Industrials

• Pasona (2168 JP)will pay out 10-20% of the extraordinary gain from the Benefit One (2412 JP) sale. It will take its sweet time doing so. For no apparent reason.
• Hang Lung Properties (101 HK)‘s first-ever scrip dividend provides the means for the Chan Family to indirectly chip away at minorities. 
• Hollysys Automation Technologies (HOLI US) accountant resignation announcement is a nothing burger. An  update on PRC regulatory approvals would be welcome about now though. 

• Our analysis suggests container rate momentum remained +ive in March
• Despite higher fuel expense, core container margins likely rose Y/Y in Q124
• Our L/S pair trade? It’s worked, a little, but Evergreen shares have stayed firm

• Pasona (2168 JP)will pay out 10-20% of the extraordinary gain from the Benefit One (2412 JP) sale. It will take its sweet time doing so. For no apparent reason.
• Hang Lung Properties (101 HK)‘s first-ever scrip dividend provides the means for the Chan Family to indirectly chip away at minorities. 
• Hollysys Automation Technologies (HOLI US) accountant resignation announcement is a nothing burger. An  update on PRC regulatory approvals would be welcome about now though. 

• Our analysis suggests container rate momentum remained +ive in March
• Despite higher fuel expense, core container margins likely rose Y/Y in Q124
• Our L/S pair trade? It’s worked, a little, but Evergreen shares have stayed firm

• 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.
• We expect up to four changes in the KOSPI 200 index during the June 2024 index rebal event (down from 5 expected last month)  based on the latest available data.

• The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
• The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
• Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

Carr’s Group has announced an updated strategy that offers the potential for value realisation and creation from a number of avenues. These include: value realisation of the Engineering Division; the ability to significantly reduce central costs; and longer-term value creation in the Agriculture Division as a focused business with recovery potential and a strategy to leverage its strong market positions for growth.

• Kondotec Inc (7438 JP) is a wholesaler of construction materials in the same league as companies such as Okabe Co., Ltd. (TSE PRM: 5959).
• In FY03/23, sales amounted to JPY75.4bn (+14.1% YoY), operating profit came to JPY4.4bn (+21.2% YoY), recurring profit was JPY4.6bn, and net income attributable to owners of the parent was JPY2.4bn.
• Kondotec Inc. announced changes to its lineup of representative directors (a change of president).

• ASGN Incorporated recently held its fourth quarter and full year 2023 earnings call.
• The company reported solid results for the fourth quarter with revenues, gross margin and adjusted EBITDA margin all landing at the upper end or above their respective guidance ranges.
• The annual revenue for 2023 amounted to approximately $4.5 billion, $2.4 billion of which was attributed to commercial and government IT consulting work.

• Sensata Technologies fourth quarter and full year 2023 earnings revealed several key points investors may consider.
• With growth in electrification revenue by approximately 50% year-over-year to $700 million in 2023, this trend is considered a major driver for future performance.
• The company has also reduced gross and net leverage, via an updated capital allocation strategy, which places higher emphasis on organic growth and lower focus on M&A. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• 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.
• We expect up to four changes in the KOSPI 200 index during the June 2024 index rebal event (down from 5 expected last month)  based on the latest available data.

• The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
• The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
• Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

Carr’s Group has announced an updated strategy that offers the potential for value realisation and creation from a number of avenues. These include: value realisation of the Engineering Division; the ability to significantly reduce central costs; and longer-term value creation in the Agriculture Division as a focused business with recovery potential and a strategy to leverage its strong market positions for growth.

• Kondotec Inc (7438 JP) is a wholesaler of construction materials in the same league as companies such as Okabe Co., Ltd. (TSE PRM: 5959).
• In FY03/23, sales amounted to JPY75.4bn (+14.1% YoY), operating profit came to JPY4.4bn (+21.2% YoY), recurring profit was JPY4.6bn, and net income attributable to owners of the parent was JPY2.4bn.
• Kondotec Inc. announced changes to its lineup of representative directors (a change of president).

• ASGN Incorporated recently held its fourth quarter and full year 2023 earnings call.
• The company reported solid results for the fourth quarter with revenues, gross margin and adjusted EBITDA margin all landing at the upper end or above their respective guidance ranges.
• The annual revenue for 2023 amounted to approximately $4.5 billion, $2.4 billion of which was attributed to commercial and government IT consulting work.

