Industrials

• Today after the close, noted Japanese battery maker Gs Yuasa Corp (6674 JP) announced a public equity offering accompanied by a 3rd party placement to Honda Motor (7267 JP). 
• Total $300mm+ raise is nearly 20.0mm shares against ~80mm shares out now. That’s 20% EPS dilution at a still-decent discount to book value.
• This creates a weird situation of a low ROE stock becoming lower ROE, at a lower PBR, with “more growth ahead” in a hyper-competitive space.

• Using data from the close on 20 November, there could be 6 adds and 5 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
• There will also be capping and funding flows that will lead to a one-way turnover of 17.8% and a one-way trade of US$1.37bn.
• There are 16 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
• There are some key changes to expectations since my last TDIV insight as a consequence of changes in share prices and/or dividend expectations.
• I currently expect 6 ADDs and 5 DELs during the December 2023 review.

• Gs Yuasa Corp (6674 JP) (GSY) is looking to raise around US$240m via a public offering, along with placing shares via third-party allotment with Honda Motor (7267 JP) .
• The company formed a JV with Honda Motors earlier this year and will use the bulk of the proceeds for investments in the JV.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• DS Dansuk is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is from 79,000 won to 89,000 won. 
• The book building for the institutional investors will be from 5-11 December. The IPO offering amount is from 96.4 billion won to 108.6 billion won. 
• According to the bankers’ valuation, DS Dansuk’s valuation would range from 462 billion won to 522 billion won. 

• On 17 November, Hyun Jeong-Eun resigned from the Hyundai Elevator Co Board of Directors Chairwoman and internal director positions, mainly due to strong pressures from other major shareholders.
• With Hyun Jeong-Eun finally out of the company, Hyundai Elevator is likely to significantly emphasize on improving its corporate governance.
• Hyundai Elevator is considering new shareholder return policies, including a potential 50%+ dividend payout, higher share buybacks, and a mandatory minimum dividend yield.

• Led by international activity, CaiNiao booked +25% Y/Y revenue growth in FYQ2
• FYQ2 EBITA margin improved Y/Y and Q/Q, even as express companies struggled
• Result bolsters CaiNiao status as vehicle to access BABA’s international growth

• AZ-Com Maruwa Holdings (9090 JP) is looking to raise around US$206m in its mixed follow-on offering. 
• The deal will be a large one to digest, at 129 days of three month ADV, 5.5% dilution and 12.2% of current mcap.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• US Global Jets ETF (JETS US) surged by 6.6% last week, bringing the YTD to -2.1%. The strong move was in tandem with U.S. major indexes, but at 3x greater
• Positive fund inflow of US$92m, the second month in a row, reversing 17 months’ downtrend. Accumulation suggests the bottom is over, and investors turning positive on the aviation sector 
• Maintain TP of US$19 (+14% UPSIDE), but it might be a good idea to protect the downside with a short-term Put option, last week’s action was too fast and furious 

• Major change of gameplan – Q1-3 FY12/2023 results were weaker than expected with the company revising down FY guidance, and withdrawing both current medium and long-term plans given highly challenging business conditions.
• An overview plan of structural reforms has been unveiled, focusing on becoming a more resilient and profitable business, realigning product lines, and rebuilding sales and production setups.
• Although an ambitious initiative with a wide scope, we believe that this will have a positive impact of significantly accelerating transformation initiatives, and transitioning the company to a more optimal business model.

• Today after the close, noted Japanese battery maker Gs Yuasa Corp (6674 JP) announced a public equity offering accompanied by a 3rd party placement to Honda Motor (7267 JP). 
• Total $300mm+ raise is nearly 20.0mm shares against ~80mm shares out now. That’s 20% EPS dilution at a still-decent discount to book value.
• This creates a weird situation of a low ROE stock becoming lower ROE, at a lower PBR, with “more growth ahead” in a hyper-competitive space.

• Using data from the close on 20 November, there could be 6 adds and 5 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
• There will also be capping and funding flows that will lead to a one-way turnover of 17.8% and a one-way trade of US$1.37bn.
• There are 16 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
• There are some key changes to expectations since my last TDIV insight as a consequence of changes in share prices and/or dividend expectations.
• I currently expect 6 ADDs and 5 DELs during the December 2023 review.

