Industrials

• A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP). 
• The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
• There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

• Frontier Management Inc. (hereafter, the Company) announced Q3 FY2024/12 results on November 13, 2024.
• Cumulative Q3 sales in the Management Consulting Business remained strong at JPY 4,444 mn (+18.1% YoY), but other segments suffered.
• The Revitalization Support Business posted sales of JPY 1,088 mn (-15.0% YoY), reflecting the completion of a major project.

• A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP). 
• The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
• There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

• Frontier Management Inc. (hereafter, the Company) announced Q3 FY2024/12 results on November 13, 2024.
• Cumulative Q3 sales in the Management Consulting Business remained strong at JPY 4,444 mn (+18.1% YoY), but other segments suffered.
• The Revitalization Support Business posted sales of JPY 1,088 mn (-15.0% YoY), reflecting the completion of a major project.

• MNC Solution reported its IPO book building results. The IPO price has been determined at 65,000 won, which is 18.8% lower than the low end of the IPO price range. 
• A total of 198 institutional investors participated in the IPO demand forecast. The competition rate was low at 8.2 to 1. 
• Our base case valuation of MNC Solution is target price of 92,842 won per share, which is 43% higher than the IPO price of 65,000 won.

• The core business continues to perform well  with a growing  order backlog
• Due to the company’s historical issues it has hugely underperformed its smaller peers
• The disconnect from the oil price provides  asymmetric upside once the overhang clears

• Aditya Infotech Ltd (6596564Z IN) is looking to raise about US$155m in its upcoming India IPO.
• Aditya Infotech is a CCTV/video surveillance provider offering a range of advanced video security and surveillance products, technologies and solutions for enterprise and consumer segments under its CP PLUS brand.
• In this note, we talk about the company’s historical performance.

• Business Breakdowns series delves into SpaceX with investor Luke Ward from Bailey Gifford
• Focus on SpaceX’s business model, cost curve of launches, and potential future of the space economy
• SpaceX is a business and technology innovator, with a focus on economic sustainability and funding additional technology innovation to expand market capabilities, such as with Starlink.

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

• In today’s Morning Views publication we comment on developments of the following high yield issuers: GMR Hyderabad, Rakuten Group
• In the US, the ISM services index fell to 52.1 (55.7 e / 56.0 p). This was the slowest pace in three months, albeit the gauge remained in expansion territory for the ninth month this year. Meanwhile, the November (final) S&P services PMI rose to 56.0 (55.0 p), albeit below the preliminary estimate of 57.0.
• The composite PMI climbed to 54.9 (54.1 p). Separately, the ADP employment survey showed that private sector job growth slowed to 146 k (150 k e / 184 k revised p).

• In this edition: • Ahold Delhaize | regulatory approval for Profi Rom acquisition • Shell | no new offshore wind projects • InPost/PostNL/bpostgroup | EC plans to address problems with Chinese parcels • Black Friday update | again a new all-time high in daily volumes for PostNL

Severfield remains the leading UK structural steel fabricator, with a strong presence in Northern Europe and an Indian joint venture. However, news that it is required to remediate 12 bridge structures and that its underlying markets are showing signs of short-term weakness have resulted in a downgrade to profit estimates and a material share price correction. We believe the markets will recover in time and that there is potential for third-party cost recoveries relating to the bridge issues, but resolution of either is not likely to be imminent. That said, the stock trades on a low FY26e P/E.

• Universal Logistics Holdings operates in logistics and transportation in North America
• Stock believed to have 50% or more upside to fair value despite risks such as family control and limited float
• Strong earnings growth, lower leverage, and better margins not fully reflected in stock price, favorable outlook for future 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.

• Kraken Robotics is a marine technology company based in Newfoundland, Canada, specializing in underwater exploration devices
• Founded in 2008, the company has grown through mergers and acquisitions to become a leader in marine robotics, sensors, and underwater batteries
• Focus on autonomous underwater vehicles with products catering to industries such as oil and gas, defense, ocean science, and renewable energy, including the KATFISH towed synthetic aperture sonar system and SEAPOWER pressure-tolerant battery system

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.