• Sensata Technologies fourth quarter and full year 2023 earnings revealed several key points investors may consider.
• With growth in electrification revenue by approximately 50% year-over-year to $700 million in 2023, this trend is considered a major driver for future performance.
• The company has also reduced gross and net leverage, via an updated capital allocation strategy, which places higher emphasis on organic growth and lower focus on M&A. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• KBR, Inc. achieved solid results in the Q4 and FY 2023, meeting or exceeding expectations on all key metrics.
• Revenue grew by 11%, and adjusted EBITDA by 12% year-on-year, with margins increasing to 10.7%.
• Cash management was a highlight, with the company settling both the convert and warrants in cash, reducing share count while avoiding dilution, and management described it as ‘delivering on its commitment to maximise shareholder return.’ The company ended the year with a good order backlog, providing visibility of future earnings potential.

• Pacific Basin Shipping (2343 HK) just announced a US$40m buyback which equals 2.5% of market capitalisation, showcasing management’s confidence in the outlook.
• At end-1Q24, it covered 68% of FY24 Handysize days at US$10,960/day and 78% of Supermax days at US$13,370/day, leaving significant room to capture the upside in 2H24.
• Market consensus looks overly conservative with FY24 earnings of US$154m, given BDI of 1,808 YTD. The average half-year BDI and net profit since 1H20 is 1,822 and US$189m.  

• Taylor Devices, Inc. designs and manufactures shock absorption devices for the construction and aerospace & defense industries.
• Aerospace & defense orders have surged and now make up over 80% of the company’s backlog.
• The company had its best financial performance in FY 2023 and continues to see significant increases in gross profit and operating income in FY 2024 under new management.

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.

• KBR, Inc. achieved solid results in the Q4 and FY 2023, meeting or exceeding expectations on all key metrics.
• Revenue grew by 11%, and adjusted EBITDA by 12% year-on-year, with margins increasing to 10.7%.
• Cash management was a highlight, with the company settling both the convert and warrants in cash, reducing share count while avoiding dilution, and management described it as ‘delivering on its commitment to maximise shareholder return.’ The company ended the year with a good order backlog, providing visibility of future earnings potential.

• Pacific Basin Shipping (2343 HK) just announced a US$40m buyback which equals 2.5% of market capitalisation, showcasing management’s confidence in the outlook.
• At end-1Q24, it covered 68% of FY24 Handysize days at US$10,960/day and 78% of Supermax days at US$13,370/day, leaving significant room to capture the upside in 2H24.
• Market consensus looks overly conservative with FY24 earnings of US$154m, given BDI of 1,808 YTD. The average half-year BDI and net profit since 1H20 is 1,822 and US$189m.  

• Taylor Devices, Inc. designs and manufactures shock absorption devices for the construction and aerospace & defense industries.
• Aerospace & defense orders have surged and now make up over 80% of the company’s backlog.
• The company had its best financial performance in FY 2023 and continues to see significant increases in gross profit and operating income in FY 2024 under new management.

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.

• Jeil M&S reported excellent IPO bookbuilding results. Jeil M&S’s IPO price has been determined at 22,000 won per share (22% higher than the high end of the IPO price range).
• A total of 2,164 institutional investors participated in this IPO book building. The demand ratio was 646 to 1. Samhyun will start trading on 30 April 2024. 
• Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 11% higher than the IPO price.

• Old Dominion Freight Line released its fourth-quarter earnings.
• In the quarter, the company saw a slowdown in the domestic economy which affected volume levels.
• Despite this, the company saw a quarterly revenue and earnings per share increase for the first time in 2023, owing to an increase in the quality of its revenue.

Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appears compelling.

• kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
• With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

• Sunrun is a renewable energy company that had a strong fourth quarter and a full-year result in 2023.
• The company exceeded its guidance on storage capacity installation and landed in its guidance range on installed solar capacity.
• As a result, there were significant increases in its subscriber values, up 7% from Q3 and 18% year-over-year.

• Jeil M&S reported excellent IPO bookbuilding results. Jeil M&S’s IPO price has been determined at 22,000 won per share (22% higher than the high end of the IPO price range).
• A total of 2,164 institutional investors participated in this IPO book building. The demand ratio was 646 to 1. Samhyun will start trading on 30 April 2024. 
• Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 11% higher than the IPO price.

• Old Dominion Freight Line released its fourth-quarter earnings.
• In the quarter, the company saw a slowdown in the domestic economy which affected volume levels.
• Despite this, the company saw a quarterly revenue and earnings per share increase for the first time in 2023, owing to an increase in the quality of its revenue.

Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appears compelling.

• kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
• With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

• Sunrun is a renewable energy company that had a strong fourth quarter and a full-year result in 2023.
• The company exceeded its guidance on storage capacity installation and landed in its guidance range on installed solar capacity.
• As a result, there were significant increases in its subscriber values, up 7% from Q3 and 18% year-over-year.

