revenues, Union Pacific continues to pull its weight with core pricing gains and robust financial growth.
• In Q1 2024, Union Pacific reported a net income of USD 1.6 billion or $2.69 per share, demonstrating a growth from Q1 2023’s net income that was parallel in value but at $2.67 per share.

• Tax-Loss Selling‘s a subject of interest in Australia. Retail investors will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
• Investors are caught out as the Aussie government “approves” Hanwha Ocean (042660 KS) buyng Austal Ltd (ASB AU). There is evidently a lot more going on in the background. 
• West Japan Railway Co (9021 JP) announces a biggish buyback. One could buy dips, but one should probably not chase. For that, suggest this acts as a range trade.

• Carrier Global Corporation’s Q1 2024 results showed a robust start to the year with adjusted EPS growth of 19% on low-single-digit organic sales growth and 280 basis points of adjusted margin expansion.
• With the addition of 12,000 new members from Viessmann Climate Solutions, the company is poised for another year of significant margin expansion and solid growth.
• Its lean journey and sustained productivity have contributed greatly to these results.

• Caterpillar’s earnings for the first quarter of 2024 highlighted a strong quarter with sales and revenues maintaining levels consistent with the last year, largely meeting the company’s expectations.
• A key aspect was the continuation of healthy demand for its products and services across major end markets.
• Thanks to its robust balance sheet and free cash flow, the company was able to allocate a remarkable $5.1 billion for share repurchases and dividends during the quarter.

• Honeywell International Inc.’s first-quarter 2024 earnings reveals consistent growth in the company, exceeding its adjusted earning per share guidance and organic sales targets.
• Despite the dynamic macroeconomic environment, the robust execution of Honeywell’s Accelerator operating system and the company’s diversified technology portfolio has led to significant performance gains.
• With recovery in key areas of Honeywell’s short-cycle portfolio and sustained growth in its long-cycle Aerospace and energy businesses, the company demonstrates a positive momentum in its financial results.

• Northrop Grumman, a global aerospace and defense technology company, has reported a strong start for the financial quarter, with revenues increasing 9% year-over-year due to growth in all four of its sectors.
• The firm had implemented productivity and cost efficiency measures, which has led to its segment operating margin dollars increasing by 10%.
• These efforts have also resulted in 15% EPS growth.

• Union Pacific Corporation, one of the leading railroad operators in the United States, presents its Q1 2024 results with notable success in operating revenue and increased net income.
• Despite numerous economic challenges including reduced volumes and lower fuel surcharge revenues, Union Pacific continues to pull its weight with core pricing gains and robust financial growth.
• In Q1 2024, Union Pacific reported a net income of USD 1.6 billion or $2.69 per share, demonstrating a growth from Q1 2023’s net income that was parallel in value but at $2.67 per share.

• Teledyne Technologies, a prominent industrial conglomerate focused on aerospace and defense, instrumentation, digital imaging, and engineered systems, reported its Q1 2024 earnings.
• In the call, management touted robust results including record first quarter non-GAAP operating margin, record adjusted earnings per share, and record free cash flow.
• The company’s strong performance was driven by growth in its marine, aviation, and select defense businesses which offset sales declines in other areas.

• Waste Connections, Inc. reported a strong start to 2024, delivering better-than-expected operating and financial results, including adjusted EBITDA margin expansion of 160 basis points to 31.4% in Q1.
• The company’s earnings exceeded projections due to improvements in employee retention and safety trends, along with rising commodity values.
• Waste Connections management highlighted several notable trends impacting its business, including continued improvement in employee turnover rates and safety incidents, suggesting an effective culture of accountability within the company.

• Rockwell Automation’s first quarter demonstrated a sequential growth in orders, with all business segments and regional markets rising from the previous quarter’s low point.
• Despite ongoing impacts of excess inventory within the distribution channel, underlying demand from machine builders and end-users remained robust.
• In the quarter under review, total sales grew by 3.6% year-over-year, with organic sales advancing by 1%.

• Based on the Q1 2024 earnings of Fortive Corporation, it is discernible that the company has visualized a strong start to the year, overachieving its anticipations regarding core revenue growth, margins extension, earnings, and free cash flow.
• Fortive’s strategy broadly focuses around invigorating safety and productivity of consumers across manufacturing and healthcare sectors.
• 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.

