Industrials

• KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
• There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

• Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 35% higher than the high end of the IPO price range.
• We estimate the Jeil M&S to generate sales of 279 billion won (up 94.9% YoY) and operating profit of 18.1 billion won (up 928% YoY).
• Jeil M&S’s main products include mixing equipment for the rechargeable battery sector. Its major customers include Samsung SDI, LG Energy Solution, and Northvolt. 

• In Q423, ZTO’s parcel volumes grew by +32% Y/Y, faster than market growth
• But weak pricing resulted in EPS growth of just +2% Y/Y in the period
• In FY24, management expects parcel growth to roughly halve – AVOID

• Aeromexico reported record profitability in 2023 and we expect another record in 2024.
• Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
• The US DOT’s tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.

• KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
• There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

• Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 35% higher than the high end of the IPO price range.
• We estimate the Jeil M&S to generate sales of 279 billion won (up 94.9% YoY) and operating profit of 18.1 billion won (up 928% YoY).
• Jeil M&S’s main products include mixing equipment for the rechargeable battery sector. Its major customers include Samsung SDI, LG Energy Solution, and Northvolt. 

• In Q423, ZTO’s parcel volumes grew by +32% Y/Y, faster than market growth
• But weak pricing resulted in EPS growth of just +2% Y/Y in the period
• In FY24, management expects parcel growth to roughly halve – AVOID

• Aeromexico reported record profitability in 2023 and we expect another record in 2024.
• Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
• The US DOT’s tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.

• Jeil Machine & Solution is getting ready for an IPO in April in the Korean stock market. The IPO price range is 15,000 won to 18,000 won. 
• The total offering amount ranges from 36 billion won to 43.2 billion won. The book building for the institutional investors will last from 5 to 12 April. 
• According to the bankers’ assessment, the implied market cap of the company ranges from 309 billion won to 371 billion won. 

• The voluntary partial (15% of share capital) takeover bid launched by Gubel for Prosegur (PSG SM) has been accepted by 13.23%, thus 88.23% acceptance, and no proration. Gubel increases its grip to 73.14%.
• The free float has been reduced to 17.5% on a market cap of just €994 million. A delisting offer could well happen in the future and would make sense financially.
• Prosegur has 81.45% of Prosegur Cash, which could also become target of a delisting offer. Its shares have low liquidity, hence are overlooked and cheap (6.9x Fwd P/E vs. 9.7x Securitas).

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing an 800+-tonne a year critical metals alloy powder manufacturing facility in Tennessee, USA, with the initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry, strategic metals and satellites.
• The company is moving apace with its planned commercialisation, recently announcing it had secured A$7.5m in corporate financing and that it had executed a binding purchase order for its second gas atomiser, the next generation Electrode Induction Melting Inert Gas Atomiser (or EIGA premium).

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry.
• On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule.

• Human services company Millennium Services Group Ltd (ASX:MIL) has entered a Scheme of Arrangement with an entity associated with Softbank Robotics Singapore for the acquisition of 100% of shares at $1.15/share cash.
• Shareholders also have the option to accept a mix of cash and scrip in the new unlisted entity, with certain management committing not less than a total of 30% for this option.
• The bid price represents an 89% premium to the last RaaS update note (October 23) and 360% premium from July 1, 2023.

• Jeil Machine & Solution is getting ready for an IPO in April in the Korean stock market. The IPO price range is 15,000 won to 18,000 won. 
• The total offering amount ranges from 36 billion won to 43.2 billion won. The book building for the institutional investors will last from 5 to 12 April. 
• According to the bankers’ assessment, the implied market cap of the company ranges from 309 billion won to 371 billion won. 

• The voluntary partial (15% of share capital) takeover bid launched by Gubel for Prosegur (PSG SM) has been accepted by 13.23%, thus 88.23% acceptance, and no proration. Gubel increases its grip to 73.14%.
• The free float has been reduced to 17.5% on a market cap of just €994 million. A delisting offer could well happen in the future and would make sense financially.
• Prosegur has 81.45% of Prosegur Cash, which could also become target of a delisting offer. Its shares have low liquidity, hence are overlooked and cheap (6.9x Fwd P/E vs. 9.7x Securitas).

