Industrials

• The A2B Australia (A2B AU) IE considers Comfortdelgro Corp (CD SP)’s A$1.45 offer fair and reasonable as it above the midpoint of its A$1.30-1.54 per share valuation range. 
• The scheme is conditional on ACCC approval, which should be forthcoming as ComfortDelGro is not a significant player in Australia.
• Several substantial shareholders have sold or exited, lowering the scheme vote risk. At the last close and for the 11 April payment, the gross/annualised spread was 2.5%/22.3%.

• Deere & Company’s earnings revealed a company operating well in the midst of an increasingly competitive market landscape, with stable demand across the majority of sectors.
• The firm noted solid execution across the cycle with an 18.5% margin for equipment operations in the first quarter.
• Land sales fell by 4% to $12.658 billion while equipment operations also dropped 8% to $10.486 billion.

• There is no suggestion of precondition breach attached to Outsourcing Inc (2427 JP)‘s impairment losses. 
• Seven Group, now holding 71.6%, has returned to the well, and made a cash/scrip Offer for shares not owned in Boral (BLD AU), with certain tendering thresholds triggering more cash.
• Itoki Corp (7972 JP)‘s mega ToSTNeT-3 buyback is now done.

• AerCap Holdings NV (AER US) (AerCap) 2023 result was excellent; record core profit of USD2.4b, 27% ROE, and share buyback of USD2.6b of shares (~18% shares in issue) 
• Management guided continued growth in 2024 and announced a further USD500m share buyback (~3% shares in issue). We think it can easily beat this lowball target       
• Poised for growth; aircraft lease rates and asset values are rising. Maintain BUY with higher TP of USD90.6 (+16% UPSIDE) pegged to FY24 P/BV of 0.94x (1SD above LT average)   

• There are three constituent changes for the SSE STAR50 (STAR50 INDEX) at the March rebalance. One inclusion and one non-inclusion are surprises.
• One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.
• The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.

• Ingersoll Rand reports strong performance for Q4 2023, marking another record-breaking year despite continued challenges within a fluctuating macroeconomic environment.
• This performance reinforces the importance of Ingersoll Rand’s employee ownership mindset, which is being credited for the successful results.
• In 2023, Ingersoll Rand delivered double-digit growth across revenue, adjusted EBITDA, adjusted EPS and free cash flow.

• The A2B Australia (A2B AU) IE considers Comfortdelgro Corp (CD SP)’s A$1.45 offer fair and reasonable as it above the midpoint of its A$1.30-1.54 per share valuation range. 
• The scheme is conditional on ACCC approval, which should be forthcoming as ComfortDelGro is not a significant player in Australia.
• Several substantial shareholders have sold or exited, lowering the scheme vote risk. At the last close and for the 11 April payment, the gross/annualised spread was 2.5%/22.3%.

• Deere & Company’s earnings revealed a company operating well in the midst of an increasingly competitive market landscape, with stable demand across the majority of sectors.
• The firm noted solid execution across the cycle with an 18.5% margin for equipment operations in the first quarter.
• Land sales fell by 4% to $12.658 billion while equipment operations also dropped 8% to $10.486 billion.

• There is no suggestion of precondition breach attached to Outsourcing Inc (2427 JP)‘s impairment losses. 
• Seven Group, now holding 71.6%, has returned to the well, and made a cash/scrip Offer for shares not owned in Boral (BLD AU), with certain tendering thresholds triggering more cash.
• Itoki Corp (7972 JP)‘s mega ToSTNeT-3 buyback is now done.

• AerCap Holdings NV (AER US) (AerCap) 2023 result was excellent; record core profit of USD2.4b, 27% ROE, and share buyback of USD2.6b of shares (~18% shares in issue) 
• Management guided continued growth in 2024 and announced a further USD500m share buyback (~3% shares in issue). We think it can easily beat this lowball target       
• Poised for growth; aircraft lease rates and asset values are rising. Maintain BUY with higher TP of USD90.6 (+16% UPSIDE) pegged to FY24 P/BV of 0.94x (1SD above LT average)   

• There are three constituent changes for the SSE STAR50 (STAR50 INDEX) at the March rebalance. One inclusion and one non-inclusion are surprises.
• One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.
• The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.

