Industrials

• Nippon Yusen Kk (9101 JP) today announced an upward revision of H1 and full-year guidance. It was a dramatic increase.
• The breakdown of the OP and RP numbers suggests a huge gain in containers in Q1 and into Q2. The breakdown of revenue and OP changes suggested substantial H2 conservatism.
• On a capital-adjusted basis, Nippon Yusen is now slightly cheap vs its domestic peers and has shown a willingness to spend its excess cash on buybacks. Expect more.

• Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
• The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
• While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.

• During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
• Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
• Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.

• Ryanair issued a stark warning on summer pricing today with 1Q25 results and we cut our FY25 net income 31% accordingly.
• Our forecasts represent a re-set of unitary economics to pre-pandemic levels and it is difficult to plot improvement unless consolidation benefits or winter surgery help FY26.
• Ryanair’s cost advantage has widened markedly against peers, justifying a strategy of continued market share focus as competitors face greater challenges.

• According to The Sunday Times, Philip Jansen is reportedly planning a takeover bid for Rentokil Initial (RTO LN), a FTSE 100 pest control company, with private equity backing.
• Jansen plans to boost Rentokil’s US performance and enhance its integration with Terminix, with the potential to market consolidation. Closest comparable Rollins trades at 33.7x EV/NTM EBIT vs. Rentokil’s 15.7x.
• As a global leader in pest control and hygiene services, Rentokil boasts a strong market position and brand recognition. Rentokil will report its H1 results on 25 July. Long.

• We are initiating coverage of Symbotic (SYM) with a Sell Rating and $10 target. 
• The latest quarterly report from SYM suggests there could be little in the form of catalysts with the biggest news being related to a business owned by the CEO
• We believe investors are putting too much reliance on SYM generating revenue from Wal-Mart (WMT) even though WMT is also using SYM’s competition for warehouse automation. 

• We remain optimistic about CXW’s new business activities, operating improvements and cost containment efforts.
• Over time, we expect occupancies at CXW facilities to continue to increase, the pending ICE termination of services at CXW’s South Texas Family Residential Center notwithstanding, as ICE & multiple government entities seek capacity.
• CXW also continues to strengthen its balance sheet, with a 2Q24 debt offering concurrent with a tender offer for 2026 8.25% notes.

• Nippon Yusen Kk (9101 JP) today announced an upward revision of H1 and full-year guidance. It was a dramatic increase.
• The breakdown of the OP and RP numbers suggests a huge gain in containers in Q1 and into Q2. The breakdown of revenue and OP changes suggested substantial H2 conservatism.
• On a capital-adjusted basis, Nippon Yusen is now slightly cheap vs its domestic peers and has shown a willingness to spend its excess cash on buybacks. Expect more.

• Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
• The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
• While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.

• During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
• Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
• Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.

• Ryanair issued a stark warning on summer pricing today with 1Q25 results and we cut our FY25 net income 31% accordingly.
• Our forecasts represent a re-set of unitary economics to pre-pandemic levels and it is difficult to plot improvement unless consolidation benefits or winter surgery help FY26.
• Ryanair’s cost advantage has widened markedly against peers, justifying a strategy of continued market share focus as competitors face greater challenges.

• According to The Sunday Times, Philip Jansen is reportedly planning a takeover bid for Rentokil Initial (RTO LN), a FTSE 100 pest control company, with private equity backing.
• Jansen plans to boost Rentokil’s US performance and enhance its integration with Terminix, with the potential to market consolidation. Closest comparable Rollins trades at 33.7x EV/NTM EBIT vs. Rentokil’s 15.7x.
• As a global leader in pest control and hygiene services, Rentokil boasts a strong market position and brand recognition. Rentokil will report its H1 results on 25 July. Long.

• We are initiating coverage of Symbotic (SYM) with a Sell Rating and $10 target. 
• The latest quarterly report from SYM suggests there could be little in the form of catalysts with the biggest news being related to a business owned by the CEO
• We believe investors are putting too much reliance on SYM generating revenue from Wal-Mart (WMT) even though WMT is also using SYM’s competition for warehouse automation. 