• MNC Solution reported its IPO book building results. The IPO price has been determined at 65,000 won, which is 18.8% lower than the low end of the IPO price range. 
• A total of 198 institutional investors participated in the IPO demand forecast. The competition rate was low at 8.2 to 1. 
• Our base case valuation of MNC Solution is target price of 92,842 won per share, which is 43% higher than the IPO price of 65,000 won.

• The core business continues to perform well  with a growing  order backlog
• Due to the company’s historical issues it has hugely underperformed its smaller peers
• The disconnect from the oil price provides  asymmetric upside once the overhang clears

• Aditya Infotech Ltd (6596564Z IN) is looking to raise about US$155m in its upcoming India IPO.
• Aditya Infotech is a CCTV/video surveillance provider offering a range of advanced video security and surveillance products, technologies and solutions for enterprise and consumer segments under its CP PLUS brand.
• In this note, we talk about the company’s historical performance.

• Business Breakdowns series delves into SpaceX with investor Luke Ward from Bailey Gifford
• Focus on SpaceX’s business model, cost curve of launches, and potential future of the space economy
• SpaceX is a business and technology innovator, with a focus on economic sustainability and funding additional technology innovation to expand market capabilities, such as with Starlink.

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

• In today’s Morning Views publication we comment on developments of the following high yield issuers: GMR Hyderabad, Rakuten Group
• In the US, the ISM services index fell to 52.1 (55.7 e / 56.0 p). This was the slowest pace in three months, albeit the gauge remained in expansion territory for the ninth month this year. Meanwhile, the November (final) S&P services PMI rose to 56.0 (55.0 p), albeit below the preliminary estimate of 57.0.
• The composite PMI climbed to 54.9 (54.1 p). Separately, the ADP employment survey showed that private sector job growth slowed to 146 k (150 k e / 184 k revised p).

• In this edition: • Ahold Delhaize | regulatory approval for Profi Rom acquisition • Shell | no new offshore wind projects • InPost/PostNL/bpostgroup | EC plans to address problems with Chinese parcels • Black Friday update | again a new all-time high in daily volumes for PostNL

Severfield remains the leading UK structural steel fabricator, with a strong presence in Northern Europe and an Indian joint venture. However, news that it is required to remediate 12 bridge structures and that its underlying markets are showing signs of short-term weakness have resulted in a downgrade to profit estimates and a material share price correction. We believe the markets will recover in time and that there is potential for third-party cost recoveries relating to the bridge issues, but resolution of either is not likely to be imminent. That said, the stock trades on a low FY26e P/E.

• Universal Logistics Holdings operates in logistics and transportation in North America
• Stock believed to have 50% or more upside to fair value despite risks such as family control and limited float
• Strong earnings growth, lower leverage, and better margins not fully reflected in stock price, favorable outlook for future 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.

• Kraken Robotics is a marine technology company based in Newfoundland, Canada, specializing in underwater exploration devices
• Founded in 2008, the company has grown through mergers and acquisitions to become a leader in marine robotics, sensors, and underwater batteries
• Focus on autonomous underwater vehicles with products catering to industries such as oil and gas, defense, ocean science, and renewable energy, including the KATFISH towed synthetic aperture sonar system and SEAPOWER pressure-tolerant battery system

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.

• Eight months after shareholders approved the transfer from the KOSDAQ to the KOSPI market, Ecopro BM (247540 KS) has submitted the application for section transfer to the KRX.
• Given historical precedent, the transfer could take place in February. Ecopro BM‘s deletion will mean an inclusion to the KOSDAQ150 Index to maintain the number of index constituents at 150.
• Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index leading to passive selling and some short covering. Then will come the inclusion to the KOSPI 200 Index.

