Industrials

• Nws Holdings (659 HK)’s IFA opines that the conditional voluntary general offer from the Cheng family is fair and reasonable. The offer + 2H dividend is HK$9.46 per share.
• The key condition is (majority vote) approval by independent NWD shareholders (EGM on 2 November). The timetable is designed such that the shareholders will also receive the NWS final dividend.
• NWD has a high but declining AGM minority participation rate. Retail forums suggest support for the transaction. On balance, we believe that this deal gets up. 

• Plug Power Inc. delivered a mixed set of results for the quarter, with revenues above the analyst consensus.
• Plug’s second quarter results show significant growth in a number of its recently introduced goods, especially in its cryogenic industry, which generated $69 million in revenue in the quarter, more than a threefold increase over the same period last year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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.

• Adani Ports & Special Economic Zone
• Shui On Land
• Yuexiu Property

• Sunrun Inc. delivered mixed results in the quarter, with revenues below analysts’ anticipations but above-par earnings.
• In Q2, Sunrun added more than 100 megawatt hours of storage capacity, up 35% over the same quarter last year.
• With a net subscriber value of $12,321 in the quarter, subscriber value was roughly 44,700, and creation cost was approximately $32,400.

• FedEx Corporation delivered a mixed set of results for the previous quarter, with revenues below the analyst consensus.
• The company’s transformation efforts are already reaping the rewards, notably in the Ground segment, which saw increased revenue due to higher yields and exceptional operational performance.
• The transformative DRIVE initiative is progressing as planned, with substantial cost reductions achieved across the network.

• Masco Corporation delivered a positive result and managed an all-around beat in the last quarter.
• The company faced a challenging business landscape in the second quarter, with a 10% decrease in top-line revenue despite a robust 8% comparison.
• Despite the top-line decline, Plumbing managed to expand its margin by 270 basis points, reaching 20% in the second quarter.

• Union Pacific Corporation delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• In the second quarter, the company faced challenges, with a 2% decline in volume driven by weak market conditions in the premium and bulk business groups.
• Freight revenue decreased by 5% due to lower fuel surcharges and a 2% volume decrease.

• Nws Holdings (659 HK)’s IFA opines that the conditional voluntary general offer from the Cheng family is fair and reasonable. The offer + 2H dividend is HK$9.46 per share.
• The key condition is (majority vote) approval by independent NWD shareholders (EGM on 2 November). The timetable is designed such that the shareholders will also receive the NWS final dividend.
• NWD has a high but declining AGM minority participation rate. Retail forums suggest support for the transaction. On balance, we believe that this deal gets up. 

• Plug Power Inc. delivered a mixed set of results for the quarter, with revenues above the analyst consensus.
• Plug’s second quarter results show significant growth in a number of its recently introduced goods, especially in its cryogenic industry, which generated $69 million in revenue in the quarter, more than a threefold increase over the same period last year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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.

• Adani Ports & Special Economic Zone
• Shui On Land
• Yuexiu Property

• Sunrun Inc. delivered mixed results in the quarter, with revenues below analysts’ anticipations but above-par earnings.
• In Q2, Sunrun added more than 100 megawatt hours of storage capacity, up 35% over the same quarter last year.
• With a net subscriber value of $12,321 in the quarter, subscriber value was roughly 44,700, and creation cost was approximately $32,400.

• FedEx Corporation delivered a mixed set of results for the previous quarter, with revenues below the analyst consensus.
• The company’s transformation efforts are already reaping the rewards, notably in the Ground segment, which saw increased revenue due to higher yields and exceptional operational performance.
• The transformative DRIVE initiative is progressing as planned, with substantial cost reductions achieved across the network.

• Masco Corporation delivered a positive result and managed an all-around beat in the last quarter.
• The company faced a challenging business landscape in the second quarter, with a 10% decrease in top-line revenue despite a robust 8% comparison.
• Despite the top-line decline, Plumbing managed to expand its margin by 270 basis points, reaching 20% in the second quarter.

• Union Pacific Corporation delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• In the second quarter, the company faced challenges, with a 2% decline in volume driven by weak market conditions in the premium and bulk business groups.
• Freight revenue decreased by 5% due to lower fuel surcharges and a 2% volume decrease.

• Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
• Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
• Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.