• Ingersoll Rand reports strong performance for Q4 2023, marking another record-breaking year despite continued challenges within a fluctuating macroeconomic environment.
• This performance reinforces the importance of Ingersoll Rand’s employee ownership mindset, which is being credited for the successful results.
• In 2023, Ingersoll Rand delivered double-digit growth across revenue, adjusted EBITDA, adjusted EPS and free cash flow.

• INOX India Limited (INOX IN) ( or IWL) and Inox Wind Energy (IWEL IN) (or IWEL) have announced a merger, where IWEL will be amalgamated with IWL
• The share swap ratio in the scheme of amalgamation gives a very evident arbitrage opportunity. 
• The arbitrage opportunity has become bigger than when announced in June 2023. While the strategy is still possible, we try to justify the market behaviour.

• LATAM Group surprised the market with strong guidance for 2024 earnings growth following upgrades through 2023. We raise our 2024 EBITDAR 14% to $2.8bn.
• A successful restructuring under Chapter 11, and market leadership in key regions, is paying off for LATAM as demand remains robust.
• Such a strong recovery positions it to make further strategic gains, particularly with the risk that competitor GOL must shrink its fleet through its own CH11 processs.

• Lyft’s positive financial performance and future expectations make it an attractive investment opportunity.
• Lyft’s 2023 performance was marked by significant growth in the company’s rideshare service, with gross bookings reaching an all-time high, ride growth accelerating each quarter and ending the year up 26% in Q4.
• This growth demonstrates the strong demand for Lyft’s service, which bodes well for its future performance.

• Mainfreight came on my radar thanks to Jessie Rancourt, a friend and fellow value investor, who mentioned it during a subscriber meetup a few months ago.
• Mainfreight is in the supply chain logistics industry, an extremely broad category covering a huge segment of the world economy and harboring (pun intended) many niches and specialties.
• I decided a look at the company would fit in well with my coverage of Old Dominion Freight Line (ODFL | Disclosure: None) in the U.S. less-than-truckload space and Triumph Financial (TFIN | Disclosure: Long) in the banking-cum-truckload finance space.

• INOX India Limited (INOX IN) ( or IWL) and Inox Wind Energy (IWEL IN) (or IWEL) have announced a merger, where IWEL will be amalgamated with IWL
• The share swap ratio in the scheme of amalgamation gives a very evident arbitrage opportunity. 
• The arbitrage opportunity has become bigger than when announced in June 2023. While the strategy is still possible, we try to justify the market behaviour.

• LATAM Group surprised the market with strong guidance for 2024 earnings growth following upgrades through 2023. We raise our 2024 EBITDAR 14% to $2.8bn.
• A successful restructuring under Chapter 11, and market leadership in key regions, is paying off for LATAM as demand remains robust.
• Such a strong recovery positions it to make further strategic gains, particularly with the risk that competitor GOL must shrink its fleet through its own CH11 processs.

• Lyft’s positive financial performance and future expectations make it an attractive investment opportunity.
• Lyft’s 2023 performance was marked by significant growth in the company’s rideshare service, with gross bookings reaching an all-time high, ride growth accelerating each quarter and ending the year up 26% in Q4.
• This growth demonstrates the strong demand for Lyft’s service, which bodes well for its future performance.

• Mainfreight came on my radar thanks to Jessie Rancourt, a friend and fellow value investor, who mentioned it during a subscriber meetup a few months ago.
• Mainfreight is in the supply chain logistics industry, an extremely broad category covering a huge segment of the world economy and harboring (pun intended) many niches and specialties.
• I decided a look at the company would fit in well with my coverage of Old Dominion Freight Line (ODFL | Disclosure: None) in the U.S. less-than-truckload space and Triumph Financial (TFIN | Disclosure: Long) in the banking-cum-truckload finance space.

• Samsung Asset Management announced today that it will be launching the first Corporate Value Up ETF on 27 February. It will focus on low PBR and positive cash flow generators.
• This ETF which will be called KoAct Dividend Growth Active ETF. There are about 45 stocks that are expected to be included in this ETF. 
• Among the 92 companies in KOSPI 200 that are trading at less than 1x PBR, those that generate positive free cash flow are outperforming significantly. 