• Nidec’s share price rose by 7% on the largest volume day of the year and on a day where the Nikkei declined by 2%.
• The move followed an announcement that Nidec will enhance its CDUs production line in Thailand by 10x by June 2024. CDUs are used to cool AI servers in data centres
• The market impact of 250 billion yen implies a sales impact of 69 billion yen, which is far too high for 24,000 units per year

• Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
• Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
• Ryanair is comfortably most insulated given margin and balance sheet strength.

• CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations 
• The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates  
• Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations 

• Our flash checks across a couple of dealers indicate pressure on margins across the industry. Voltas Ltd (VOLT IN) is trying hard to gain market share.
• Other names discussed include PNB Housing Finance Ltd (PNBHOUSI IN), Vedant Fashions (MANYAVAR IN) and Bandhan Bank Ltd (BANDHAN IN). 
• Varun Beverages (VBL IN) and Schaeffler India (SCHFL IN) show up as interesting ARs to read. 

• Prysmian SpA (PRY IM) agreed to acquire Encore Wire (WIRE US) for $290/share in cash, 29% premium to 90-day VWAP, implied EV of €4,264 million, 11x EV/NTM EBITDA and 16.9x Fwd P/E.
• Encore wire has traded at an average 6.4x EV/EBITDA and 10.6x P/E over the last 5 years. I set my TP at $290. Synergies could be valued at $51/share.
• The shares are trading slightly above the offer price. Gross spread is +0.2%. The volume traded since announcement has been very strong. There is room for some sweetening. Long.

• Lonking Holdings (3339 HK)‘s demand should pick up in 2H24 supported by the government’s “Action plan to promote large-scale equipment renewals and consumer goods trade-ins”. 
• Industry volume sales have already witnessed a narrower YoY decline in Mar, with solid exports of wheel loaders and domestic sales of excavators.
• After going ex- in late-May, its PER will drop to 7.0x and yield will rise to 6.6%. Net cash of HK$1.56/share is more than fully cover its share price.

• J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Invest in Spirit 8% bonds due 9/20/2025
• Spirit Airlines has strong cash position and available credit
• Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes

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.

• Norcros plc is a United Kingdom-based supplier of bathroom and kitchen products.
• The principal activities of the Company and its subsidiaries are the design, manufacture, and distribution of a range of bathroom and kitchen products, mainly in the United Kingdom and South Africa.
• In the United Kingdom, it offers a range of bathroom and kitchen products for domestic and commercial applications. 

• kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
• With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

• Nidec’s share price rose by 7% on the largest volume day of the year and on a day where the Nikkei declined by 2%.
• The move followed an announcement that Nidec will enhance its CDUs production line in Thailand by 10x by June 2024. CDUs are used to cool AI servers in data centres
• The market impact of 250 billion yen implies a sales impact of 69 billion yen, which is far too high for 24,000 units per year

• Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
• Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
• Ryanair is comfortably most insulated given margin and balance sheet strength.

• CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations 
• The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates  
• Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations 

• Our flash checks across a couple of dealers indicate pressure on margins across the industry. Voltas Ltd (VOLT IN) is trying hard to gain market share.
• Other names discussed include PNB Housing Finance Ltd (PNBHOUSI IN), Vedant Fashions (MANYAVAR IN) and Bandhan Bank Ltd (BANDHAN IN). 
• Varun Beverages (VBL IN) and Schaeffler India (SCHFL IN) show up as interesting ARs to read. 

• Prysmian SpA (PRY IM) agreed to acquire Encore Wire (WIRE US) for $290/share in cash, 29% premium to 90-day VWAP, implied EV of €4,264 million, 11x EV/NTM EBITDA and 16.9x Fwd P/E.
• Encore wire has traded at an average 6.4x EV/EBITDA and 10.6x P/E over the last 5 years. I set my TP at $290. Synergies could be valued at $51/share.
• The shares are trading slightly above the offer price. Gross spread is +0.2%. The volume traded since announcement has been very strong. There is room for some sweetening. Long.

• Lonking Holdings (3339 HK)‘s demand should pick up in 2H24 supported by the government’s “Action plan to promote large-scale equipment renewals and consumer goods trade-ins”. 
• Industry volume sales have already witnessed a narrower YoY decline in Mar, with solid exports of wheel loaders and domestic sales of excavators.
• After going ex- in late-May, its PER will drop to 7.0x and yield will rise to 6.6%. Net cash of HK$1.56/share is more than fully cover its share price.

• J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Invest in Spirit 8% bonds due 9/20/2025
• Spirit Airlines has strong cash position and available credit
• Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes

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.

• Norcros plc is a United Kingdom-based supplier of bathroom and kitchen products.
• The principal activities of the Company and its subsidiaries are the design, manufacture, and distribution of a range of bathroom and kitchen products, mainly in the United Kingdom and South Africa.
• In the United Kingdom, it offers a range of bathroom and kitchen products for domestic and commercial applications. 

• kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
• With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.