Industrials

• 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 8.8bn of A-shares on lower gross volumes. NORTHBOUND bought Luxshare, CMB, and CATL. AH Premia now lowest in 4yrs.
• Foreign attitudes to HK stocks different than to mainland stocks. This may continue.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Indian IPOs continued to do well, we also looked at two upcoming deals in Hong Kong.
• On the placement front, last week ended up being one of the busiest ones so far this year with five deals live just on Thursday night alone. 

• The company has slashed FY Sep-24 guidance after missing 1H sales and profit targets by wide margins. Dividend maintained, 2-for-1 split planned and buyback under consideration.
• Capex has been cut, reflecting lower growth expectations. R&D also. Inventory adjustments will eventually be completed, but Chinese competiton will remain a problem.
• The share price has dropped 30% in the past year and 10.5% since May 8, putting the shares on 27 times EPS guidance. Still not cheap, but getting there.

• nVent Electric performed strongly in the first quarter of 2024, delivering impressive volume growth, margin expansion and robust free cash flow.
• The company executed its growth strategy, focusing on high-growth verticals, new products, global expansion and acquisitions.
• The continued acceleration of artificial intelligence (AI) has also increased demand for the company’s Data Solutions offerings.

• The TransDigm Group reported their second quarter 2024 earnings and the group highlighted that their strategy remains consistent, focusing on intrinsic shareholder value creation through the different phases of the aerospace cycle.
• Approximately 90% of net sales are from unique proprietary products, with most of their EBITDA coming from aftermarket revenues.
• This results in higher margins and relative stability during downturns.

• 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 8.8bn of A-shares on lower gross volumes. NORTHBOUND bought Luxshare, CMB, and CATL. AH Premia now lowest in 4yrs.
• Foreign attitudes to HK stocks different than to mainland stocks. This may continue.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Indian IPOs continued to do well, we also looked at two upcoming deals in Hong Kong.
• On the placement front, last week ended up being one of the busiest ones so far this year with five deals live just on Thursday night alone. 

• The company has slashed FY Sep-24 guidance after missing 1H sales and profit targets by wide margins. Dividend maintained, 2-for-1 split planned and buyback under consideration.
• Capex has been cut, reflecting lower growth expectations. R&D also. Inventory adjustments will eventually be completed, but Chinese competiton will remain a problem.
• The share price has dropped 30% in the past year and 10.5% since May 8, putting the shares on 27 times EPS guidance. Still not cheap, but getting there.

• nVent Electric performed strongly in the first quarter of 2024, delivering impressive volume growth, margin expansion and robust free cash flow.
• The company executed its growth strategy, focusing on high-growth verticals, new products, global expansion and acquisitions.
• The continued acceleration of artificial intelligence (AI) has also increased demand for the company’s Data Solutions offerings.

• The TransDigm Group reported their second quarter 2024 earnings and the group highlighted that their strategy remains consistent, focusing on intrinsic shareholder value creation through the different phases of the aerospace cycle.
• Approximately 90% of net sales are from unique proprietary products, with most of their EBITDA coming from aftermarket revenues.
• This results in higher margins and relative stability during downturns.

• Zen Technologies (ZEN IN) expands product range to drones, anti-drone systems, and medical simulators, enhancing opportunities beyond government contracts.
• Strong order book of Rs 1,401 crore, significant R&D investment, and government support for indigenous defence manufacturing drive growth.
• Zen Technologies (ZEN IN) diversified product portfolio and strategic government support position it well for significant growth in the defence and simulation markets.

• There is Japan Post Bank (7182 JP) buyback risk that might cause Japan Post Holdings (6178 JP)/JPB unwinds; though probably a H2 risk.
• Great Eastern Holdings (GE SP) has consistently traded through OCBC (OCBC SP)‘s Offer terms. Someone appears to be accumulating a stake to block an Exit/Delisting Offer, and force a bump.
• L’Occitane (973 HK)‘s scrip pre-condition has been satisfied. But still the Offeror prevaricates. 