• With 1H24 results, Qantas followed Singapore Airlines in highlighting fare weakness in international markets and we cut our pre-tax income by 13% to FY24.
• We expect FY24 pre-tax income to fall 16% yoy but also expect FY25 to fall another 5%, as our EBITDAR/ASK remains 10% above FY19 levels following 12% in 2H24.
• While international markets continue to normalise, Qantas’s domestic market structure positions it favourably to continue to invest in customer service and product.

• Boeing shares are down 20% since the start of the year, despite a booming global market for aviation
• Boeing’s focus on financial performance and stock price over safety and engineering has been a concern
• The current CEO David Calhoun dissolved the company’s strategy department, raising questions about Boeing’s future direction and decision-making strategies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• On 21 February, it was announced that the long awaited amendment to the Export-Import Bank Act was passed by the Korean National Assembly. 
• As a result of this passage, the capital limit of the Export-Import Bank of Korea will be raised from the current 10 trillion won to 25 trillion won. 
• The revision of this law is expected to benefit major defense companies in Korea including Hyundai Rotem, Hanwha Aerospace, LIG Nex1, and Korea Aerospace Industries.

• 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 nearly $25 million, affirming the company’s original expectations at the start of the year.
• However, despite this impressive performance, there are still risks ahead given uncertain economic conditions.

• Before the open, HNI reported 4Q23 results, beating on adjusted EPS and roughly in line on the consolidated revenue line.
• Adjusted EPS was $0.98, well ahead of our estimate of $0.84 and consensus of $0.83.
• The adjusted number excluded ~$0.50 of restructuring asset impairment and acquisition-related costs.

• Howmet Aerospace positively reported strong fourth quarter 2023 results, achieving or surpassing the upper end of guidance across various parameters, including revenue, EBITDA, EBITDA margin, and earnings per share.
• It was reported that the company continued to grow faster than its respective markets.
• The full-year figures for 2023 also revealed strong performances with a 17% increase in revenue and 18% increase in EBITDA. The earnings per share showed significant annual improvements, setting a record at $1.84 per share, marking a 31% year-over-year increase.

• Samsung Asset Management announced today that it will be launching the first Corporate Value Up ETF on 27 February. It will focus on low PBR and positive cash flow generators.
• This ETF which will be called KoAct Dividend Growth Active ETF. There are about 45 stocks that are expected to be included in this ETF. 
• Among the 92 companies in KOSPI 200 that are trading at less than 1x PBR, those that generate positive free cash flow are outperforming significantly. 

• With 1H24 results, Qantas followed Singapore Airlines in highlighting fare weakness in international markets and we cut our pre-tax income by 13% to FY24.
• We expect FY24 pre-tax income to fall 16% yoy but also expect FY25 to fall another 5%, as our EBITDAR/ASK remains 10% above FY19 levels following 12% in 2H24.
• While international markets continue to normalise, Qantas’s domestic market structure positions it favourably to continue to invest in customer service and product.

• Boeing shares are down 20% since the start of the year, despite a booming global market for aviation
• Boeing’s focus on financial performance and stock price over safety and engineering has been a concern
• The current CEO David Calhoun dissolved the company’s strategy department, raising questions about Boeing’s future direction and decision-making strategies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• On 21 February, it was announced that the long awaited amendment to the Export-Import Bank Act was passed by the Korean National Assembly. 
• As a result of this passage, the capital limit of the Export-Import Bank of Korea will be raised from the current 10 trillion won to 25 trillion won. 
• The revision of this law is expected to benefit major defense companies in Korea including Hyundai Rotem, Hanwha Aerospace, LIG Nex1, and Korea Aerospace Industries.

• 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 nearly $25 million, affirming the company’s original expectations at the start of the year.
• However, despite this impressive performance, there are still risks ahead given uncertain economic conditions.

• Before the open, HNI reported 4Q23 results, beating on adjusted EPS and roughly in line on the consolidated revenue line.
• Adjusted EPS was $0.98, well ahead of our estimate of $0.84 and consensus of $0.83.
• The adjusted number excluded ~$0.50 of restructuring asset impairment and acquisition-related costs.