• United Rentals’ (URI) latest earnings depicted strong Q1 results with total revenue increasing by 6% YoY to reach $3.5 billion, a new first quarter record, along with rental revenue growing 7% and fleet productivity increasing by a promising 4%.
• Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew to a first quarter record of $1.6 billion, culminating in a margin of 45.5%.
• Furthermore, adjusted Earnings per Share (EPS) appreciated by 15% to reach $9.15.

• In the first quarter of 2024, Otis Worldwide Corporation reported a solid performance, reinforcing the continued robustness of its Service-driven business model as the company achieved mid-single digit organic sales growth, led by its Service business.
• Both Service and New Equipment operating profit margins expanded by 80 and 20 basis points respectively, contributing to a 10% increase in adjusted EPS growth.
• 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.

• The latest earnings from General Dynamics Corporation indicated a robust start to 2024.
• Notably, there was a significant increase in total revenues, operating earnings, and net earnings compared to the previous year.
• The corporation revealed earnings of $2.88 per share on revenue of $10.7 billion, demonstrating an 8.6% increase compared to the first quarter of the previous year.

• Masco Corporation started the year strong with operating profit margin expansion and EPS growth compared to the previous year.
• This strength was driven by improved operational efficiencies, solid execution, and the strength of the company’s repair and remodel product portfolio.
• Despite this, the company’s top line failed to impress as it decreased by 3% in the quarter, in line with company expectations.

• We are optimistic about operating improvements going forward and expect occupancies at CXW facilities to continue to increase as ICE & multiple government entities seek capacity.
• CXW also continues to strengthen its balance sheet, with a 1Q24 debt offering concurrent with a tender offer for 2026 8.25% notes.
• As a result, the company pushed debt maturities out roughly three years & has no major debt maturities before 2029 other than some $262M 4.75% notes that mature in 2027.

• Teledyne Technologies, a prominent industrial conglomerate focused on aerospace and defense, instrumentation, digital imaging, and engineered systems, reported its Q1 2024 earnings.
• In the call, management touted robust results including record first quarter non-GAAP operating margin, record adjusted earnings per share, and record free cash flow.
• The company’s strong performance was driven by growth in its marine, aviation, and select defense businesses which offset sales declines in other areas.

• Waste Connections, Inc. reported a strong start to 2024, delivering better-than-expected operating and financial results, including adjusted EBITDA margin expansion of 160 basis points to 31.4% in Q1.
• The company’s earnings exceeded projections due to improvements in employee retention and safety trends, along with rising commodity values.
• Waste Connections management highlighted several notable trends impacting its business, including continued improvement in employee turnover rates and safety incidents, suggesting an effective culture of accountability within the company.

• Rockwell Automation’s first quarter demonstrated a sequential growth in orders, with all business segments and regional markets rising from the previous quarter’s low point.
• Despite ongoing impacts of excess inventory within the distribution channel, underlying demand from machine builders and end-users remained robust.
• In the quarter under review, total sales grew by 3.6% year-over-year, with organic sales advancing by 1%.

• Based on the Q1 2024 earnings of Fortive Corporation, it is discernible that the company has visualized a strong start to the year, overachieving its anticipations regarding core revenue growth, margins extension, earnings, and free cash flow.
• Fortive’s strategy broadly focuses around invigorating safety and productivity of consumers across manufacturing and healthcare sectors.
• 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.

• United Rentals’ (URI) latest earnings depicted strong Q1 results with total revenue increasing by 6% YoY to reach $3.5 billion, a new first quarter record, along with rental revenue growing 7% and fleet productivity increasing by a promising 4%.
• Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew to a first quarter record of $1.6 billion, culminating in a margin of 45.5%.
• Furthermore, adjusted Earnings per Share (EPS) appreciated by 15% to reach $9.15.

• In the first quarter of 2024, Otis Worldwide Corporation reported a solid performance, reinforcing the continued robustness of its Service-driven business model as the company achieved mid-single digit organic sales growth, led by its Service business.
• Both Service and New Equipment operating profit margins expanded by 80 and 20 basis points respectively, contributing to a 10% increase in adjusted EPS growth.
• 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.

• The latest earnings from General Dynamics Corporation indicated a robust start to 2024.
• Notably, there was a significant increase in total revenues, operating earnings, and net earnings compared to the previous year.
• The corporation revealed earnings of $2.88 per share on revenue of $10.7 billion, demonstrating an 8.6% increase compared to the first quarter of the previous year.

• Masco Corporation started the year strong with operating profit margin expansion and EPS growth compared to the previous year.
• This strength was driven by improved operational efficiencies, solid execution, and the strength of the company’s repair and remodel product portfolio.
• Despite this, the company’s top line failed to impress as it decreased by 3% in the quarter, in line with company expectations.