• Zen Technologies (ZEN IN) expands product range to drones, anti-drone systems, and medical simulators, enhancing opportunities beyond government contracts.
• Strong order book of Rs 1,401 crore, significant R&D investment, and government support for indigenous defence manufacturing drive growth.
• Zen Technologies (ZEN IN) diversified product portfolio and strategic government support position it well for significant growth in the defence and simulation markets.

• There is Japan Post Bank (7182 JP) buyback risk that might cause Japan Post Holdings (6178 JP)/JPB unwinds; though probably a H2 risk.
• Great Eastern Holdings (GE SP) has consistently traded through OCBC (OCBC SP)‘s Offer terms. Someone appears to be accumulating a stake to block an Exit/Delisting Offer, and force a bump.
• L’Occitane (973 HK)‘s scrip pre-condition has been satisfied. But still the Offeror prevaricates. 

• Cummins is offering an oddlot exchange with a high pre-tax gain of approximately $2,150 per account compared to other split-off exchanges
• Participants must buy 99 shares of CMI at $265.80 and tender all shares by March 13th to receive around 1,255 shares of ATMU in exchange
• The exchange ratio offers a premium of 7.053% in ATMU shares for each CMI share exchanged, with the final ratio determined by the average VWAP of CMI and ATMU on March 7th, 8th, and 11th

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.

• OHBA (hereafter referred to as “the Company”) has achieved 12 consecutive years of operating profit growth through FY2023/5, and is on track to stretch this streak to 13 consecutive years in FY2024/5, having posted a 20.1% YoY increase in operating profit for cumulative 3Q FY2024/5.
• The Company has secured orders for a number of landmark construction projects from both the public and private sectors, including basic policy formulation and master plan preparation work associated with the optimization of Japan Self-Defense Force facilities, Kumamoto JASM/TSMC (Taiwan Semiconductor Manufacturing Company) Phase 1 plant, Sony Semiconductor Solutions Corporation plant, among others.
• It has been able to capitalize on the robust macro environment, partly supported by the continued rise in technician prices for design work outsourcing

• Stanley Black & Decker remains optimistic with its progress during Q1 2024, focusing on driving value through its ongoing business transformation.
• The quarter saw solid execution across the operations, with particular momentum seen in two primary areas: free cash flow generation and gross margin expansion.
• Although the macro environment was more challenging during 2023 and ’24, the company managed to uphold its gross margin.

• Cummins is offering an oddlot exchange with a high pre-tax gain of approximately $2,150 per account compared to other split-off exchanges
• Participants must buy 99 shares of CMI at $265.80 and tender all shares by March 13th to receive around 1,255 shares of ATMU in exchange
• The exchange ratio offers a premium of 7.053% in ATMU shares for each CMI share exchanged, with the final ratio determined by the average VWAP of CMI and ATMU on March 7th, 8th, and 11th

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.

• OHBA (hereafter referred to as “the Company”) has achieved 12 consecutive years of operating profit growth through FY2023/5, and is on track to stretch this streak to 13 consecutive years in FY2024/5, having posted a 20.1% YoY increase in operating profit for cumulative 3Q FY2024/5.
• The Company has secured orders for a number of landmark construction projects from both the public and private sectors, including basic policy formulation and master plan preparation work associated with the optimization of Japan Self-Defense Force facilities, Kumamoto JASM/TSMC (Taiwan Semiconductor Manufacturing Company) Phase 1 plant, Sony Semiconductor Solutions Corporation plant, among others.
• It has been able to capitalize on the robust macro environment, partly supported by the continued rise in technician prices for design work outsourcing

• Stanley Black & Decker remains optimistic with its progress during Q1 2024, focusing on driving value through its ongoing business transformation.
• The quarter saw solid execution across the operations, with particular momentum seen in two primary areas: free cash flow generation and gross margin expansion.
• Although the macro environment was more challenging during 2023 and ’24, the company managed to uphold its gross margin.