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing an 800+-tonne a year critical metals alloy powder manufacturing facility in Tennessee, USA, with the initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry, strategic metals and satellites.
• The company is moving apace with its planned commercialisation, recently announcing it had secured A$7.5m in corporate financing and that it had executed a binding purchase order for its second gas atomiser, the next generation Electrode Induction Melting Inert Gas Atomiser (or EIGA premium).

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry.
• On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule.

• Human services company Millennium Services Group Ltd (ASX:MIL) has entered a Scheme of Arrangement with an entity associated with Softbank Robotics Singapore for the acquisition of 100% of shares at $1.15/share cash.
• Shareholders also have the option to accept a mix of cash and scrip in the new unlisted entity, with certain management committing not less than a total of 30% for this option.
• The bid price represents an 89% premium to the last RaaS update note (October 23) and 360% premium from July 1, 2023.

• Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.
• For holdco discount, we used a 50% holdco discount. If investors perceive improvement in value (such as through corporate governance improvements), the holdco discount on LG Corp would decline.
• LG Corp’s shares are up 5.9% in the past six months, outperforming all the major LG Group related companies including LG Chem, LG H&H, LG Electronics, and LG Energy Solution. 

• From July, Korea’s listed firms will disclose value enhancement plans. Korea’s NPS may exclude non-compliant firms, pending official response, though internal review suggests likely implementation.
• It’s crucial to know portfolio stocks for proactive positioning. A setup targeting potential exclusion from NPS’s ESG funds due to post-July compliance must be designed.
• Managers often use KRX ESG Leaders 150, aligning portfolios with it. Thus, it’s crucial to use this list for post-July compliance monitoring and to adapt setups for NPS’s flow impacts.

• In Q3FY24, Larsen & Toubro (LT IN) witnessed order inflow of INR 760bn (up 25% YoY) bolstering the order book to INR 4.7tn at the end of December 2023.
• Margins continued to remain under pressure in 9MFY24 due to cost pressures in legacy jobs.
• Strong project execution and healthy order book are expected to drive future growth with margins reviving after bottoming out.

• Lindbergh Spa operates a sophisticated digital platform model for logistics and engineering services within the Italian and French MRO (Maintenance, Repair, and Operations) market.

• This approach not only supports strong operating margins but also provides value-added services in an industry typically marked by commoditization.

• Distinguishing itself as the sole competitor with such a differentiated business model, Lindbergh faces formidable barriers to entry.

• IMCD is a global specialty chemicals distributor headquartered in the Netherlands with a strong presence in the Americas, EMEA, and Asia-Pacific regions.
• The company is currently led by CEO Piet van der Slikke and CFO Hans Kooijmans, who are transitioning leadership to Valerie Diele-Braun.
• IMCD has a diversified geographic footprint and operates in multiple countries, positioning it for continued success in the specialty chemicals industry.

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.

• Summer pricing data suggests growth yoy for European short haul carriers.
• This prompts us to raise our easyJet PBT forecast 11% to £676m for FY24.
• We continue to see underperforming Wizz Air as the carrier with greatest opportunity to improve perception towards it by executing well in summer 2024.

• This is our first report on renowned manufacturer of comfort, residential thermal, and security solutions, Resideo Technologies, Inc.
• The company concluded 2023 with solid Q4 revenue and profitability, beating the midpoint of its comprehension, underpinned by a vigorous cash generation with a full-year operating cash flow of $440 million.
• The company gained traction throughout the year in order activity within Products and Solutions and made substantial strides in key strategic operational initiatives and significantly curbing structural costs.

• Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.
• For holdco discount, we used a 50% holdco discount. If investors perceive improvement in value (such as through corporate governance improvements), the holdco discount on LG Corp would decline.
• LG Corp’s shares are up 5.9% in the past six months, outperforming all the major LG Group related companies including LG Chem, LG H&H, LG Electronics, and LG Energy Solution. 

• From July, Korea’s listed firms will disclose value enhancement plans. Korea’s NPS may exclude non-compliant firms, pending official response, though internal review suggests likely implementation.
• It’s crucial to know portfolio stocks for proactive positioning. A setup targeting potential exclusion from NPS’s ESG funds due to post-July compliance must be designed.
• Managers often use KRX ESG Leaders 150, aligning portfolios with it. Thus, it’s crucial to use this list for post-July compliance monitoring and to adapt setups for NPS’s flow impacts.