• We are optimistic about operating improvements going forward and expect occupancies at CXW facilities to continue to increase as ICE & multiple government entities seek capacity.
• CXW also continues to strengthen its balance sheet, with a 1Q24 debt offering concurrent with a tender offer for 2026 8.25% notes.
• As a result, the company pushed debt maturities out roughly three years & has no major debt maturities before 2029 other than some $262M 4.75% notes that mature in 2027.

• On 2 April, Austal Ltd (ASB AU) rejected a non-binding proposal from Hanwha Ocean (042660 KS) at A$2.825 due to concerns about obtaining Australian and US regulatory approvals. 
• The Board’s claims are on shaky grounds. On 1 May, the AFR reported that Australian Defence Minister Richard Marles had no concerns with Hanwha’s privatisation bid. 
• The Board’s rejection is a clumsy attempt to negotiate better terms, such as a bump, ticking fees, or significant break fees. At the last close, the gross spread was 21.8%. 

• The share price has bounced back on strong 3Q orders and long-term optimism, but weak 4Q guidance calls the growth trajectory into question.
• Guidance, which has sales dropping to about half what they were a year earlier, is based on the expected timing of customer acceptance of delivered equipment. It could be conservative.
• At 75X EPS guidance for FY Jun-24, a rate of growth not visible in current trends has already been discounted. Current orders should translate into sales in 2026.

• Enphase Energy, a leading provider of energy management solutions, reported its first quarter 2024 financial results.
• For the quarter ending March 31, 2024, the company reported a total revenue of $263.3 million, a slight decrease compared with the previous quarter.
• The company also managed to ship approximately 1.4 million microinverters and 75.5 megawatt hours of batteries during this period, leading to a free cash flow of $41.8 million.

• Waste Management, Inc. has successfully delivered a strong end to 2023, with a 15% increase in fourth quarter operating EBITDA. This has resulted in full year operating EBITDA exceeding the company’s most recent guidance range by Waste Management Inc. (WM) witnessed robust financial performance for Q1 2024, underscored by outstanding operational performance in the collection and disposal business.
• Operating EBITDA witnessed a growth of 15% for this quarter, with margins expanding by 240 basis points.
• This was propelled primarily by significant momentum in cost-effective efforts and disciplined execution of pricing programs.

• IDEX Corporation’s Q1 2024 earnings highlighted the company’s continued engagement in the global market, notable achievements during the quarter, and financial results, which were understandably mixed due to various factors.
• Despite challenging comparatives, the company’s Fluid & Metering Technologies and Fire & Safety/Diversified Products businesses recorded strong results, demonstrating its core execution capabilities.
• This indicates the company’s ability to adapt and reaffirms its positioning as a invested-interest even during turbulent market conditions.

• In their First Quarter 2024 Earnings Results Lockheed Martin gave an outline of their strong financial performance and offered an insight into some key initiatives that are currently in progress.
• Their results reflect a robust growth in revenue across the company, and a stable backlog amounting to $159 billion, an indication of the alignment between the firm’s advanced technology solutions and the missions and priorities of their customers.
• The highlights of the FY ’24 defense budget reflect well on Lockheed Martin with robust funding earmarked for munitions multiyear procurement, ongoing investments into hypersonics and classified activities, and consistent support for long term initiatives such as Black Hawk, CH-53K heavy lift helicopter, the fleet ballistic missile, C-130, and F-35.

• United Parcel Service Inc. (UPS) reported consolidated revenue of $21.7 billion, marking a 5.3% decline YoY. The operating profit came in at $1.7 billion, down by 31.5% in comparison to the previous year, largely as a result of higher labor costs associated with the first year of the Teamsters contract.
• The consolidated operating margin was at 8%.
• A notable development in the quarter is UPS’s deal with the United States Postal Service, where it plans to become the primary air cargo provider.

• The Boeing Company’s Q1 2024 marked an important moment for investors, as management focused primarily on the actions taken post the Alaska Airlines accident in January.
• Boeing CEO, Dave Calhoun, emphatically underscored the company’s commitment to quality and safety measures.
• The company has improved its production protocols and gone beyond compliance with the FAA directives, working towards an Embedded Quality Action Plan.

• Norfolk Southern Corporation deemed its first quarter of 2024 as one reflecting strategic growth and prudent operational strategies.
• The company followed a balanced strategy to deliver top-tier earnings with an industry competitive margin focusing on customer service, productivity, and growth with strong safety measures.
• The company’s president and CEO, Alan Shaw, mentioned that in 2023, safety and service were prioritized to protect the company’s franchise and shareholders, thereby operating one of the safest networks in North America.

