Industrials

• Jacobs Solutions recently concluded its fourth quarter and fiscal year 2024 with a focus on a strategic shift towards a more streamlined operation centered on higher value and higher-margin portfolios.
• The company completed the separation transaction of its Critical Mission Solutions (CMS) and Cyber & Intelligence businesses.
• This resulted in a cash inflow of $911 million, which was used to repay existing debt, alongside acquiring a 7.5% equity stake in Amentum, which could increase to 8%.

• Deere & Company delivered a fourth quarter and full-year performance for fiscal 2024 in a context of declining sales and tough market conditions.
• The company reported net sales and revenues down 16% for the year to $51.7 billion, with equipment operations showing a sharper decline of 19%.
• Net income attributable to Deere stood at $7.1 billion, reflecting a challenging market impacted by lower agricultural demand globally.

• Jacobs Solutions recently concluded its fourth quarter and fiscal year 2024 with a focus on a strategic shift towards a more streamlined operation centered on higher value and higher-margin portfolios.
• The company completed the separation transaction of its Critical Mission Solutions (CMS) and Cyber & Intelligence businesses.
• This resulted in a cash inflow of $911 million, which was used to repay existing debt, alongside acquiring a 7.5% equity stake in Amentum, which could increase to 8%.

• Deere & Company delivered a fourth quarter and full-year performance for fiscal 2024 in a context of declining sales and tough market conditions.
• The company reported net sales and revenues down 16% for the year to $51.7 billion, with equipment operations showing a sharper decline of 19%.
• Net income attributable to Deere stood at $7.1 billion, reflecting a challenging market impacted by lower agricultural demand globally.

• As forecast, there are no changes for the SSE STAR50 (STAR50 INDEX) in December while there are 4 changes for the STAR100 Index.
• There will be big outflows for Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) due to SSE STAR50 (STAR50 INDEX) capping. There will be selling from other index trackers too.
• Hainan Jinpan Smart Technology (688676 CH) had been ignored by the index committee at the September rebalance, so this inclusion in the STAR100 Index could come as a surprise.

• There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
• There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
• Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.

• Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. 
• Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.
• H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.

• Remain BULLISH Keisei Electric Railway Co (9009 JP)  with low conviction. This is buying on narrative rather than fundamentals but there is no need to not get involved.
• Vitasoy Intl Holdings (345 HK)‘s share price run up is excessive as Philip Ng andYeo Hiap Seng (YHS SP) over-extend their hand.
• Nec Networks (1973 JP) has yet to trade below terms. The premium is small, perhaps reflecting the risk NEC will lower the minimum threshold. But there is still a fight here.

• Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.
• There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. 
• Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. 

• Flowserve Corporation’s third-quarter 2024 financial results reveal a mix of strengths and ongoing challenges as the company continues to execute its strategic growth plans.
• The company demonstrated notable progress in several key areas, while also acknowledging factors that moderated its performance in the quarter.
• On the positive side, Flowserve achieved a book-to-bill ratio exceeding 1.06, with bookings hitting $1.2 billion—a clear indicator of demand across its business segments.

• As forecast, there are no changes for the SSE STAR50 (STAR50 INDEX) in December while there are 4 changes for the STAR100 Index.
• There will be big outflows for Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) due to SSE STAR50 (STAR50 INDEX) capping. There will be selling from other index trackers too.
• Hainan Jinpan Smart Technology (688676 CH) had been ignored by the index committee at the September rebalance, so this inclusion in the STAR100 Index could come as a surprise.

• There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
• There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
• Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.

• Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. 
• Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.
• H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.

• Remain BULLISH Keisei Electric Railway Co (9009 JP)  with low conviction. This is buying on narrative rather than fundamentals but there is no need to not get involved.
• Vitasoy Intl Holdings (345 HK)‘s share price run up is excessive as Philip Ng andYeo Hiap Seng (YHS SP) over-extend their hand.
• Nec Networks (1973 JP) has yet to trade below terms. The premium is small, perhaps reflecting the risk NEC will lower the minimum threshold. But there is still a fight here.

• Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.
• There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. 
• Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. 

