Industrials

• Sanil Electric is getting ready to complete its IPO in late July in KOSPI. The IPO price range is from 24,000 won to 30,000 won per share. 
• The company is planning is raise between 182.4 billion won and 228 billion won in this IPO. The book building for the institutional investors lasts from 9 to 15 July. 
• Sanil Electric is best known for making special transformers used for special purposes in environments with severe weather changes, such as offshore wind power, solar power, and offshore plants. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Asia Cement China (743 HK), A8 New Media (800 HK), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), Nagatanien Holdings (2899 JP), Chilled & Frozen Logistics Holdings (9099 JP).

• With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
• Recovery is decent with passenger traffic rising 37.5% in 5M24. CX’s capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
• YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  

• Sanil Electric is getting ready to complete its IPO in late July in KOSPI. The IPO price range is from 24,000 won to 30,000 won per share. 
• The company is planning is raise between 182.4 billion won and 228 billion won in this IPO. The book building for the institutional investors lasts from 9 to 15 July. 
• Sanil Electric is best known for making special transformers used for special purposes in environments with severe weather changes, such as offshore wind power, solar power, and offshore plants. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Asia Cement China (743 HK), A8 New Media (800 HK), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), Nagatanien Holdings (2899 JP), Chilled & Frozen Logistics Holdings (9099 JP).

• With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
• Recovery is decent with passenger traffic rising 37.5% in 5M24. CX’s capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
• YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
• Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

• Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
• We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
• IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

• As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
• In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
• We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
• Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

• Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
• We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
• IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

• As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
• In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
• We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) launched the Tatsuta Electric Wire & Cable (5809 JP) tender offer at unchanged JPY720, 4.9% below the last close price.  
• The Board requested a bump, but Eneos refused due to Tatsuta’s missed targets, no competing offer and the supportive updated IFA valuation
• The lack of a bump, no vocal opposition, deal fatigue, the Board’s unexpected recommendation, weak earnings and 73.9% takeover premium will help acceptance.

• ENEOS announced its deal for Tatsuta Electric Wire & Cable (5809 JP) 18mos ago. China approval took a while. Now they have launched. 
• The TOPIX Non-Ferrous Metals sector has returned 60%. TOPIX 50%. There is a new TSE Sheriff in town asking for PBR 1.0x. BVPS is up. Presumably, forward CF is up.
• But the TOB Price is unchanged. That is disappointing. One reason why a higher price was rejected was that no other buyer approached to take over the company. 🤷🏻‍♂️

• Cyan Renewables has bumped its Mma Offshore (MRM AU) offer to A$2.70 per share, a 3.8% premium to the previous A$2.60 offer.
• The bump is derisory in the context of recent earnings upgrades. Since the binding proposal, MMA has upgraded its FY24 EBITDA and EBIT guidance by 9.8% and 15.5%, respectively.
• The AFR reported that around 30% of the register opposed the previous offer. A cursory 3.8% bump is unlikely to sway most of these dissenters to change their views.

• SharkNinja is a newly listed company with popular consumer brands Shark and Ninja
• Despite challenges in brand-building and international markets, the company achieved a 15% operating margin in 2023
• Analysts project an annualized return of 18-20% based on current earnings yield and expected organic earnings growth

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.

• 18 months after announcing the offer, ENEOS Holdings (5020 JP) launched the Tatsuta Electric Wire & Cable (5809 JP) tender offer at unchanged JPY720, 4.9% below the last close price.  
• The Board requested a bump, but Eneos refused due to Tatsuta’s missed targets, no competing offer and the supportive updated IFA valuation
• The lack of a bump, no vocal opposition, deal fatigue, the Board’s unexpected recommendation, weak earnings and 73.9% takeover premium will help acceptance.