• Auckland Council is looking to raise NZ$1.3bn (US$772m) from selling its entire stake in Auckland Intl Airport (AIA NZ).
• Overall, the selldown will be a large one for the stock to digest at 10% of shares outstanding and 62 days of three month ADV.
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Sg Fleet (SGF AU) has entered a scheme implementation deed with Pacific Equity Partners (PEP) at A$3.50 per share, a 31.1% premium to the undisturbed price. 
• The key conditions are shareholder and regulatory approvals (FIRB, OIO and UK FCA). Super Group (SPG SJ), the largest shareholder with a 53.58% stake, will support the offer. 
• The offer is attractive compared to peer multiples and represents an all-time high. At the last close and for a March 2025-end payment, the gross/annualised spread is 2.3%/7.6%.

• Eight months after shareholders approved the transfer from the KOSDAQ to the KOSPI market, Ecopro BM (247540 KS) has submitted the application for section transfer to the KRX.
• Given historical precedent, the transfer could take place in February. Ecopro BM‘s deletion will mean an inclusion to the KOSDAQ150 Index to maintain the number of index constituents at 150.
• Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index leading to passive selling and some short covering. Then will come the inclusion to the KOSPI 200 Index.

• Auckland Council is looking to raise NZ$1.3bn (US$772m) from selling its entire stake in Auckland Intl Airport (AIA NZ).
• Overall, the selldown will be a large one for the stock to digest at 10% of shares outstanding and 62 days of three month ADV.
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Sg Fleet (SGF AU) has entered a scheme implementation deed with Pacific Equity Partners (PEP) at A$3.50 per share, a 31.1% premium to the undisturbed price. 
• The key conditions are shareholder and regulatory approvals (FIRB, OIO and UK FCA). Super Group (SPG SJ), the largest shareholder with a 53.58% stake, will support the offer. 
• The offer is attractive compared to peer multiples and represents an all-time high. At the last close and for a March 2025-end payment, the gross/annualised spread is 2.3%/7.6%.

• Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
• The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
• There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.

• In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
• What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
• The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.

• Back on the 25 November, SG Fleet (SGF AU) (SGF), an Aussie provider of fleet leasing services, announced a A$3.50/share non-binding/indicative proposal from Sydney PE outfit Pacific Equity Partners (PEP).
• The initial due diligence period was extended one week to the 6th December. That short timeframe suggested a firm Offer was imminent. Both parties have now entered into a SID. 
• Terms remains the same as the NBIO. SGF’s largest shareholder, Super Group (SPG SJ) (53.58%), is supportive. Implementation is expected in the 1Q25. 

• With a massive 125% rally YTD, Xinjiang Goldwind Science & Technology (2208 HK) is no longer cheap. Its yield of 3.5% for FY25 cannot stand out as attractive.
• Good 9M24 earnings growth is partly due to an extremely low base last year. However, the average bidding price of WTG suppliers is still 50% below that in early 2022. 
• Net operating cash outflow surged 37.8% YoY, adding pressure to its balance sheet. Its gearing has increased by 7pp over the last nine months.

• Copart, Inc. delivered their first-quarter fiscal 2025 results amidst significant environmental challenges and dynamic industry trends.
• The firm exhibited strong performance, particularly in their insurance segment and response to natural disasters, while also experiencing some cost increases related to capacity expansion and hurricane preparation.
• A critical highlight was Copart’s adept response to consecutive hurricanes in the southeastern United States, notably Hurricanes Helane and Milton.

• Tsubakimoto Kogyo announced at 10:00 a.m. on November 29, 2024 that it had completed its share buyback, which it announced following the previous day’s market close.
• The Company explained that the reason for the share buyback is to improve shareholder returns and capital efficiency and to enable the implementation of an agile and flexible capital policy.
• In its Q2 FY2025/3 earnings briefing held on October 31, 2024, the Company reported results that fell slightly short of plan, leading to a temporary drop in its share price.

Following Singapore Post’s resilient H1 results in November, the company has now announced that it has agreed to sell its Australian logistics business for an enterprise value of c A$1bn to a private equity investor. The disposal is likely to result in the reporting of a gain on disposal of over S$300m. The proceeds are likely to be used to pay down debt and to potentially pay a special dividend to shareholders.