• HD Korea Shipbuilding & Offshore Engineering (009540 KS) is looking to raise approximately US$258m, via selling 2.6m shares (2.9% of TSO) of HD Hyundai Heavy Industries (329180 KS) stock.
• The deal is a large one to digest at 14.6 days of three month ADV. 
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Khazanah Nasional, the EPF,  the Abu Dhabi Investment Authority, and Global Infrastructure Partners, are offering to buy all shares not already owned in Malaysia Airports Holdings (MAHB MK) at RM11.00/share.
• The pre-conditional voluntary Offer price is a 5.77% premium to last close; but a life-time high. The Offeror consortium collectively holds 41.22% of shares out.
• The pre-cons include regulatory approvals (in Malaysia, Turkey, Saudi Arabia, and Egypt). The Offer is subject to a 90% acceptance condition; which may be reduced. 

• HD Korea Shipbuilding & Offshore Engineering (009540 KS) plans to sell 2.66 million shares (3% of outstanding shares) of HD Hyundai Heavy Industries (329180 KS) in a block deal sale.
• We would avoid participating in this block deal sale and we have a Negative view of HD Hyundai Heavy Industries (329180 KS) over the next one year.
• After this block deal sale, we believe there could be concerns about HD Korea Shipbuilding & Offshore Engineering potentially selling additional shares of HD HHI in the next 2-3 years.

• Profit continues to expand at Mitsui E&S after its transition to a holding company, now reporting over 400% profit growth for 9 months YTD.
• The company is doing well to keep its operating costs down, with an improving funding structure and balance, as its revenue grows more than COGs.
• We wonder if there will be more revisions upward to profit, with new initiatives and with a more proven recent track record.

• Nissin Corp (TYO 9066) bought back 23.6% of their outstanding shares in a single day on May 10th and also doubled their dividend.
• The result? The stock went up about 39% (up 72% YTD).
• I already had a full sized position in Nissin Corp and despite being up big on it I added to my position at ¥4,265.

• Cummins Inc.’s Q1 2024 financial results revealed a decrease in revenues compared to Q1 2023, standing at $8.4 billion compared to the previous year’s $8.44 billion.
• This decrease was, however, marginal at 1%.
• EBITDA in Q1 2024 was doubled that of Q1 2023, being $2.6 billion or 30.6% compared to the previous year’s $1.4 billion or 16.1%.

• QANTM Intellectual Property Ltd (ASX:QIP) has announced it has entered into a binding Scheme of Arrangement for an entity associated with Adamantem Capital to acquire all its shares for $1.817/share.
• Shareholders will have the opportunity to elect to receive 100% cash or a combination of 50% cash, 50% scrip, subject to a scrip issuance cap of 24%.
• The QANTM board can elect to pay a special dividend of up to $0.071/share, which will be included in the offer price and enable shareholders who are eligible to benefit from franking credits of up to $0.03/share.

• On the optimistic front, Xylem reported a formidable first-quarter, outperforming expectations across revenue, margin, and earnings per share.
• Xylem’s team led high single-digit organic revenue growth attributed to evenly distributed volume and price.
• Furthermore, they achieved an almost 300 basis points expansion in adjusted EBITDA margin, driving EPS growth of 14%.

• EasyJet on track for record summer performance, helped by lower fuel prices.
• However pricing growth moderating and growth itself may be fizzling out.
• Winter losses remain highly elevated and we publish new analysis identifying the root causes.

• Howmet Aerospace has reported an impressive first quarter for 2024, with record revenue, earnings per share, profit, and margin all improving from last year’s figures.
• However, there have been some challenges that the company faced, particularly related to the FAA restrictions on the Boeing 737 MAX production.
• Despite these challenges, Howmet Aerospace has managed to effectively plan its strategies and make necessary adjustments to continue its growth trajectory.

• HD Korea Shipbuilding & Offshore Engineering (009540 KS) is looking to raise approximately US$258m, via selling 2.6m shares (2.9% of TSO) of HD Hyundai Heavy Industries (329180 KS) stock.
• The deal is a large one to digest at 14.6 days of three month ADV. 
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Khazanah Nasional, the EPF,  the Abu Dhabi Investment Authority, and Global Infrastructure Partners, are offering to buy all shares not already owned in Malaysia Airports Holdings (MAHB MK) at RM11.00/share.
• The pre-conditional voluntary Offer price is a 5.77% premium to last close; but a life-time high. The Offeror consortium collectively holds 41.22% of shares out.
• The pre-cons include regulatory approvals (in Malaysia, Turkey, Saudi Arabia, and Egypt). The Offer is subject to a 90% acceptance condition; which may be reduced. 

