Industrials

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Amer Sports (AS US), Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
• Event-Driven developments – Benefit One Inc (2412 JP), GUPPY’s Inc (5127 JP), T&K Toka Co Ltd (4636 JP), Weiqiao Textile Co (2698 HK), Genetron Holdings Ltd (GTH US). 

• Dai Ichi Life (8750 JP) has the wherewithal, and probably the synergies to make a bump for Benefit One (2412 JP) work. M3 is clearly not in the driver’s seat.
• China United Network (600050 CH) is, for all intent and purpose, a pseudo-A to China Unicom (762 HK). Go long Unicom, short United due to Unicom’s significantly cheaper valuation.
• Zhejiang Expressway (576 HK) has had a stonking run since its rights issue. Look to unwind this set-up and take the other side: short Expressway, long Zheshang Securities (601878 CH).

• This is our first report on sensor-based technology solutions provider, Sensata Technologies.
• The dip in revenue was cited due to factors like market outgrowth slowing over the last 12 months and unfavorable movements in foreign currency.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Amer Sports (AS US), Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
• Event-Driven developments – Benefit One Inc (2412 JP), GUPPY’s Inc (5127 JP), T&K Toka Co Ltd (4636 JP), Weiqiao Textile Co (2698 HK), Genetron Holdings Ltd (GTH US). 

• Dai Ichi Life (8750 JP) has the wherewithal, and probably the synergies to make a bump for Benefit One (2412 JP) work. M3 is clearly not in the driver’s seat.
• China United Network (600050 CH) is, for all intent and purpose, a pseudo-A to China Unicom (762 HK). Go long Unicom, short United due to Unicom’s significantly cheaper valuation.
• Zhejiang Expressway (576 HK) has had a stonking run since its rights issue. Look to unwind this set-up and take the other side: short Expressway, long Zheshang Securities (601878 CH).

• This is our first report on sensor-based technology solutions provider, Sensata Technologies.
• The dip in revenue was cited due to factors like market outgrowth slowing over the last 12 months and unfavorable movements in foreign currency.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Key points (machine generated)

• IBP is a leading roll-up strategist in the building industry, having executed over 100 acquisitions in a short period of time.
• The company leverages its national platform, supplier relationships, and operational expertise to enhance value while keeping the acquired companies’ local brands, talent, and customer relationships intact.
• IBP’s successful acquisition strategy, along with its strong commitment to timely delivery and solid financial position, has helped the company become a key player in the insulation industry.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Marel HF (MARL IR) announced a third proposal from John Bean Technologies (JBT US) for a cash and shares offer, equivalent €3.60/share, to be launched in Q1, with 24.7% irrevocable undertakings.
• There is strong market growth potential, due to growing middle-class demanding a higher proportion of animal protein in their diet. The overall sector, despite global economic woes, seems piping hot.
• My base-case fair value estimate is €3.54 (9.0% WACC, 2% implied perpetuity growth rate). The median IBES consensus TP is €3.50. On this basis, the offer price seems fair. Buy.

Key points (machine generated)

• IBP is a leading roll-up strategist in the building industry, having executed over 100 acquisitions in a short period of time.
• The company leverages its national platform, supplier relationships, and operational expertise to enhance value while keeping the acquired companies’ local brands, talent, and customer relationships intact.
• IBP’s successful acquisition strategy, along with its strong commitment to timely delivery and solid financial position, has helped the company become a key player in the insulation industry.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Marel HF (MARL IR) announced a third proposal from John Bean Technologies (JBT US) for a cash and shares offer, equivalent €3.60/share, to be launched in Q1, with 24.7% irrevocable undertakings.
• There is strong market growth potential, due to growing middle-class demanding a higher proportion of animal protein in their diet. The overall sector, despite global economic woes, seems piping hot.
• My base-case fair value estimate is €3.54 (9.0% WACC, 2% implied perpetuity growth rate). The median IBES consensus TP is €3.50. On this basis, the offer price seems fair. Buy.

• While Singapore’s exports have lagged behind Taiwan and Korea in Nov-Dec 2023, they have showed signs of recovery after a year of steep drops.
• External factors also affect the prospects of the iEdge SG Advanced Manufacturing Index’s most traded stocks.
• Some of the most traded index stocks, such as Yangzijiang Shipbuilding, Dyna-Mac and Food Empire, have high P/B ratios compared to their historical averages, indicating strong market valuation.

• This is our first report on KBR Inc, a renowned provider of scientific, technology, and engineering solutions to governments and commercial customers.
• The company’s third Quarter 2023 earnings conference call shared interesting highlights about the company’s progress and future prospects.
• KBR’s President and CEO, Stuart Bradie, emphasized on the company’s Zero Harm moment, highlighting KBR’s commitment to space sustainability and security.

• While Singapore’s exports have lagged behind Taiwan and Korea in Nov-Dec 2023, they have showed signs of recovery after a year of steep drops.
• External factors also affect the prospects of the iEdge SG Advanced Manufacturing Index’s most traded stocks.
• Some of the most traded index stocks, such as Yangzijiang Shipbuilding, Dyna-Mac and Food Empire, have high P/B ratios compared to their historical averages, indicating strong market valuation.

• This is our first report on KBR Inc, a renowned provider of scientific, technology, and engineering solutions to governments and commercial customers.
• The company’s third Quarter 2023 earnings conference call shared interesting highlights about the company’s progress and future prospects.
• KBR’s President and CEO, Stuart Bradie, emphasized on the company’s Zero Harm moment, highlighting KBR’s commitment to space sustainability and security.

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
• Although I do not see any regular ADDs/DELs for the March 2024 rebalance, there might be one or two intra-review changes during the first quarter of 2024. 
• These intra-review changes will be triggered by the completion of M&A events and it is important to know which names are leading the race to become intra-review ADDs.

• The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.
• Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies. 
• We also provide a list of seven Korean companies that have been targeted by activist investors  to cancel more shares and improve corporate governance. 

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
• Although I do not see any regular ADDs/DELs for the March 2024 rebalance, there might be one or two intra-review changes during the first quarter of 2024. 
• These intra-review changes will be triggered by the completion of M&A events and it is important to know which names are leading the race to become intra-review ADDs.

• The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.
• Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies. 
• We also provide a list of seven Korean companies that have been targeted by activist investors  to cancel more shares and improve corporate governance. 

• Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
• Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
• The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

• Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
• The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
• The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high. 

• With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
• There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
• The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

• In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
• There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
• For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

• Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
• A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
• Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading. 

• The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
• Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
• In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

• Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
• Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months,  AOT earnings could lag their peers.
• Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

• The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
• There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
• OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 

• ​Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
• EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
• Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.

• Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
• Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
• The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

• Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
• The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
• The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high. 

• With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
• There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
• The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

• In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
• There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
• For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

• Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
• A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
• Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading. 

• The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
• Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
• In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

• Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
• Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months,  AOT earnings could lag their peers.
• Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

• The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
• There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
• OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 

• ​Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
• EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
• Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.