• RaaS has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following the company’s announcement yesterday that it has signed a three-year supply agreement for US melt and forged titanium bar with The Perryman Company, a US-based privately owned, fully-integrated manufacturer of titanium products.
• For the term of the contract, Amaero says Perryman will be its preferred and primary supplier of high-quality, reliable and scalable US melt and forged titanium alloy bar feedstock for the atomisation of premium spherical powder.
• The contract guarantees that Amaero will have sufficient titanium bars to meet anticipated contractual demand for Ti64 powder in an environment of heightening tariff wars between the US and China, limited sources of supply for critical metals and ongoing demand from the US defence, aerospace and space components sector for full lot traceability of feedstock.

• Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
• The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
• There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.

• In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
• What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
• The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.

• Back on the 25 November, SG Fleet (SGF AU) (SGF), an Aussie provider of fleet leasing services, announced a A$3.50/share non-binding/indicative proposal from Sydney PE outfit Pacific Equity Partners (PEP).
• The initial due diligence period was extended one week to the 6th December. That short timeframe suggested a firm Offer was imminent. Both parties have now entered into a SID. 
• Terms remains the same as the NBIO. SGF’s largest shareholder, Super Group (SPG SJ) (53.58%), is supportive. Implementation is expected in the 1Q25. 

• With a massive 125% rally YTD, Xinjiang Goldwind Science & Technology (2208 HK) is no longer cheap. Its yield of 3.5% for FY25 cannot stand out as attractive.
• Good 9M24 earnings growth is partly due to an extremely low base last year. However, the average bidding price of WTG suppliers is still 50% below that in early 2022. 
• Net operating cash outflow surged 37.8% YoY, adding pressure to its balance sheet. Its gearing has increased by 7pp over the last nine months.

• Copart, Inc. delivered their first-quarter fiscal 2025 results amidst significant environmental challenges and dynamic industry trends.
• The firm exhibited strong performance, particularly in their insurance segment and response to natural disasters, while also experiencing some cost increases related to capacity expansion and hurricane preparation.
• A critical highlight was Copart’s adept response to consecutive hurricanes in the southeastern United States, notably Hurricanes Helane and Milton.

• Tsubakimoto Kogyo announced at 10:00 a.m. on November 29, 2024 that it had completed its share buyback, which it announced following the previous day’s market close.
• The Company explained that the reason for the share buyback is to improve shareholder returns and capital efficiency and to enable the implementation of an agile and flexible capital policy.
• In its Q2 FY2025/3 earnings briefing held on October 31, 2024, the Company reported results that fell slightly short of plan, leading to a temporary drop in its share price.

Following Singapore Post’s resilient H1 results in November, the company has now announced that it has agreed to sell its Australian logistics business for an enterprise value of c A$1bn to a private equity investor. The disposal is likely to result in the reporting of a gain on disposal of over S$300m. The proceeds are likely to be used to pay down debt and to potentially pay a special dividend to shareholders.

• RaaS has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following the company’s announcement yesterday that it has signed a three-year supply agreement for US melt and forged titanium bar with The Perryman Company, a US-based privately owned, fully-integrated manufacturer of titanium products.
• For the term of the contract, Amaero says Perryman will be its preferred and primary supplier of high-quality, reliable and scalable US melt and forged titanium alloy bar feedstock for the atomisation of premium spherical powder.
• The contract guarantees that Amaero will have sufficient titanium bars to meet anticipated contractual demand for Ti64 powder in an environment of heightening tariff wars between the US and China, limited sources of supply for critical metals and ongoing demand from the US defence, aerospace and space components sector for full lot traceability of feedstock.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
• The base date for the December 2024 review was 25th November 2024. However, after the base date, the index selection methodology has been changed.
• As a result, we are revising our expectations for index changes and flow expectations.

• The recent pull-back in the share price of KHI provides a cheap entry point into the defense spending thematic
• KHI’s defense revenues are projected to soar by 40% to ¥406 billion in FY24, outpacing industry leader MHI’s 20% growth
• KHI and MJI to benefit from Japan’s defense spending doubling to 2% of GDP by 2027 and ¥43 trillion ($320 billion) earmarked over five years. 