• Raytheon Technologies Corporation (RTX) started off the year strongly with emphasis on attaining a strong foundation for the future.
• The company is making headway in transforming its three business units: Pratt & Whitney, Collins Aerospace, and Raytheon into industry leaders that can withstand increasing sales and operating profit growth.
• The company’s backlog has reached a record high of over $200 billion which is positive evidence of its market strength.

• On 2 April, Austal Ltd (ASB AU) rejected a non-binding proposal from Hanwha Ocean (042660 KS) at A$2.825 due to concerns about obtaining Australian and US regulatory approvals. 
• The Board’s claims are on shaky grounds. On 1 May, the AFR reported that Australian Defence Minister Richard Marles had no concerns with Hanwha’s privatisation bid. 
• The Board’s rejection is a clumsy attempt to negotiate better terms, such as a bump, ticking fees, or significant break fees. At the last close, the gross spread was 21.8%. 

• The share price has bounced back on strong 3Q orders and long-term optimism, but weak 4Q guidance calls the growth trajectory into question.
• Guidance, which has sales dropping to about half what they were a year earlier, is based on the expected timing of customer acceptance of delivered equipment. It could be conservative.
• At 75X EPS guidance for FY Jun-24, a rate of growth not visible in current trends has already been discounted. Current orders should translate into sales in 2026.

• Enphase Energy, a leading provider of energy management solutions, reported its first quarter 2024 financial results.
• For the quarter ending March 31, 2024, the company reported a total revenue of $263.3 million, a slight decrease compared with the previous quarter.
• The company also managed to ship approximately 1.4 million microinverters and 75.5 megawatt hours of batteries during this period, leading to a free cash flow of $41.8 million.

• Waste Management, Inc. has successfully delivered a strong end to 2023, with a 15% increase in fourth quarter operating EBITDA. This has resulted in full year operating EBITDA exceeding the company’s most recent guidance range by Waste Management Inc. (WM) witnessed robust financial performance for Q1 2024, underscored by outstanding operational performance in the collection and disposal business.
• Operating EBITDA witnessed a growth of 15% for this quarter, with margins expanding by 240 basis points.
• This was propelled primarily by significant momentum in cost-effective efforts and disciplined execution of pricing programs.

• IDEX Corporation’s Q1 2024 earnings highlighted the company’s continued engagement in the global market, notable achievements during the quarter, and financial results, which were understandably mixed due to various factors.
• Despite challenging comparatives, the company’s Fluid & Metering Technologies and Fire & Safety/Diversified Products businesses recorded strong results, demonstrating its core execution capabilities.
• This indicates the company’s ability to adapt and reaffirms its positioning as a invested-interest even during turbulent market conditions.

• In their First Quarter 2024 Earnings Results Lockheed Martin gave an outline of their strong financial performance and offered an insight into some key initiatives that are currently in progress.
• Their results reflect a robust growth in revenue across the company, and a stable backlog amounting to $159 billion, an indication of the alignment between the firm’s advanced technology solutions and the missions and priorities of their customers.
• The highlights of the FY ’24 defense budget reflect well on Lockheed Martin with robust funding earmarked for munitions multiyear procurement, ongoing investments into hypersonics and classified activities, and consistent support for long term initiatives such as Black Hawk, CH-53K heavy lift helicopter, the fleet ballistic missile, C-130, and F-35.

• United Parcel Service Inc. (UPS) reported consolidated revenue of $21.7 billion, marking a 5.3% decline YoY. The operating profit came in at $1.7 billion, down by 31.5% in comparison to the previous year, largely as a result of higher labor costs associated with the first year of the Teamsters contract.
• The consolidated operating margin was at 8%.
• A notable development in the quarter is UPS’s deal with the United States Postal Service, where it plans to become the primary air cargo provider.

• The Boeing Company’s Q1 2024 marked an important moment for investors, as management focused primarily on the actions taken post the Alaska Airlines accident in January.
• Boeing CEO, Dave Calhoun, emphatically underscored the company’s commitment to quality and safety measures.
• The company has improved its production protocols and gone beyond compliance with the FAA directives, working towards an Embedded Quality Action Plan.