• Flowserve Corporation’s third-quarter 2024 financial results reveal a mix of strengths and ongoing challenges as the company continues to execute its strategic growth plans.
• The company demonstrated notable progress in several key areas, while also acknowledging factors that moderated its performance in the quarter.
• On the positive side, Flowserve achieved a book-to-bill ratio exceeding 1.06, with bookings hitting $1.2 billion—a clear indicator of demand across its business segments.

• On the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
• The buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. To avoid an MGO, this requires a whitewash waiver
• The Offer Doc is now out. The EGM – and the first close – is the 20th December. 

• Today after the close Dai Nippon Printing (7912 JP) announced 16 corporate and financial entities would be selling cross-held shares in a ~US$240mm equity offering.
• The stock has gotten shellacked (relatively speaking given structurally low volatility) since three weeks ago. There’s a reason for that. But it makes it cheaper. 
• This offering is only 10% of the cross-held total. There’s more to come. But there is more outbound cross-holding to sell too. There’s value here.

• A group of shareholders are looking to raise US$214m from selling their respective stakes in Dai Nippon Printing (7912 JP).
• While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted capped index composed of 400 constituents.
• The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
• Below is a look at the rankings of potential ADDs/DELs for the JPX-Nikkei 400 August 2025 rebalance based on trading data as of end-November 2024.

• Ecopro BM’s still hot trading volume might minimize passive impact. The real action is who replaces it in KOSDAQ 150 and which KOSPI 200 stock gets the boot.
• LS Marine Solution joins KOSDAQ 150, while Green Cross Holdings gets the boot due to the lowest average daily market cap from May 1 to October 31.
• KRX fast-tracks approvals for financially strong companies in 20 trading days. Ecopro BM likely qualifies, meaning approval could come before Christmas—ideal timing for entry.

• BQE posted excellent Q3 financials that beat our expectations across the board as operations services continued its growth trajectory and the technical services and China JV segments reverted to historical levels.
• Proportional revenue came in at $10.2M (+28% YoY) vs. our estimate of $8.6M and Adj. EBITDA came in at $4.6M (+67% YoY) vs. our $2.7M.
• Management expects continued strong performance from the technical services segment through Q4/24 and Q1/25.

• We discuss the end of the mandatory lock-up periods for 52 stocks in Korea in December 2024, among which two are in KOSPI and 50 are in KOSDAQ.
• Hese 52 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
• The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in December are Jeju Air, LS Materials, and Toolgen.

• On the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
• The buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. To avoid an MGO, this requires a whitewash waiver
• The Offer Doc is now out. The EGM – and the first close – is the 20th December. 

• Today after the close Dai Nippon Printing (7912 JP) announced 16 corporate and financial entities would be selling cross-held shares in a ~US$240mm equity offering.
• The stock has gotten shellacked (relatively speaking given structurally low volatility) since three weeks ago. There’s a reason for that. But it makes it cheaper. 
• This offering is only 10% of the cross-held total. There’s more to come. But there is more outbound cross-holding to sell too. There’s value here.

• A group of shareholders are looking to raise US$214m from selling their respective stakes in Dai Nippon Printing (7912 JP).
• While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted capped index composed of 400 constituents.
• The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
• Below is a look at the rankings of potential ADDs/DELs for the JPX-Nikkei 400 August 2025 rebalance based on trading data as of end-November 2024.

• Ecopro BM’s still hot trading volume might minimize passive impact. The real action is who replaces it in KOSDAQ 150 and which KOSPI 200 stock gets the boot.
• LS Marine Solution joins KOSDAQ 150, while Green Cross Holdings gets the boot due to the lowest average daily market cap from May 1 to October 31.
• KRX fast-tracks approvals for financially strong companies in 20 trading days. Ecopro BM likely qualifies, meaning approval could come before Christmas—ideal timing for entry.

• BQE posted excellent Q3 financials that beat our expectations across the board as operations services continued its growth trajectory and the technical services and China JV segments reverted to historical levels.
• Proportional revenue came in at $10.2M (+28% YoY) vs. our estimate of $8.6M and Adj. EBITDA came in at $4.6M (+67% YoY) vs. our $2.7M.
• Management expects continued strong performance from the technical services segment through Q4/24 and Q1/25.