• In Q3FY24, Larsen & Toubro (LT IN) witnessed order inflow of INR 760bn (up 25% YoY) bolstering the order book to INR 4.7tn at the end of December 2023.
• Margins continued to remain under pressure in 9MFY24 due to cost pressures in legacy jobs.
• Strong project execution and healthy order book are expected to drive future growth with margins reviving after bottoming out.

• Lindbergh Spa operates a sophisticated digital platform model for logistics and engineering services within the Italian and French MRO (Maintenance, Repair, and Operations) market.

• This approach not only supports strong operating margins but also provides value-added services in an industry typically marked by commoditization.

• Distinguishing itself as the sole competitor with such a differentiated business model, Lindbergh faces formidable barriers to entry.

• IMCD is a global specialty chemicals distributor headquartered in the Netherlands with a strong presence in the Americas, EMEA, and Asia-Pacific regions.
• The company is currently led by CEO Piet van der Slikke and CFO Hans Kooijmans, who are transitioning leadership to Valerie Diele-Braun.
• IMCD has a diversified geographic footprint and operates in multiple countries, positioning it for continued success in the specialty chemicals industry.

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.

• Summer pricing data suggests growth yoy for European short haul carriers.
• This prompts us to raise our easyJet PBT forecast 11% to £676m for FY24.
• We continue to see underperforming Wizz Air as the carrier with greatest opportunity to improve perception towards it by executing well in summer 2024.

• This is our first report on renowned manufacturer of comfort, residential thermal, and security solutions, Resideo Technologies, Inc.
• The company concluded 2023 with solid Q4 revenue and profitability, beating the midpoint of its comprehension, underpinned by a vigorous cash generation with a full-year operating cash flow of $440 million.
• The company gained traction throughout the year in order activity within Products and Solutions and made substantial strides in key strategic operational initiatives and significantly curbing structural costs.

• Late last week, machine tool and press maker Aida Engineering (6118 JP) made an announcement of a share buyback. Up to 2.3mm shs (3.59%) spending up to ¥2bn.
• The company has filed a policy for “Action to Implement Management That is Conscious of Cost of Capital and Stock Price” in its most recent CorpGov report available (J/E) here. 
• It will be a little smaller than that, but it is worth taking a closer look at the details, etc.

• Since October, Evergreen shares have performed well on rising spot rates
• Over the same period, Maersk and ZIM shares fell on longer-term concerns
• Pair trade idea: SHORT Evergreen vs LONG Maersk / ZIM position

• Ceigall India (1605242D IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by IIFL Securities, JM Financial and ICICI Securities.
• Ceigall India is an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. 
• Its principal business operations are broadly divided into EPC and hybrid annuity model (HAM) projects, which are spread across ten states in India.

• AviChina Industry & Technology H (2357 HK)‘s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. 
• Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
• The stock’s 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.

• Late last week, machine tool and press maker Aida Engineering (6118 JP) made an announcement of a share buyback. Up to 2.3mm shs (3.59%) spending up to ¥2bn.
• The company has filed a policy for “Action to Implement Management That is Conscious of Cost of Capital and Stock Price” in its most recent CorpGov report available (J/E) here. 
• It will be a little smaller than that, but it is worth taking a closer look at the details, etc.

• Since October, Evergreen shares have performed well on rising spot rates
• Over the same period, Maersk and ZIM shares fell on longer-term concerns
• Pair trade idea: SHORT Evergreen vs LONG Maersk / ZIM position

• Ceigall India (1605242D IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by IIFL Securities, JM Financial and ICICI Securities.
• Ceigall India is an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. 
• Its principal business operations are broadly divided into EPC and hybrid annuity model (HAM) projects, which are spread across ten states in India.

• AviChina Industry & Technology H (2357 HK)‘s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. 
• Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
• The stock’s 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.

• In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
• The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
• We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

• 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 BUY RMB 32.8bn of A-shares on decent volume after one RMB-3bn week following 5 weeks straight of net buying total RMB +63bn. Foreigners are in.
• The volume now is back to chasing momentum, but given so much net buying, much of it appears to be passive plus a CATL kicker.

• In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
• The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
• We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

• 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 BUY RMB 32.8bn of A-shares on decent volume after one RMB-3bn week following 5 weeks straight of net buying total RMB +63bn. Foreigners are in.
• The volume now is back to chasing momentum, but given so much net buying, much of it appears to be passive plus a CATL kicker.