• ENEOS announced its deal for Tatsuta Electric Wire & Cable (5809 JP) 18mos ago. China approval took a while. Now they have launched. 
• The TOPIX Non-Ferrous Metals sector has returned 60%. TOPIX 50%. There is a new TSE Sheriff in town asking for PBR 1.0x. BVPS is up. Presumably, forward CF is up.
• But the TOB Price is unchanged. That is disappointing. One reason why a higher price was rejected was that no other buyer approached to take over the company. 🤷🏻‍♂️

• Cyan Renewables has bumped its Mma Offshore (MRM AU) offer to A$2.70 per share, a 3.8% premium to the previous A$2.60 offer.
• The bump is derisory in the context of recent earnings upgrades. Since the binding proposal, MMA has upgraded its FY24 EBITDA and EBIT guidance by 9.8% and 15.5%, respectively.
• The AFR reported that around 30% of the register opposed the previous offer. A cursory 3.8% bump is unlikely to sway most of these dissenters to change their views.

• SharkNinja is a newly listed company with popular consumer brands Shark and Ninja
• Despite challenges in brand-building and international markets, the company achieved a 15% operating margin in 2023
• Analysts project an annualized return of 18-20% based on current earnings yield and expected organic earnings growth

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.

• Innospace reported solid IPO bookbuilding results. Innospace’s IPO price has been determined at 43,300 won won, which is at the high end of the IPO price range.
• Our base case valuation of Innospace is target price of 51,481 won per share (12 month view), which is 19% higher than the IPO price.
• Innospace is involved in the satellite launch vehicle production and launch service business.

• All the business fundamentals continue to trend in the right direction
• The sector has sold off with the general commodity sell-off
• Investors not giving the benefit of the doubt to future oil demand

• Deep-Sea container rates surged in May, yielding best read since June 2022
• But volume growth into North American WC ports slowed noticeably…
• We believe Q224 results will impress, and still like our Long/Short pairs

• Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
• The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
• Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

• Enerpac Tool Group (EPAC) designs, manufactures, and distributes hydraulic tools with a strong market position and reputation for reliability
• Despite its strong competitive position, growth opportunities, and operational execution, Enerpac’s P/E multiple is at a five-year low, offering a significant discount to its peers
• With a new management team implementing operational improvements, investors have the opportunity to invest in a potentially undervalued stock with long-term 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.

• Based on a rigorous examination of Core & Main’s first quarter fiscal 2024 results, a nuanced investment thesis for the company can be deduced by delving into various facets of its operations and financial performance.
• Core & Main, a prominent distributor of water, wastewater, storm drainage, and fire protection products, has marketed itself effectively as an indispensable partner to municipalities, private water companies, and professional contractors.
• Positively, Core & Main reported a robust 11% growth in net sales reaching a record $1.74 billion for the quarter.

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.

• Innospace reported solid IPO bookbuilding results. Innospace’s IPO price has been determined at 43,300 won won, which is at the high end of the IPO price range.
• Our base case valuation of Innospace is target price of 51,481 won per share (12 month view), which is 19% higher than the IPO price.
• Innospace is involved in the satellite launch vehicle production and launch service business.

• All the business fundamentals continue to trend in the right direction
• The sector has sold off with the general commodity sell-off
• Investors not giving the benefit of the doubt to future oil demand

• Deep-Sea container rates surged in May, yielding best read since June 2022
• But volume growth into North American WC ports slowed noticeably…
• We believe Q224 results will impress, and still like our Long/Short pairs

• Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
• The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
• Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

• Enerpac Tool Group (EPAC) designs, manufactures, and distributes hydraulic tools with a strong market position and reputation for reliability
• Despite its strong competitive position, growth opportunities, and operational execution, Enerpac’s P/E multiple is at a five-year low, offering a significant discount to its peers
• With a new management team implementing operational improvements, investors have the opportunity to invest in a potentially undervalued stock with long-term 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.

• Based on a rigorous examination of Core & Main’s first quarter fiscal 2024 results, a nuanced investment thesis for the company can be deduced by delving into various facets of its operations and financial performance.
• Core & Main, a prominent distributor of water, wastewater, storm drainage, and fire protection products, has marketed itself effectively as an indispensable partner to municipalities, private water companies, and professional contractors.
• Positively, Core & Main reported a robust 11% growth in net sales reaching a record $1.74 billion for the quarter.

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.