• The December 2024 index review results for the CSI National Defense Industry Index were announced after market close on Friday 29th November 2024.
• There will be seven changes  for the CSI National Defense Industry Index. 
• In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance.

• Quess Corp Ltd (QUESS IN) will spinoff into 3 different companies, each representing a business vertical of its consolidated operations. All three companies are expected to be listed during Q1FY26.
• It has received approval from the stock exchanges and is now awaiting the go ahead from National Company Law Tribunal (NCLT).
• Improving business performance and sum-of-the-parts valuation of the three separate listed businesses indicate potential upside from the current valuation.

• Core business driving increasing recurring revenue profile: Strong growth history with recent successful conversion to recurring revenue – now 50%+ of the business’ revenue – provides more visible earnings certainty.
• Recent history of solid growth is set to continue in core operating segments, while commercialising water treatment technology is option for potential upside in the stock.
• Cash generative, profitable, and capital-light business model: Energy (boilers) and Baltec (exhaust systems) in particular provide cash generative and profitable support for the business to prosecute building out its suite of environmental engineered solutions.

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.

• In this edition: • Unilever | confirms its intention to sell off certain local brands • bpostgroup | CEO stresses sense of urgency for a quick transformation • Black Friday update | iDEAL transactions on Black Friday lower than last year’s

• The key takeaway from the Q1-2 FY3/25 result is that Duskin is making solid strides forward, although previous earnings projections appear to have been too ambitious.
• Management has experienced challenges in aligning earnings guidance with actual performance, and there is a risk over whether it can deliver the planned ROI on the major ¥21bn capex automation project at the Direct Selling Group.
• The Food Group continues to perform positively towards its full potential at ‘Mister Donut’, and we believe this segment will continue to be the core contributor to earnings growth.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
• The base date for the December 2024 review was 25th November 2024. However, after the base date, the index selection methodology has been changed.
• As a result, we are revising our expectations for index changes and flow expectations.

• The recent pull-back in the share price of KHI provides a cheap entry point into the defense spending thematic
• KHI’s defense revenues are projected to soar by 40% to ¥406 billion in FY24, outpacing industry leader MHI’s 20% growth
• KHI and MJI to benefit from Japan’s defense spending doubling to 2% of GDP by 2027 and ¥43 trillion ($320 billion) earmarked over five years. 

• The December 2024 index review results for the CSI National Defense Industry Index were announced after market close on Friday 29th November 2024.
• There will be seven changes  for the CSI National Defense Industry Index. 
• In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance.

• Quess Corp Ltd (QUESS IN) will spinoff into 3 different companies, each representing a business vertical of its consolidated operations. All three companies are expected to be listed during Q1FY26.
• It has received approval from the stock exchanges and is now awaiting the go ahead from National Company Law Tribunal (NCLT).
• Improving business performance and sum-of-the-parts valuation of the three separate listed businesses indicate potential upside from the current valuation.

• Core business driving increasing recurring revenue profile: Strong growth history with recent successful conversion to recurring revenue – now 50%+ of the business’ revenue – provides more visible earnings certainty.
• Recent history of solid growth is set to continue in core operating segments, while commercialising water treatment technology is option for potential upside in the stock.
• Cash generative, profitable, and capital-light business model: Energy (boilers) and Baltec (exhaust systems) in particular provide cash generative and profitable support for the business to prosecute building out its suite of environmental engineered solutions.

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.

• In this edition: • Unilever | confirms its intention to sell off certain local brands • bpostgroup | CEO stresses sense of urgency for a quick transformation • Black Friday update | iDEAL transactions on Black Friday lower than last year’s

• The key takeaway from the Q1-2 FY3/25 result is that Duskin is making solid strides forward, although previous earnings projections appear to have been too ambitious.
• Management has experienced challenges in aligning earnings guidance with actual performance, and there is a risk over whether it can deliver the planned ROI on the major ¥21bn capex automation project at the Direct Selling Group.
• The Food Group continues to perform positively towards its full potential at ‘Mister Donut’, and we believe this segment will continue to be the core contributor to earnings growth.