• HD Korea Shipbuilding & Offshore Engineering (009540 KS) plans to sell 2.66 million shares (3% of outstanding shares) of HD Hyundai Heavy Industries (329180 KS) in a block deal sale.
• We would avoid participating in this block deal sale and we have a Negative view of HD Hyundai Heavy Industries (329180 KS) over the next one year.
• After this block deal sale, we believe there could be concerns about HD Korea Shipbuilding & Offshore Engineering potentially selling additional shares of HD HHI in the next 2-3 years.

• Profit continues to expand at Mitsui E&S after its transition to a holding company, now reporting over 400% profit growth for 9 months YTD.
• The company is doing well to keep its operating costs down, with an improving funding structure and balance, as its revenue grows more than COGs.
• We wonder if there will be more revisions upward to profit, with new initiatives and with a more proven recent track record.

• Nissin Corp (TYO 9066) bought back 23.6% of their outstanding shares in a single day on May 10th and also doubled their dividend.
• The result? The stock went up about 39% (up 72% YTD).
• I already had a full sized position in Nissin Corp and despite being up big on it I added to my position at ¥4,265.

• Cummins Inc.’s Q1 2024 financial results revealed a decrease in revenues compared to Q1 2023, standing at $8.4 billion compared to the previous year’s $8.44 billion.
• This decrease was, however, marginal at 1%.
• EBITDA in Q1 2024 was doubled that of Q1 2023, being $2.6 billion or 30.6% compared to the previous year’s $1.4 billion or 16.1%.

• QANTM Intellectual Property Ltd (ASX:QIP) has announced it has entered into a binding Scheme of Arrangement for an entity associated with Adamantem Capital to acquire all its shares for $1.817/share.
• Shareholders will have the opportunity to elect to receive 100% cash or a combination of 50% cash, 50% scrip, subject to a scrip issuance cap of 24%.
• The QANTM board can elect to pay a special dividend of up to $0.071/share, which will be included in the offer price and enable shareholders who are eligible to benefit from franking credits of up to $0.03/share.

• On the optimistic front, Xylem reported a formidable first-quarter, outperforming expectations across revenue, margin, and earnings per share.
• Xylem’s team led high single-digit organic revenue growth attributed to evenly distributed volume and price.
• Furthermore, they achieved an almost 300 basis points expansion in adjusted EBITDA margin, driving EPS growth of 14%.

• EasyJet on track for record summer performance, helped by lower fuel prices.
• However pricing growth moderating and growth itself may be fizzling out.
• Winter losses remain highly elevated and we publish new analysis identifying the root causes.

• Howmet Aerospace has reported an impressive first quarter for 2024, with record revenue, earnings per share, profit, and margin all improving from last year’s figures.
• However, there have been some challenges that the company faced, particularly related to the FAA restrictions on the Boeing 737 MAX production.
• Despite these challenges, Howmet Aerospace has managed to effectively plan its strategies and make necessary adjustments to continue its growth trajectory.

• Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP). 
• There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
• The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.

• Malaysia Airports Holdings (MAHB MK)’s pre-conditional voluntary conditional offer from a four-member consortium is RM11.00, a 5.8% premium to the last close. 
• Despite the offer representing an all-time high, the 90% minimum acceptance condition could be challenging due to the low takeover premium and discount to historical and peer multiples. 
• The consortium can overcome issues satisfying the minimum acceptance condition by bumping the offer or lowering the acceptance condition. 

• Today, S Line Co Ltd (9078 JP) announced its CEO would conduct a Tender Offer MBO to buy out the ¥50bn-target revenue logistics company, at 0.6x book. 
• The company announced results with revenues up. But withdrew its existing MTMP which said revenues would be up 10% from here to March 2025 and ROE would be higher.
• This is the wrong price. It should engender some upset, but active investors own almost nothing it seems. 

• Recruit Holdings (6098 JP) reported 4Q and full-year FY03/2024 results today. Earnings beat own guidance as well as consensus estimates.
• Weakening labour markets have negatively impacted all business segments and new pricing model for Indeed has not really been successful.
• Recruit expects a recovery in 2HFY03/2025, but at the rate at which job openings are going down, we remain cautious.