• MSMEs play a big role in Indonesia’s economy. In 2019, the Indonesian government reported that there were 65.4 million MSMEs in Indonesia, constituting 60.5% of its GDP.
• But for many of these small companies across the region, digitalization is still a new concept, and this provides opportunities for big tech companies as well as startups to fill the gap.
• One such player is Indonesia-based Bababos, which targets SMEs in the manufacturing space. The startup operates a platform that matches these SMEs with suppliers of raw materials like steel, polymers, and chemicals.

• J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

FY23 trading has continued according to the early August update, demonstrating the benefit of two unrelated activities at Carr’s Group: the Engineering division’s strength countering the weakness seen in the Speciality Agriculture business. Both have underlying longer-term growth attractions to drive earnings, along with the recovery potential in the agriculture end-markets.

• Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
• Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
• Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.

• MSMEs play a big role in Indonesia’s economy. In 2019, the Indonesian government reported that there were 65.4 million MSMEs in Indonesia, constituting 60.5% of its GDP.
• But for many of these small companies across the region, digitalization is still a new concept, and this provides opportunities for big tech companies as well as startups to fill the gap.
• One such player is Indonesia-based Bababos, which targets SMEs in the manufacturing space. The startup operates a platform that matches these SMEs with suppliers of raw materials like steel, polymers, and chemicals.

• J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

FY23 trading has continued according to the early August update, demonstrating the benefit of two unrelated activities at Carr’s Group: the Engineering division’s strength countering the weakness seen in the Speciality Agriculture business. Both have underlying longer-term growth attractions to drive earnings, along with the recovery potential in the agriculture end-markets.

• Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)‘s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
• The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
• The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS’ final dividend ex-date. That’s worth exploring further.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Embraer’s ESG as “Adequate”, in line with its “Adequate” Environmental and Governance scores. The company has a “Strong” score for the Social pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

• J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• We have looked at the company’s past performance and its PHIP updates in our earlier notes. In this note we will undertake a peer comparison.

• Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)‘s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
• The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
• The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS’ final dividend ex-date. That’s worth exploring further.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Embraer’s ESG as “Adequate”, in line with its “Adequate” Environmental and Governance scores. The company has a “Strong” score for the Social pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

• J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• We have looked at the company’s past performance and its PHIP updates in our earlier notes. In this note we will undertake a peer comparison.

• The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
• The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
• A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

• The YTD underperformance of Dongfang Electric (1072 HK) has put it on very attractive PER of 5.8x for FY23. More importantly, it has delivered both earnings and new order growth. 
• Financial position has improved with net cash of Rmb16.5bn and its recurring earnings soared 26.5% at 1H23. The adverse economic environment has not had an impact on its operations.
• New orders amounted to Rmb48.9bn (+33.3% YoY), a record high, and we estimate backlog at Rmb166bn. This equals 2.5x FY23F revenue and suggests forward earnings are well covered.

• The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
• The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
• A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

• The YTD underperformance of Dongfang Electric (1072 HK) has put it on very attractive PER of 5.8x for FY23. More importantly, it has delivered both earnings and new order growth. 
• Financial position has improved with net cash of Rmb16.5bn and its recurring earnings soared 26.5% at 1H23. The adverse economic environment has not had an impact on its operations.
• New orders amounted to Rmb48.9bn (+33.3% YoY), a record high, and we estimate backlog at Rmb166bn. This equals 2.5x FY23F revenue and suggests forward earnings are well covered.

• Our base case valuation of Ecoeye IPO is 45,421 won per share, representing 31% higher than the high end of the IPO price range. 
• Given the solid upside, we have a positive view of Ecoeye IPO. The target P/E multiple of 28.8x is based on a 20% premium to the comps’ average valuation multiple.
• We believe this premium valuation multiple is appropriate given higher sales growth rate and operating margin for Ecoeye as compared to the comps.

• Our base case valuation of Ecoeye IPO is 45,421 won per share, representing 31% higher than the high end of the IPO price range. 
• Given the solid upside, we have a positive view of Ecoeye IPO. The target P/E multiple of 28.8x is based on a 20% premium to the comps’ average valuation multiple.
• We believe this premium valuation multiple is appropriate given higher sales growth rate and operating margin for Ecoeye as compared to the comps.