• We discuss the end of the mandatory lock-up periods for 52 stocks in Korea in December 2024, among which two are in KOSPI and 50 are in KOSDAQ.
• Hese 52 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
• The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in December are Jeju Air, LS Materials, and Toolgen.

• Belrise Industries (9156339Z IN)  is planning to raise about US$255m through its upcoming IPO in India. The lead bookrunners for the deal are Axis Capital, HSBC, Jefferies, SBI Capital
• Established in 1988, it specializes in safety-critical systems and engineering solutions for two-wheelers, three-wheelers, four-wheelers, commercial vehicles, and agricultural vehicles.
• As per Crisil report, Belrise held a market share of 24% in the two-wheeler metal components segment in India as of FY24.

• Pateo Connect Technology (PTC HK)  is looking to raise up to US$300m in its upcoming Hong Kong IPO.
• It is one of the largest domestic providers of smart cockpit and intelligent connectivity solutions in China, providing full-stack smart cockpit solution and cloud-based vehicle connectivity, for Chinese OEMs.
• In this note, we look at the firm’s past performance.

• Delta Manufacturing (DELTAMAG IN)  manufactures hard-ferrite magnets, which it sells to OEMs and also manufactures garment trims in India i.e. woven labels, heat transfers, fabric printed labels, etc.
• DMG’s market cap is just about INR 1.2 bn but faces grim, loss making operations
• Other forensic setbacks include lack of FCF generation on the back of muted capex, cash flow misstatements, goodwill impairment, dependency on low cost promoter debt, etc.

• Dry bulk shipping sector experienced a summer slump in Q3 2024, with companies like GNK, GOGL, and SBLK seeing stock prices fall 10-20%
• Despite the slump, GOGL has seen flat to 25% YTD increase while DSX has a YTD drop of 15%+
• DSX has lagged behind peers but offers a high dividend yield of 12.3% and trades at a significant discount to its net asset value, making it an attractive investment opportunity

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.

• J.B. Hunt Transport Services, Inc. recently released its third-quarter results for the fiscal year 2024, providing insights into the performance and strategic positioning amidst a dynamic freight environment.
• The company reported a decline in revenue by 3% year over year, with operating income down by 7% and diluted earnings per share decreasing by 17%.
• These figures reflect the ongoing challenges in the freight industry, exacerbated by the deflationary rate environment which continues to exert pressure on the company’s margin performance across the board.

• Belrise Industries (9156339Z IN)  is planning to raise about US$255m through its upcoming IPO in India. The lead bookrunners for the deal are Axis Capital, HSBC, Jefferies, SBI Capital
• Established in 1988, it specializes in safety-critical systems and engineering solutions for two-wheelers, three-wheelers, four-wheelers, commercial vehicles, and agricultural vehicles.
• As per Crisil report, Belrise held a market share of 24% in the two-wheeler metal components segment in India as of FY24.

• Pateo Connect Technology (PTC HK)  is looking to raise up to US$300m in its upcoming Hong Kong IPO.
• It is one of the largest domestic providers of smart cockpit and intelligent connectivity solutions in China, providing full-stack smart cockpit solution and cloud-based vehicle connectivity, for Chinese OEMs.
• In this note, we look at the firm’s past performance.

• Delta Manufacturing (DELTAMAG IN)  manufactures hard-ferrite magnets, which it sells to OEMs and also manufactures garment trims in India i.e. woven labels, heat transfers, fabric printed labels, etc.
• DMG’s market cap is just about INR 1.2 bn but faces grim, loss making operations
• Other forensic setbacks include lack of FCF generation on the back of muted capex, cash flow misstatements, goodwill impairment, dependency on low cost promoter debt, etc.

• Dry bulk shipping sector experienced a summer slump in Q3 2024, with companies like GNK, GOGL, and SBLK seeing stock prices fall 10-20%
• Despite the slump, GOGL has seen flat to 25% YTD increase while DSX has a YTD drop of 15%+
• DSX has lagged behind peers but offers a high dividend yield of 12.3% and trades at a significant discount to its net asset value, making it an attractive investment opportunity

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.