• Gs Yuasa Corp (6674 JP) (GSY) is looking to raise around US$240m via a public offering, along with placing shares via third-party allotment with Honda Motor (7267 JP) .
• The company formed a JV with Honda Motors earlier this year and will use the bulk of the proceeds for investments in the JV.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• DS Dansuk is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is from 79,000 won to 89,000 won. 
• The book building for the institutional investors will be from 5-11 December. The IPO offering amount is from 96.4 billion won to 108.6 billion won. 
• According to the bankers’ valuation, DS Dansuk’s valuation would range from 462 billion won to 522 billion won. 

• On 17 November, Hyun Jeong-Eun resigned from the Hyundai Elevator Co Board of Directors Chairwoman and internal director positions, mainly due to strong pressures from other major shareholders.
• With Hyun Jeong-Eun finally out of the company, Hyundai Elevator is likely to significantly emphasize on improving its corporate governance.
• Hyundai Elevator is considering new shareholder return policies, including a potential 50%+ dividend payout, higher share buybacks, and a mandatory minimum dividend yield.

• Led by international activity, CaiNiao booked +25% Y/Y revenue growth in FYQ2
• FYQ2 EBITA margin improved Y/Y and Q/Q, even as express companies struggled
• Result bolsters CaiNiao status as vehicle to access BABA’s international growth

• AZ-Com Maruwa Holdings (9090 JP) is looking to raise around US$206m in its mixed follow-on offering. 
• The deal will be a large one to digest, at 129 days of three month ADV, 5.5% dilution and 12.2% of current mcap.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• US Global Jets ETF (JETS US) surged by 6.6% last week, bringing the YTD to -2.1%. The strong move was in tandem with U.S. major indexes, but at 3x greater
• Positive fund inflow of US$92m, the second month in a row, reversing 17 months’ downtrend. Accumulation suggests the bottom is over, and investors turning positive on the aviation sector 
• Maintain TP of US$19 (+14% UPSIDE), but it might be a good idea to protect the downside with a short-term Put option, last week’s action was too fast and furious 

• Major change of gameplan – Q1-3 FY12/2023 results were weaker than expected with the company revising down FY guidance, and withdrawing both current medium and long-term plans given highly challenging business conditions.
• An overview plan of structural reforms has been unveiled, focusing on becoming a more resilient and profitable business, realigning product lines, and rebuilding sales and production setups.
• Although an ambitious initiative with a wide scope, we believe that this will have a positive impact of significantly accelerating transformation initiatives, and transitioning the company to a more optimal business model.

• Non-Core items boosted Q3 earnings, but core margins plunged vs Q2
• In a surprise move, ZTO has abandoned its aggressive pursuit of share
• Medium term growth is likely to slow, and pressure on margins remains

• Rolling stock manufacturer Talgo SA (TLGO SM)  confirms the interest of a Hungarian investor in launching a takeover bid at €5/share, 28% premium, 10.5 EV/24e EBITDA.
• The implied market cap is €617 million and the implied EV is €837 million. My fair value estimate (DCF-based) is €4.76/share, so the potential offer price seems adequate.
• The 17 November closing share price implies a 44% probability of an offer (12% gross spread, 12% gain since disclosure), which indicates that the outcome seems uncertain.

• Non-Core items boosted Q3 earnings, but core margins plunged vs Q2
• In a surprise move, ZTO has abandoned its aggressive pursuit of share
• Medium term growth is likely to slow, and pressure on margins remains

• Rolling stock manufacturer Talgo SA (TLGO SM)  confirms the interest of a Hungarian investor in launching a takeover bid at €5/share, 28% premium, 10.5 EV/24e EBITDA.
• The implied market cap is €617 million and the implied EV is €837 million. My fair value estimate (DCF-based) is €4.76/share, so the potential offer price seems adequate.
• The 17 November closing share price implies a 44% probability of an offer (12% gross spread, 12% gain since disclosure), which indicates that the outcome seems uncertain.

• Pasona Group (2168 JP) is massively net cash. And it’s ofloading Benefit One Inc (2412 JP). Though we don’t know what the future holds, Pasona is the wrong price.
• ENN Energy (2688 HK) controlling shreholder announced it intends to increase it stake. And it’s been in the market almost everry day since the interims. 
• Zhejiang Expressway (576 HK) announced its rights offering. It’s at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio

• I tally 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Six new deals were discussed this week: Benefit One  (2412 JP), Japan Best Rescue System (2453 JP), IJTT (7315 JP), Ohizumi (6618 JP), Amara (AMA SP), and Atlantic Lithium (A11 AU).
• Key updates took place for: VNET (VNET US), Eoflow (294090 KS), Azure Minerals (AZS AU), Origin Energy (ORG AU), Haitong International Securities Group (665 HK) and Shidax Corp (4837 JP).