• Norfolk Southern Corporation deemed its first quarter of 2024 as one reflecting strategic growth and prudent operational strategies.
• The company followed a balanced strategy to deliver top-tier earnings with an industry competitive margin focusing on customer service, productivity, and growth with strong safety measures.
• The company’s president and CEO, Alan Shaw, mentioned that in 2023, safety and service were prioritized to protect the company’s franchise and shareholders, thereby operating one of the safest networks in North America.

• Raytheon Technologies Corporation (RTX) started off the year strongly with emphasis on attaining a strong foundation for the future.
• The company is making headway in transforming its three business units: Pratt & Whitney, Collins Aerospace, and Raytheon into industry leaders that can withstand increasing sales and operating profit growth.
• The company’s backlog has reached a record high of over $200 billion which is positive evidence of its market strength.

• Yesterday, West Japan Railway Co (9021 JP) announced FY23 earnings, a higher dividend, an update to the Medium-Term Management Plan (p10~), and a Buyback.
• Short & Sweet:  Revenues were +17.2%yoy, OP +114.1%, NP +1.6%. OPM was 11.0% and ROE 9.2% (both best since FY18). Guidance is Revenue up, OP down, NP tiny up.
• The new FY25 (Mar26) OP guide in the MTMP is the old Mar28 target (mostly inbound tourism-driven). The Buyback is biggish. It is worth looking at the details. 

• Chilled & Frozen Logistics Holdings (9099 JP) had been sending out questions, and trying to get AZ-Com Maruwa Holdings (9090 JP) to delay the start until at least late-May.
• AZ-Com Maruwa answered questions (first and second set) and on the 24th, C&F asked AZ-Com to extend. They did not extend. AZ-Com announced the Tender Offer at ¥3,000 today.
• C&F responded today saying the TOB is launched without C&F Board approval. Then they said some other things that might be disclosed when C&F’s Board presents its Target Opinion.

• AZ-Com Maruwa Holdings (9090 JP) has satisfied the precondition for its hostile Chilled & Frozen Logistics Holdings (9099 JP) JPY3,000 offer. The offer closes on 17 June (31 business days).
• AZ-COM Maruwa has called the Board’s bluff by providing sufficient time (extending the offer period from 20 to 31 business days) for a white knight to lob a competing bidder.
• While a bump is probable, the shares already factor in a significant bumpitrage premium. A potential bump has a good chance of being lower than the last close.

• Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%. 
• Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
• Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact. 

• Sai Gon Cargo Service (SCS VN) reported revenues/profits up 31%/30% YoY. Net cash on the balance sheet ended the quarter at 15% of market capitalization (approximately 300 mn USD). 
• Catalysts we cited in our insight Sai Gon Cargo Services (SCS VN) Update: Price Hikes, Strong Q1 2024 Operational Numbers are playing out, resulting in earnings upside in the future.
• Trading at 12.5x FY24 PE and 6.8% dividend yield, this is an excellent micro-cap worth exploring for exposure to the Vietnam market. 

• TRS reported first quarter results confirming a turnaround in the packaging segment could be underway
• Packaging is TRS’s largest business segment and had undergone a restructuring last year. The increase in sales has done little to impress investors
• TRS reported first quarter sales of $227.1 million compared to our estimate of $216.2 million. The biggest driver for the outperformance was the packaging segment

• We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections unchanged after urban-gro registered upside in 1Q top and Adjusted EBITDA and reiterated prior 2024 guidance.
• That said, with the Drug Enforcement Agency approving the reclassification of cannabis from a Schedule I to Schedule III drug, and the potential for Florida to approve recreational cannabis usage in November, we believe our 2H24 and especially 2025 projections could prove highly conservative.
• As such, we are reiterating our Buy rating and $8 price target.

• Recent update highlights a proven and replicable cash- generating business model.
• In the two-plus years since its founding, Base Carbon has successfully sourced, invested, and developed three projects that are on time, on budget, and are either producing credits or will be in the coming quarters.
• Credit sales from Vietnam have already generated ~$18 million in cash, Rwanda has produced its first credits, and the Indian ARR project is on track to deliver its first credits in early 2025.

• Yesterday, West Japan Railway Co (9021 JP) announced FY23 earnings, a higher dividend, an update to the Medium-Term Management Plan (p10~), and a Buyback.
• Short & Sweet:  Revenues were +17.2%yoy, OP +114.1%, NP +1.6%. OPM was 11.0% and ROE 9.2% (both best since FY18). Guidance is Revenue up, OP down, NP tiny up.
• The new FY25 (Mar26) OP guide in the MTMP is the old Mar28 target (mostly inbound tourism-driven). The Buyback is biggish. It is worth looking at the details. 

