Industrials

• Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP). 
• The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share. 
• Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.

• Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY2,123 per share, a 32.7% premium to M3 Inc (2413 JP)’s offer.
• The other terms are unchanged. The pre-conditions relate to board recommendation, Pasona Group (2168 JP) support, and the M3 offer not being completed. The tender offer starts in mid-January 2024.
• While M3 has extended its offer period to 17 January 2024, it will unlikely engage in a bidding war. Expect the Board and Pasona to support the Dai-ichi Life proposal.

• Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
• Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
• That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.

• The 20% retreat in the share price of Cosco Shipping Energy Transportation (1138 HK) from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.
• 4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.
• Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F. 

• Airports of Thailand (AOT TB) 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.
• AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while Malaysia Airports Holdings (MAHB MK) kept them under control.
• Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.

• After market close on December 20, MillerKnoll reported 2QFY24 adjusted EPS of $0.59, ahead of our estimate of $0.55 and the consensus mean of $0.54.
• Margins were better than expected, while revenue of $949.5 million came in at the low end of guidance.
• Sales in the Americas segment disappointed relative to our expectations.

• Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP). 
• The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share. 
• Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.

• Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY2,123 per share, a 32.7% premium to M3 Inc (2413 JP)’s offer.
• The other terms are unchanged. The pre-conditions relate to board recommendation, Pasona Group (2168 JP) support, and the M3 offer not being completed. The tender offer starts in mid-January 2024.
• While M3 has extended its offer period to 17 January 2024, it will unlikely engage in a bidding war. Expect the Board and Pasona to support the Dai-ichi Life proposal.

• Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
• Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
• That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.

• The 20% retreat in the share price of Cosco Shipping Energy Transportation (1138 HK) from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.
• 4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.
• Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F. 

• Airports of Thailand (AOT TB) 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.
• AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while Malaysia Airports Holdings (MAHB MK) kept them under control.
• Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.

• After market close on December 20, MillerKnoll reported 2QFY24 adjusted EPS of $0.59, ahead of our estimate of $0.55 and the consensus mean of $0.54.
• Margins were better than expected, while revenue of $949.5 million came in at the low end of guidance.
• Sales in the Americas segment disappointed relative to our expectations.

• In September, YFO (Yamauchi Family Office) upped its Tender Offer proposal to ¥1,255/share. YFO presented. The Toyo Special Committee met, interviewed, examined, deliberated, then last week rejected YFO’s proposal. 
• The rejection was a three-parter. First, they rejected YFO for not bringing management/ownership experience. Second, they said the proposal didn’t add enough value. Third, the price was too low.
• There were no metrics against which to measure anything. And now Toyo has apparently decided to withdraw its Tender Offer Proposal.

• Singapore Airlines (SIA SP) (SIA) November operating statistics were good, passenger load factor rose by 1.9ppt YoY to 87.8%, and cargo load factor rose by a similar quantum  
• Market observations suggest yields should remain at high levels and cost items such as fuel and USD-denominated items on a favorable downtrend 
• If this performance continues, SIA will beat consensus easily. We recommend BUY with a TP of SGD8.07 – pegged to 10x FY24 PE. (+26% UPSIDE)  

• INOX India Limited (INOX IN) raised around US$175m in its Indian IPO, after pricing the deal at INR660/share. It will begin trading tomorrow on 21st Dec 2023.
• Inox India is a manufacturer of cryogenic equipment. As per CRISIL, the firm was the largest Indian exporter of cryogenic tanks in terms of FY23 sales.
• We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.

• MillerKnoll reports 2QFY24 earnings after market close on Wednesday, December 20, and will host its management conference call at 5:00 pm ET.
• WTR is modeling EPS of $0.55, the midpoint of guidance, on revenue of $987 million. Consensus is $0.54, with an estimate range of $0.52-0.56.
• Order trends. We are modeling orders in the Americas at +13.9% versus a poor year-ago quarter of -17.3%.

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry.
• On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule. 

• After Tuesday’s close, Steelcase reported 3QFY24 adjusted EPS of $0.30, ahead of our $0.25 estimate and consensus of $0.23.
• Revenue came in lighter than expected at $778 million versus our $804 million estimate and consensus of $796 million.
• Steelcase delivered another quarter of gross margin improvement at 32.4%, up 370 bps versus 3QFY23, and 46 bps above our estimate. 