• Howmet Aerospace positively reported strong fourth quarter 2023 results, achieving or surpassing the upper end of guidance across various parameters, including revenue, EBITDA, EBITDA margin, and earnings per share.
• It was reported that the company continued to grow faster than its respective markets.
• The full-year figures for 2023 also revealed strong performances with a 17% increase in revenue and 18% increase in EBITDA. The earnings per share showed significant annual improvements, setting a record at $1.84 per share, marking a 31% year-over-year increase.

• As discussed in Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump, the company was going to do a mega ToSTNeT-3 buyback between then and end-Feb. That happened this morning.
• The company bought back 7.966mm shares (13.96%) for ¥15.9bn. That should have cleared out the bulk of the risk of the original warrant holders who bought in 2020. But…
• The dilution/accretion don’t offset perfectly, and there is a clause suggesting how this might play out from here. But we can infer things from other data we now have.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK) , Uchi Technologies (UCHI MK) , and The Keepers Holdings (KEEPR PM).
• We recently added Ginebra San Miguel (GSMI PM) / Sai Gon Cargo Service (SCS VN) to our list of companies under coverage, along with Plover Bay Technologies (1523 HK).  

• We cut our SIA operating profit by 9% to S$2.6bn in FY24 and by 17% to S$1.5bn in FY25 versus consensus of S$2.1bn.
• SIA’s cost control is under-examined and we publish a deep dive on a concerning level of inflation relative to key peers, which actually escalated in 3Q24.
• Cargo broke even in peak season, and Scoot’s margins present a conundrum as it may need to be further utilization to help SIA with cost management.

• January pricing momentum improved, helped by more operating days & re-routes
• Throughput growth remained strong last month, including +18% into WC ports
• Near term reality far rosier than downbeat view from industry giant Maersk

• The CNMV authorizes the partial takeover bid of Gubel S.L., for 15% of the shares of Prosegur (PSG SM) at €1.83/share. Acceptance period until 19 March, although extension possible to 13 May.
• I recommend long and tender, both because of the current spread and the fact that its already low liquidity and low free float will be even lower after closing.
• I believe the proration risk is minimal. Spread is 2.95%/12.43% (gross/annualised, assuming settlement on 23 May).

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than- forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements. 

• Investment firms are using Ten East to diversify personal portfolios
• Business Breakdowns podcast explores successful businesses like Heiko in niche markets
• Heiko operates in the aerospace industry, offering cost-saving solutions for aircraft parts and repairs, similar to generic drugs in the pharmaceutical industry

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than-forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements.

• iPower reported 2QFY24 revenue of $16.8 million versus $19.3 million a year ago, driven primarily by continued inventory tightening at its main online retail partner.
• Nevertheless, gross margin improved to 43.6% from 41.4% Y/Y, driven by a favorable product mix, lower warehouse costs, and service revenue.
• The secular inventory tightening, following the supply disruptions of 2022, has now run its course, and might have been exacerbated this quarter by iPower’s main retail online partner end of the year considerations.

• Q1-4 FY12/23 results were weaker than our estimates with the company revising down FY guidance.
• Orders for the mainstay electric discharge machines fell 24% YoY in Q4 FY12/23 with China demand remaining sluggish.
• However, there are positive indications that the company aims to transform its business model by conducting cost reductions, streamlining the balance sheet, and bringing greater focus to its business strategy. 

• As discussed in Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump, the company was going to do a mega ToSTNeT-3 buyback between then and end-Feb. That happened this morning.
• The company bought back 7.966mm shares (13.96%) for ¥15.9bn. That should have cleared out the bulk of the risk of the original warrant holders who bought in 2020. But…
• The dilution/accretion don’t offset perfectly, and there is a clause suggesting how this might play out from here. But we can infer things from other data we now have.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK) , Uchi Technologies (UCHI MK) , and The Keepers Holdings (KEEPR PM).
• We recently added Ginebra San Miguel (GSMI PM) / Sai Gon Cargo Service (SCS VN) to our list of companies under coverage, along with Plover Bay Technologies (1523 HK).  