• Chilled & Frozen Logistics Holdings (9099 JP) had been sending out questions, and trying to get AZ-Com Maruwa Holdings (9090 JP) to delay the start until at least late-May.
• AZ-Com Maruwa answered questions (first and second set) and on the 24th, C&F asked AZ-Com to extend. They did not extend. AZ-Com announced the Tender Offer at ¥3,000 today.
• C&F responded today saying the TOB is launched without C&F Board approval. Then they said some other things that might be disclosed when C&F’s Board presents its Target Opinion.

• AZ-Com Maruwa Holdings (9090 JP) has satisfied the precondition for its hostile Chilled & Frozen Logistics Holdings (9099 JP) JPY3,000 offer. The offer closes on 17 June (31 business days).
• AZ-COM Maruwa has called the Board’s bluff by providing sufficient time (extending the offer period from 20 to 31 business days) for a white knight to lob a competing bidder.
• While a bump is probable, the shares already factor in a significant bumpitrage premium. A potential bump has a good chance of being lower than the last close.

• Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%. 
• Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
• Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact. 

• Sai Gon Cargo Service (SCS VN) reported revenues/profits up 31%/30% YoY. Net cash on the balance sheet ended the quarter at 15% of market capitalization (approximately 300 mn USD). 
• Catalysts we cited in our insight Sai Gon Cargo Services (SCS VN) Update: Price Hikes, Strong Q1 2024 Operational Numbers are playing out, resulting in earnings upside in the future.
• Trading at 12.5x FY24 PE and 6.8% dividend yield, this is an excellent micro-cap worth exploring for exposure to the Vietnam market. 

• TRS reported first quarter results confirming a turnaround in the packaging segment could be underway
• Packaging is TRS’s largest business segment and had undergone a restructuring last year. The increase in sales has done little to impress investors
• TRS reported first quarter sales of $227.1 million compared to our estimate of $216.2 million. The biggest driver for the outperformance was the packaging segment

• We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections unchanged after urban-gro registered upside in 1Q top and Adjusted EBITDA and reiterated prior 2024 guidance.
• That said, with the Drug Enforcement Agency approving the reclassification of cannabis from a Schedule I to Schedule III drug, and the potential for Florida to approve recreational cannabis usage in November, we believe our 2H24 and especially 2025 projections could prove highly conservative.
• As such, we are reiterating our Buy rating and $8 price target.

• Recent update highlights a proven and replicable cash- generating business model.
• In the two-plus years since its founding, Base Carbon has successfully sourced, invested, and developed three projects that are on time, on budget, and are either producing credits or will be in the coming quarters.
• Credit sales from Vietnam have already generated ~$18 million in cash, Rwanda has produced its first credits, and the Indian ARR project is on track to deliver its first credits in early 2025.

• The activist investor is back and has demanded further action to unlock value from Keisei Electric Railway Co (9009 JP)  management.
• Operational numbers are still healthy, but growth is not as large due to the high base.
• Immediate pressure to divest Oriental Land thus short Oriental Land (4661 JP)  and long Keisei.

• Premier Energies Limited (0377949D IN) is into manufacturing of solar cells and modules. The company is the second largest integrated player (cell+module) in India with a market share of 28%
• The business has picked up in the last two years. Revenues, order book and capacities have increased and margins have also seen improvement. 
• However, the company is struggling on cash conversion on the back of highly levered balance sheet. Focus should also be on few questionable related party transactions.

• Matthews International is an undervalued diversified industrial company
• The potential IPO of its machinery segment for dry battery electrodes could unlock value
• The Industrial Technology segment, with Tesla as a customer, has significant potential for growth and value creation

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 activist investor is back and has demanded further action to unlock value from Keisei Electric Railway Co (9009 JP)  management.
• Operational numbers are still healthy, but growth is not as large due to the high base.
• Immediate pressure to divest Oriental Land thus short Oriental Land (4661 JP)  and long Keisei.

• Premier Energies Limited (0377949D IN) is into manufacturing of solar cells and modules. The company is the second largest integrated player (cell+module) in India with a market share of 28%
• The business has picked up in the last two years. Revenues, order book and capacities have increased and margins have also seen improvement. 
• However, the company is struggling on cash conversion on the back of highly levered balance sheet. Focus should also be on few questionable related party transactions.

• Matthews International is an undervalued diversified industrial company
• The potential IPO of its machinery segment for dry battery electrodes could unlock value
• The Industrial Technology segment, with Tesla as a customer, has significant potential for growth and value creation

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.