• 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 – Asahi Group Holdings (2502 JP)‘s US$1.3 billion secondary offering; ZEEKR (ZK US), Tata Technologies (TATATECH IN) and Cainiao Smart Logistics Network (1437124D HK) IPOs
• Event-Driven developments Benefit One Inc (2412 JP), Japan Best Rescue System Co (2453 JP), Eoflow (294090 KS), Haitong International Securities Group (665 HK), Vinda International (3331 HK), Amara Holdings (AMA SP).

• Pasona Group (2168 JP) is massively net cash. And it’s ofloading Benefit One Inc (2412 JP). Though we don’t know what the future holds, Pasona is the wrong price.
• ENN Energy (2688 HK) controlling shreholder announced it intends to increase it stake. And it’s been in the market almost everry day since the interims. 
• Zhejiang Expressway (576 HK) announced its rights offering. It’s at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio

• I tally 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Six new deals were discussed this week: Benefit One  (2412 JP), Japan Best Rescue System (2453 JP), IJTT (7315 JP), Ohizumi (6618 JP), Amara (AMA SP), and Atlantic Lithium (A11 AU).
• Key updates took place for: VNET (VNET US), Eoflow (294090 KS), Azure Minerals (AZS AU), Origin Energy (ORG AU), Haitong International Securities Group (665 HK) and Shidax Corp (4837 JP).

• 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 – Asahi Group Holdings (2502 JP)‘s US$1.3 billion secondary offering; ZEEKR (ZK US), Tata Technologies (TATATECH IN) and Cainiao Smart Logistics Network (1437124D HK) IPOs
• Event-Driven developments Benefit One Inc (2412 JP), Japan Best Rescue System Co (2453 JP), Eoflow (294090 KS), Haitong International Securities Group (665 HK), Vinda International (3331 HK), Amara Holdings (AMA SP).

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

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

• As discussed here in a piece about the Partial Tender Offer, Pasona Group (2168) has agreed to sell its controlling stake in Benefit One (2412) to M3 (2413).
• That will leave Pasona Group with a fair chunk of cash and possibly a residual stake in Benefit One, depending on the results.
• Though we don’t know what the future holds, Pasona now is the wrong price for its future. 

• ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
• In ZEEKR IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on growth slowdown in the second-largest business, high related-parties dependence, Virdi/CEVT gross margin pressure, ongoing operating losses and FCF burn.

• iPower reported $26.5 million in revenue in 1QFY24, its highest quarterly revenue ever, compared with $26.0 million in 1QFY23.
• The company’s performance was helped by business generated by its SuperSuite supply chain partnerships, currently on a $7 million annual run rate.
• The company’s TikTok Shop sales also contributed to the solid sales results.

• Earnings Trends: 1Q FY24/5 results were solid, with steady sales and improved gross profit margins.
• Profit growth was limited owing to higher SG&A expenses in absolute terms stemming from hiring personnel, higher wages, and the inclusion of SG&A expenses of Ohba Research and Land Surveys.
• However, the company is likely to see more benefits from the steady accumulation of orders and continuous improvement in gross profit margin from 2Q onward, when it becomes easier to secure sales volume owing to the seasonality of its business.

• As discussed here in a piece about the Partial Tender Offer, Pasona Group (2168) has agreed to sell its controlling stake in Benefit One (2412) to M3 (2413).
• That will leave Pasona Group with a fair chunk of cash and possibly a residual stake in Benefit One, depending on the results.
• Though we don’t know what the future holds, Pasona now is the wrong price for its future. 

• ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
• In ZEEKR IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on growth slowdown in the second-largest business, high related-parties dependence, Virdi/CEVT gross margin pressure, ongoing operating losses and FCF burn.

• iPower reported $26.5 million in revenue in 1QFY24, its highest quarterly revenue ever, compared with $26.0 million in 1QFY23.
• The company’s performance was helped by business generated by its SuperSuite supply chain partnerships, currently on a $7 million annual run rate.
• The company’s TikTok Shop sales also contributed to the solid sales results.

• Earnings Trends: 1Q FY24/5 results were solid, with steady sales and improved gross profit margins.
• Profit growth was limited owing to higher SG&A expenses in absolute terms stemming from hiring personnel, higher wages, and the inclusion of SG&A expenses of Ohba Research and Land Surveys.
• However, the company is likely to see more benefits from the steady accumulation of orders and continuous improvement in gross profit margin from 2Q onward, when it becomes easier to secure sales volume owing to the seasonality of its business.