• We cut our SIA operating profit by 9% to S$2.6bn in FY24 and by 17% to S$1.5bn in FY25 versus consensus of S$2.1bn.
• SIA’s cost control is under-examined and we publish a deep dive on a concerning level of inflation relative to key peers, which actually escalated in 3Q24.
• Cargo broke even in peak season, and Scoot’s margins present a conundrum as it may need to be further utilization to help SIA with cost management.

• January pricing momentum improved, helped by more operating days & re-routes
• Throughput growth remained strong last month, including +18% into WC ports
• Near term reality far rosier than downbeat view from industry giant Maersk

• The CNMV authorizes the partial takeover bid of Gubel S.L., for 15% of the shares of Prosegur (PSG SM) at €1.83/share. Acceptance period until 19 March, although extension possible to 13 May.
• I recommend long and tender, both because of the current spread and the fact that its already low liquidity and low free float will be even lower after closing.
• I believe the proration risk is minimal. Spread is 2.95%/12.43% (gross/annualised, assuming settlement on 23 May).

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than- forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements. 

• Investment firms are using Ten East to diversify personal portfolios
• Business Breakdowns podcast explores successful businesses like Heiko in niche markets
• Heiko operates in the aerospace industry, offering cost-saving solutions for aircraft parts and repairs, similar to generic drugs in the pharmaceutical industry

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than-forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements.

• iPower reported 2QFY24 revenue of $16.8 million versus $19.3 million a year ago, driven primarily by continued inventory tightening at its main online retail partner.
• Nevertheless, gross margin improved to 43.6% from 41.4% Y/Y, driven by a favorable product mix, lower warehouse costs, and service revenue.
• The secular inventory tightening, following the supply disruptions of 2022, has now run its course, and might have been exacerbated this quarter by iPower’s main retail online partner end of the year considerations.

• Q1-4 FY12/23 results were weaker than our estimates with the company revising down FY guidance.
• Orders for the mainstay electric discharge machines fell 24% YoY in Q4 FY12/23 with China demand remaining sluggish.
• However, there are positive indications that the company aims to transform its business model by conducting cost reductions, streamlining the balance sheet, and bringing greater focus to its business strategy. 

• In More Hong Kong Stocks Priced For Liquidation, I flagged thirteen stocks the market is all-but implying are priced for liquidation. 
• One of the cut-off points in that analysis was a requirement for stocks to trade at least US$1mn/day. Removing that constraint uncovers shipping services play COSCO International Holdings (517 HK) (CSI).
• CSI’s market cap accounts for ~86% of its 1H23 net cash position. Earlier this month, CSI announced another positive profit warning. Those numbers should be out late-March.

• LG Display’s tight stock rights trading prompts a need to assess potential trading opportunities. Taihan Electric Wire’s concurrent capital increase warrants close observation.
• Watch for a potentially wider spread in Taihan Electric Wire’s stock rights trading from the 22nd, given local institutional demand focus on LG Display may create a buying vacuum.
• Observers speculate on a CJ CGV-like pattern at LG Display. With no current market movements, predicting such a scenario is difficult. Nonetheless, I’ll monitor closely and share any developments.

• On the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a forgettable 8.6% premium to last close.
• This Voluntary Offer followed by a Merger by Absorption requires shareholder approval and SAFE signing off. The SAFE condition was satisfied on the 26th Jan.
• Last night, CIMC announced the CBP investigation into the evasion of  U.S. anti-dumping and countervailing duties was extended. There is no mentioned in interim accounts or HKEx of this investigation.

• There is room for FY23 result of Cathay Pacific Airways (293 HK) to beat market expectations on stronger traffic volume and better yield performance.  
• Resumption of more capacity, from 70% of the pre-pandemic level at end-FY23, will drive FY24 earnings with ROE at 12-13%, putting it on an inexpensive 0.65x P/B. 
• Its associate Air China Ltd (H) (753 HK) will also benefit from the release of pent-up demand in the domestic market and the recovery in international travel. 

• The market seems to be dancing to its own tune and is likely to continue.
• EUREKAFO’s distributors are dissatisfied, MANYAVAR’s reported numbers failed to match up to the on-ground optimism. 
• LTFH’s “strong” retail playbook keeps performing, and SGMART’s website raises concerns about its operations. 