• J.B. Hunt Transport Services, Inc. recently released its third-quarter results for the fiscal year 2024, providing insights into the performance and strategic positioning amidst a dynamic freight environment.
• The company reported a decline in revenue by 3% year over year, with operating income down by 7% and diluted earnings per share decreasing by 17%.
• These figures reflect the ongoing challenges in the freight industry, exacerbated by the deflationary rate environment which continues to exert pressure on the company’s margin performance across the board.

• There are now new changes forecast for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
• Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
• The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.

• On 27 November, Ecopro BM (247540 KS) announced that it has filed an application for the transfer of listing from KOSDAQ to KOSPI. 
• Ecopro BM is currently the second largest company in KOSDAQ. At the current market cap, Ecopro BM will be the 34th largest company in KOSPI (in terms of market cap).
• Lofty valuation is one of the main reasons why we continue to be bearish on Ecopro BM which is trading at P/E of 134x and P/B of 9.4x in 2026.

• Carraro India Limited (810618Z IN) is looking to raise about US$216m in its India IPO.
• Carraro India Limited (CIL), is an independent tier 1 solution provider of axles, transmission systems and gears for the agricultural tractor and construction vehicle industries in India.
• In this note, we talk about the company’s historical performance.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Ports, Vedanta Resources, Seazen Group
• In the US, October new home sales fell 17.3% m-o-m (-1.8% e / 7.0% revised p) to an annualised 610 k units, the lowest in almost two years, amid rising mortgage rates as well as disruptions caused by hurricanes Helene and Milton. Separately, the Conference Board consumer confidence index increased to 111.7 in November (111.8 e / 109.6 p), the highest since August 2023.
• “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labour market. Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years”, according to Dana M. Peterson, Chief Economist at The Conference Board.

• HireQuest is a staffing company, founded in 1991 by Richard Hermanns and Dan McAnnar.
• It started as an on-demand labor provider for daily-paid jobs.
• Over the past 3 decades, HireQuest has added long-term placements and executive recruitment services, operating as a network of different brands.

• Expion360 announced several new OEM relationships that management “expects to generate incremental revenue of $5.0 million in 2025”.
• We are electing to be more conservative with our model for the moment but we are still raising our 2025 revenue estimate from $6 million to $8.9 million.
• Our valuation target also remains unchanged at $4/share as the improving 2025 outlook is tempered by concerns about the company’s financial condition in 2025.

• There are now new changes forecast for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
• Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
• The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.

• On 27 November, Ecopro BM (247540 KS) announced that it has filed an application for the transfer of listing from KOSDAQ to KOSPI. 
• Ecopro BM is currently the second largest company in KOSDAQ. At the current market cap, Ecopro BM will be the 34th largest company in KOSPI (in terms of market cap).
• Lofty valuation is one of the main reasons why we continue to be bearish on Ecopro BM which is trading at P/E of 134x and P/B of 9.4x in 2026.

• Carraro India Limited (810618Z IN) is looking to raise about US$216m in its India IPO.
• Carraro India Limited (CIL), is an independent tier 1 solution provider of axles, transmission systems and gears for the agricultural tractor and construction vehicle industries in India.
• In this note, we talk about the company’s historical performance.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Ports, Vedanta Resources, Seazen Group
• In the US, October new home sales fell 17.3% m-o-m (-1.8% e / 7.0% revised p) to an annualised 610 k units, the lowest in almost two years, amid rising mortgage rates as well as disruptions caused by hurricanes Helene and Milton. Separately, the Conference Board consumer confidence index increased to 111.7 in November (111.8 e / 109.6 p), the highest since August 2023.
• “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labour market. Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years”, according to Dana M. Peterson, Chief Economist at The Conference Board.

• HireQuest is a staffing company, founded in 1991 by Richard Hermanns and Dan McAnnar.
• It started as an on-demand labor provider for daily-paid jobs.
• Over the past 3 decades, HireQuest has added long-term placements and executive recruitment services, operating as a network of different brands.

• Expion360 announced several new OEM relationships that management “expects to generate incremental revenue of $5.0 million in 2025”.
• We are electing to be more conservative with our model for the moment but we are still raising our 2025 revenue estimate from $6 million to $8.9 million.
• Our valuation target also remains unchanged at $4/share as the improving 2025 outlook is tempered by concerns about the company’s financial condition in 2025.