• This note revises our estimates for Steelcase following its 3QFY24 earnings call.
• In short, for 4QFY24, we up our margin assumption, moderate our revenue assumption slightly, and shave our adjusted EPS estimate by $0.01.
• Steelcase reported strong margins and steady orders in the 3QFY24 on Tuesday evening.

• CEO Michaël Fribourg, who controls almost 30% of the company through Colombus Holding, will launch a takeover bid for Chargeurs at €12 per share.

• His aim is to achieve a majority stake while keeping the company listed.

• The proposed price of €12 per share represents a premium of 36.2% to the wighted average share price over the last month and 50.5% over the last three months.

• In September, YFO (Yamauchi Family Office) upped its Tender Offer proposal to ¥1,255/share. YFO presented. The Toyo Special Committee met, interviewed, examined, deliberated, then last week rejected YFO’s proposal. 
• The rejection was a three-parter. First, they rejected YFO for not bringing management/ownership experience. Second, they said the proposal didn’t add enough value. Third, the price was too low.
• There were no metrics against which to measure anything. And now Toyo has apparently decided to withdraw its Tender Offer Proposal.

• Singapore Airlines (SIA SP) (SIA) November operating statistics were good, passenger load factor rose by 1.9ppt YoY to 87.8%, and cargo load factor rose by a similar quantum  
• Market observations suggest yields should remain at high levels and cost items such as fuel and USD-denominated items on a favorable downtrend 
• If this performance continues, SIA will beat consensus easily. We recommend BUY with a TP of SGD8.07 – pegged to 10x FY24 PE. (+26% UPSIDE)  

• INOX India Limited (INOX IN) raised around US$175m in its Indian IPO, after pricing the deal at INR660/share. It will begin trading tomorrow on 21st Dec 2023.
• Inox India is a manufacturer of cryogenic equipment. As per CRISIL, the firm was the largest Indian exporter of cryogenic tanks in terms of FY23 sales.
• We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.

• MillerKnoll reports 2QFY24 earnings after market close on Wednesday, December 20, and will host its management conference call at 5:00 pm ET.
• WTR is modeling EPS of $0.55, the midpoint of guidance, on revenue of $987 million. Consensus is $0.54, with an estimate range of $0.52-0.56.
• Order trends. We are modeling orders in the Americas at +13.9% versus a poor year-ago quarter of -17.3%.

• Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
• The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry.
• On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule. 

• After Tuesday’s close, Steelcase reported 3QFY24 adjusted EPS of $0.30, ahead of our $0.25 estimate and consensus of $0.23.
• Revenue came in lighter than expected at $778 million versus our $804 million estimate and consensus of $796 million.
• Steelcase delivered another quarter of gross margin improvement at 32.4%, up 370 bps versus 3QFY23, and 46 bps above our estimate. 

• This note revises our estimates for Steelcase following its 3QFY24 earnings call.
• In short, for 4QFY24, we up our margin assumption, moderate our revenue assumption slightly, and shave our adjusted EPS estimate by $0.01.
• Steelcase reported strong margins and steady orders in the 3QFY24 on Tuesday evening.

• CEO Michaël Fribourg, who controls almost 30% of the company through Colombus Holding, will launch a takeover bid for Chargeurs at €12 per share.

• His aim is to achieve a majority stake while keeping the company listed.

• The proposed price of €12 per share represents a premium of 36.2% to the wighted average share price over the last month and 50.5% over the last three months.

• A consortium led by the Harim Group and JKL Partners has been chosen as the preferred bidder to acquire a 57.9% stake in HMM.
• Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) are the main creditors of HMM, which is the largest shipping company in Korea.
• Pan Ocean is expected to complete a rights offering of nearly 3 trillion won which is 136% of its current market cap. This is excessive and negative for Pan Ocean.

• Asagami Corporation (TYO 9311) owns 3 warehouses on Tokyo Harbor with land carried on its books at ¥7.9 billion.
• These properties alone are likely worth closer to ¥29.5 billion.
• These assets account for less than half of the company’s land assets, but are worth multiples of the current market cap of just ¥7.16B.

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY Next 50 indices in the March 2024 rebalance.
• There could be multiple changes for NIFTY 50 and separately, there could be five changes for NIFTY Next 50. The NIFTY 50 changes could have high impact.

• In November, domestic parcel volume growth accelerated vs recent months
• International remains very strong; STO keeps taking share from Yunda
• Avoid domestic ‘ground’ segment, seek international growth in SF, CaiNiao

• Steelcase reports 3QFY24 results after market close today. We are expecting adjusted EPS of $0.25 on revenue of $804 million.
• Consensus is EPS of $0.23 on revenue of $796 million.
• Our estimate is at the high end of the revenue guidance and the midpoint of adjusted EPS guidance. 