• We refresh estimates on AF-KLM, IAG, Lufthansa following Singapore Airlines’s effective profit warning, noting higher fuel prices make margin protection more difficult.
• Our 2024 EBIT estimates are 7% ahead of consensus at €2.0bn for AF-KLM, 6% ahead at €3.6bn for IAG and 5% behind at €2.5bn for Lufthansa.
• Lufthansa has highest-in-class capacity growth, with its biggest focus on APAC while APAC yield weakness prompts margin management concerns as ground handlers strike.

With November’s purchase of Astutis, January’s sale of MiExact and the proposed Healthcare business disposal, Wilmington is now firmly focused on opportunities within the large global governance, risk and compliance (GRC) market. The group’s significant cash resource should enable further M&A to accelerate growth across the GRC landscape, while investment in technology platforms and AI capabilities improves revenue and operating margin prospects in the core activities. H124 organic revenue growth (continuing business) was up 7%, with a 12% gain in adjusted EPS. FY24 results to June are expected in line with market forecasts. Given the improving quality of earnings we regard the valuation as undemanding.

• In More Hong Kong Stocks Priced For Liquidation, I flagged thirteen stocks the market is all-but implying are priced for liquidation. 
• One of the cut-off points in that analysis was a requirement for stocks to trade at least US$1mn/day. Removing that constraint uncovers shipping services play COSCO International Holdings (517 HK) (CSI).
• CSI’s market cap accounts for ~86% of its 1H23 net cash position. Earlier this month, CSI announced another positive profit warning. Those numbers should be out late-March.

• LG Display’s tight stock rights trading prompts a need to assess potential trading opportunities. Taihan Electric Wire’s concurrent capital increase warrants close observation.
• Watch for a potentially wider spread in Taihan Electric Wire’s stock rights trading from the 22nd, given local institutional demand focus on LG Display may create a buying vacuum.
• Observers speculate on a CJ CGV-like pattern at LG Display. With no current market movements, predicting such a scenario is difficult. Nonetheless, I’ll monitor closely and share any developments.

• On the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a forgettable 8.6% premium to last close.
• This Voluntary Offer followed by a Merger by Absorption requires shareholder approval and SAFE signing off. The SAFE condition was satisfied on the 26th Jan.
• Last night, CIMC announced the CBP investigation into the evasion of  U.S. anti-dumping and countervailing duties was extended. There is no mentioned in interim accounts or HKEx of this investigation.

• There is room for FY23 result of Cathay Pacific Airways (293 HK) to beat market expectations on stronger traffic volume and better yield performance.  
• Resumption of more capacity, from 70% of the pre-pandemic level at end-FY23, will drive FY24 earnings with ROE at 12-13%, putting it on an inexpensive 0.65x P/B. 
• Its associate Air China Ltd (H) (753 HK) will also benefit from the release of pent-up demand in the domestic market and the recovery in international travel. 

• The market seems to be dancing to its own tune and is likely to continue.
• EUREKAFO’s distributors are dissatisfied, MANYAVAR’s reported numbers failed to match up to the on-ground optimism. 
• LTFH’s “strong” retail playbook keeps performing, and SGMART’s website raises concerns about its operations. 

• We refresh estimates on AF-KLM, IAG, Lufthansa following Singapore Airlines’s effective profit warning, noting higher fuel prices make margin protection more difficult.
• Our 2024 EBIT estimates are 7% ahead of consensus at €2.0bn for AF-KLM, 6% ahead at €3.6bn for IAG and 5% behind at €2.5bn for Lufthansa.
• Lufthansa has highest-in-class capacity growth, with its biggest focus on APAC while APAC yield weakness prompts margin management concerns as ground handlers strike.

With November’s purchase of Astutis, January’s sale of MiExact and the proposed Healthcare business disposal, Wilmington is now firmly focused on opportunities within the large global governance, risk and compliance (GRC) market. The group’s significant cash resource should enable further M&A to accelerate growth across the GRC landscape, while investment in technology platforms and AI capabilities improves revenue and operating margin prospects in the core activities. H124 organic revenue growth (continuing business) was up 7%, with a 12% gain in adjusted EPS. FY24 results to June are expected in line with market forecasts. Given the improving quality of earnings we regard the valuation as undemanding.