• In the first quarter of 2024, C.H. Robinson implemented a new operating model based on lean methodology, aiming to improve execution, decision-making, and accountability across the business.
• This shift resulted in better pricing and capacity procurement efforts, thus improving optimization of volume and adjusted gross profit per truckload.
• The company saw improved operational discipline and decision-making based on data, fostering a healthier work culture with a focus on continuous improvement.

• Expion360 continues to expand its product lineup beyond the core RV and marine battery markets as it has officially entered the home energy storage market and expanded its offerings for the small RV market.
• New RV shipments have shown signs of life in the first quarter but we will have to the mix of RV shipments appears to have shifted to lower end towable units.
• The company released first-quarter results which were roughly in line with our lowered expectations.

• Management has indicated that the pipeline for new leases, renewals is robust as ICE & multiple government entities seek capacity.
• Company is engaged in multiple discussions.
• In addition, the recent debt issuance extended maturities & CXW was able to maintain the cost of capital despite the uncertain rate, economic outlook.

• The Parker-Hannifin Corporation had a strong third-quarter performance in its Fiscal Year 2024, recording record sales of $5.1 billion and a 150 basis point improvement in its margins on the prior year.
• The CFO, Todd Leombruno, attributed the record levels of sales, segment operating income, net income, and earnings per share to the impressive operating performance of the company.
• Highlights of the quarter included the aerospace segment which drove significant growth and a record operating margin of 26.7%.

• Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP). 
• There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
• The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.

• Malaysia Airports Holdings (MAHB MK)’s pre-conditional voluntary conditional offer from a four-member consortium is RM11.00, a 5.8% premium to the last close. 
• Despite the offer representing an all-time high, the 90% minimum acceptance condition could be challenging due to the low takeover premium and discount to historical and peer multiples. 
• The consortium can overcome issues satisfying the minimum acceptance condition by bumping the offer or lowering the acceptance condition. 

• Today, S Line Co Ltd (9078 JP) announced its CEO would conduct a Tender Offer MBO to buy out the ¥50bn-target revenue logistics company, at 0.6x book. 
• The company announced results with revenues up. But withdrew its existing MTMP which said revenues would be up 10% from here to March 2025 and ROE would be higher.
• This is the wrong price. It should engender some upset, but active investors own almost nothing it seems. 

• Recruit Holdings (6098 JP) reported 4Q and full-year FY03/2024 results today. Earnings beat own guidance as well as consensus estimates.
• Weakening labour markets have negatively impacted all business segments and new pricing model for Indeed has not really been successful.
• Recruit expects a recovery in 2HFY03/2025, but at the rate at which job openings are going down, we remain cautious.

• In the first quarter of 2024, C.H. Robinson implemented a new operating model based on lean methodology, aiming to improve execution, decision-making, and accountability across the business.
• This shift resulted in better pricing and capacity procurement efforts, thus improving optimization of volume and adjusted gross profit per truckload.
• The company saw improved operational discipline and decision-making based on data, fostering a healthier work culture with a focus on continuous improvement.

• Expion360 continues to expand its product lineup beyond the core RV and marine battery markets as it has officially entered the home energy storage market and expanded its offerings for the small RV market.
• New RV shipments have shown signs of life in the first quarter but we will have to the mix of RV shipments appears to have shifted to lower end towable units.
• The company released first-quarter results which were roughly in line with our lowered expectations.

• Management has indicated that the pipeline for new leases, renewals is robust as ICE & multiple government entities seek capacity.
• Company is engaged in multiple discussions.
• In addition, the recent debt issuance extended maturities & CXW was able to maintain the cost of capital despite the uncertain rate, economic outlook.

• The Parker-Hannifin Corporation had a strong third-quarter performance in its Fiscal Year 2024, recording record sales of $5.1 billion and a 150 basis point improvement in its margins on the prior year.
• The CFO, Todd Leombruno, attributed the record levels of sales, segment operating income, net income, and earnings per share to the impressive operating performance of the company.
• Highlights of the quarter included the aerospace segment which drove significant growth and a record operating margin of 26.7%.