• A consortium led by the Harim Group and JKL Partners has been chosen as the preferred bidder to acquire a 57.9% stake in HMM.
• Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) are the main creditors of HMM, which is the largest shipping company in Korea.
• Pan Ocean is expected to complete a rights offering of nearly 3 trillion won which is 136% of its current market cap. This is excessive and negative for Pan Ocean.

• Asagami Corporation (TYO 9311) owns 3 warehouses on Tokyo Harbor with land carried on its books at ¥7.9 billion.
• These properties alone are likely worth closer to ¥29.5 billion.
• These assets account for less than half of the company’s land assets, but are worth multiples of the current market cap of just ¥7.16B.

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY Next 50 indices in the March 2024 rebalance.
• There could be multiple changes for NIFTY 50 and separately, there could be five changes for NIFTY Next 50. The NIFTY 50 changes could have high impact.

• In November, domestic parcel volume growth accelerated vs recent months
• International remains very strong; STO keeps taking share from Yunda
• Avoid domestic ‘ground’ segment, seek international growth in SF, CaiNiao

• Steelcase reports 3QFY24 results after market close today. We are expecting adjusted EPS of $0.25 on revenue of $804 million.
• Consensus is EPS of $0.23 on revenue of $796 million.
• Our estimate is at the high end of the revenue guidance and the midpoint of adjusted EPS guidance. 

• Last week, Taihan Electric Wire announced a rights offering of 50% of its outstanding shares.  The company is expected to raise 526 billion won. 
• Taihan Electric Wire is expected to use the rights offering proceeds to mostly expand its submarine cable production.
• With the share price falling 21% since the announcement of the rights offering last week, Taihan Electric Wire looks more attractive.

• As we begin lapping easy comps, our momentum index looks “less bad”
• Red Sea re-routes, interest rate moves, fuel all helped lift shares recently
• We think lots of bad news has been priced into shares at current levels

• Last week, Taihan Electric Wire announced a rights offering of 50% of its outstanding shares.  The company is expected to raise 526 billion won. 
• Taihan Electric Wire is expected to use the rights offering proceeds to mostly expand its submarine cable production.
• With the share price falling 21% since the announcement of the rights offering last week, Taihan Electric Wire looks more attractive.

• As we begin lapping easy comps, our momentum index looks “less bad”
• Red Sea re-routes, interest rate moves, fuel all helped lift shares recently
• We think lots of bad news has been priced into shares at current levels

• The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
• Stocks with buy flows dropped 0.51% on average on Friday while the stocks with sell flows dropped 0.92%. On a flow weighted basis, the numbers were -0.21% vs -0.75%.
• Since the start of November, the adds have outperformed the deletes and the TWSE INDEX. There has been significant outperformance in just the last week.

• Octillion Energy Holdings (OE HK) is looking to raise US$400m in its upcoming Hong Kong IPO.
• Octillion Energy Holdings (OE) primarily designs, manufactures and markets tailor-made battery systems for electric vehicles (EVs), and to a lesser extent, electric storage systems (ESS) and battery management systems (BMS).
• As per F&S, OE had a 9.6% market share and was ranked the third largest EV battery system provider for passenger battery EVs (BEVs) in China by FY22 shipment units.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• JSW Infrastructure
• Lippo Malls Indonesia Retail Trust
• SK Hynix

• The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
• Stocks with buy flows dropped 0.51% on average on Friday while the stocks with sell flows dropped 0.92%. On a flow weighted basis, the numbers were -0.21% vs -0.75%.
• Since the start of November, the adds have outperformed the deletes and the TWSE INDEX. There has been significant outperformance in just the last week.

• Octillion Energy Holdings (OE HK) is looking to raise US$400m in its upcoming Hong Kong IPO.
• Octillion Energy Holdings (OE) primarily designs, manufactures and markets tailor-made battery systems for electric vehicles (EVs), and to a lesser extent, electric storage systems (ESS) and battery management systems (BMS).
• As per F&S, OE had a 9.6% market share and was ranked the third largest EV battery system provider for passenger battery EVs (BEVs) in China by FY22 shipment units.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• JSW Infrastructure
• Lippo Malls Indonesia Retail Trust
• SK Hynix