• We remain optimistic about CXW’s new business activities, operating improvements and cost containment efforts.
• Over time, we expect occupancies at CXW facilities to continue to increase, the pending ICE termination of services at CXW’s South Texas Family Residential Center notwithstanding, as ICE & multiple government entities seek capacity.
• CXW also continues to strengthen its balance sheet, with a 2Q24 debt offering concurrent with a tender offer for 2026 8.25% notes.

• ENEOS Holdings (5020 JP) announced its deal for affiliate Tatsuta Electric Wire & Cable (5809 JP) 18-plus months ago. China approvals held it up more than a year.
• Last month, they launched. The sector was up a lot. TOPIX was up a lot. The stock had recently been trading through terms. But ENEOS didn’t bump the price.
• A month later, and the tender was supposed to have closed Friday 19 July. It didn’t. ENEOS extended, for no reason, which suggests they don’t have the shares. 

• SOUTHBOUND was again a net buyer, for HK$19.2bn this week, on smallish two-way volumes. Tencent and ETFs stood out as large net buys.
• I’ve thought national team was buying banks for months. This week, no banks showed in the top five net buys, and only 1 in the top ten.
• It is somewhat perplexing that the flows just stopped. But that may be a sign of things to come. Confirmation may require a week or two.

• With the review period nearing completion, there could be 14/15 changes for the NIFTY Midcap 150 Index at the September rebalance.
• Estimated one-way turnover is 8.2% resulting in a one-way trade of INR 6.6bn (US$79m). With US$38bn tracking the index actively, the impact on the stocks will be much larger.
• Performance of a long adds/short deletes trade was very good in March, and we could see a repeat over the next couple of months.

• Arwana Citramulia (ARNA IJ) is Indonesia’s leading ceramic tile producer catering to the mass market but expanding into the higher-end porcelain tile space competing with Chinese imports at lower costs.
• The recent move by the government to extend the gas subsidy for the industry bodes well for Arwana given the strides it has already made in reducing gas consumption.
• Arwana continues to expand its capacity, especially in higher-margin porcelain tiles, which will help to drive future growth and profitability. Valuations are attractive as capacity-driven growth kicks in.

• ENEOS Holdings (5020 JP) announced its deal for affiliate Tatsuta Electric Wire & Cable (5809 JP) 18-plus months ago. China approvals held it up more than a year.
• Last month, they launched. The sector was up a lot. TOPIX was up a lot. The stock had recently been trading through terms. But ENEOS didn’t bump the price.
• A month later, and the tender was supposed to have closed Friday 19 July. It didn’t. ENEOS extended, for no reason, which suggests they don’t have the shares. 

• SOUTHBOUND was again a net buyer, for HK$19.2bn this week, on smallish two-way volumes. Tencent and ETFs stood out as large net buys.
• I’ve thought national team was buying banks for months. This week, no banks showed in the top five net buys, and only 1 in the top ten.
• It is somewhat perplexing that the flows just stopped. But that may be a sign of things to come. Confirmation may require a week or two.

• With the review period nearing completion, there could be 14/15 changes for the NIFTY Midcap 150 Index at the September rebalance.
• Estimated one-way turnover is 8.2% resulting in a one-way trade of INR 6.6bn (US$79m). With US$38bn tracking the index actively, the impact on the stocks will be much larger.
• Performance of a long adds/short deletes trade was very good in March, and we could see a repeat over the next couple of months.

• Arwana Citramulia (ARNA IJ) is Indonesia’s leading ceramic tile producer catering to the mass market but expanding into the higher-end porcelain tile space competing with Chinese imports at lower costs.
• The recent move by the government to extend the gas subsidy for the industry bodes well for Arwana given the strides it has already made in reducing gas consumption.
• Arwana continues to expand its capacity, especially in higher-margin porcelain tiles, which will help to drive future growth and profitability. Valuations are attractive as capacity-driven growth kicks in.

• Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
• With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
• We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

• Baidu, a Chinese multinational technology giant, chose Hesai Group to be the exclusive LiDAR supplier for its robotaxi fleet in China.  
• Baidu is uniquely positioned for growth in a self-driving robotaxis and its autonomous ride-hailing platform, Apollo Go Robotaxi, gains real traction.   
• Hesai Group may ship at least 300K LiDARs for Baidu’s sixth generation Apollo RT6 robotaxis that would translate into a revenue of up to $300M.

• Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
• With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
• We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

• Baidu, a Chinese multinational technology giant, chose Hesai Group to be the exclusive LiDAR supplier for its robotaxi fleet in China.  
• Baidu is uniquely positioned for growth in a self-driving robotaxis and its autonomous ride-hailing platform, Apollo Go Robotaxi, gains real traction.   
• Hesai Group may ship at least 300K LiDARs for Baidu’s sixth generation Apollo RT6 robotaxis that would translate into a revenue of up to $300M.

We view International Container (ICTSI) as “Low Risk” on the LARA scale. This reflects the company’s: [1] leading position in Philippine container terminal operations; [2] geographically diversified operations, with port terminal assets across 19 countries; and [3] sound business capability to execute its expansion plans, as evidenced by its track record of healthy revenue growth and margin expansion. These are balanced against the risks associated with: [1] a potential increase in competitive pressures in the container shipping industry; [2] the Port of Manila’s small scale (in terms of annual throughput) compared to major ports worldwide; and [3] exposure to political and event risks arising from the company’s operations in frontier markets.

Our fundamental Credit Bias on ICTSI is “Stable”. The company’s leverage has improved over the years, supported by earnings growth and strong OCF generation. That said, FCF may be tempered by high capex and dividend payouts.

Controversies are “Material”. In 2017, ICTSI was accused by the International Transport Workers Federation (ITF) of violating various labour rights. This included the illegal sacking of outsourced workers at its Madagascar terminal, paying “poverty wages” at the company’s terminals in Indonesia and Madagascar, discrimination against unionised workers, as well as safety breaches at various terminals. The ITF also accused ICTSI of profiting off dictatorships, by working with authoritarian governments in Sudan, Syria and the Democratic Republic of Congo. In March 2023, the Organised Crime and Corruption Reporting Project accused the company of bribing two officials from the PNG Ports Corporation in relation to concession awards for its terminals in Papua New Guinea. That said, ICTSI does not appear to be materially impacted by the controversies. Overall, the ESG Impact on Credit is “Neutral”.

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

• Edenred SE is a global payment solutions company with a strong financial performance and dominant industry position
• Company’s stock has declined -19.50% year-to-date due to a legal investigation in Italy
• Despite challenges, Edenred has a strong balance sheet, cash flow generation, and growth potential, making it a long opportunity for investors.

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.

• The WTR Sustainable Index was up 7.0% W/W versus the S&P 500 Index (up 0.9%), the Russell 2000 Index (up 6.0%), and the Nasdaq Index (down 0.3%).
• Energy Technology (15.1% of the index) was up 15.5%, while Industrial Climate and Ag Technology (58.5% of the index) was up 4.7%, ClimateTech Mining was down 3.4% and Advanced Transportation Solutions (21.2% of index) was up 9.0%.
• Top 10 Performers: ARVL, ZAPP, NAAS, VMC, PEGY, QS, LCID, OUST, EVGO, COMM

• Pyxis Tankers is a small illiquid microcap company that owns and operates charter tankers and dry bulk vessels
• Trading at a discount to liquidation value of vessels and lower EV/FCF ratio compared to peers
• Strong inside ownership and disciplined capital allocation, with bull thesis based on optimistic outlook for tanker rates in near term

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.

We view International Container (ICTSI) as “Low Risk” on the LARA scale. This reflects the company’s: [1] leading position in Philippine container terminal operations; [2] geographically diversified operations, with port terminal assets across 19 countries; and [3] sound business capability to execute its expansion plans, as evidenced by its track record of healthy revenue growth and margin expansion. These are balanced against the risks associated with: [1] a potential increase in competitive pressures in the container shipping industry; [2] the Port of Manila’s small scale (in terms of annual throughput) compared to major ports worldwide; and [3] exposure to political and event risks arising from the company’s operations in frontier markets.

Our fundamental Credit Bias on ICTSI is “Stable”. The company’s leverage has improved over the years, supported by earnings growth and strong OCF generation. That said, FCF may be tempered by high capex and dividend payouts.

Controversies are “Material”. In 2017, ICTSI was accused by the International Transport Workers Federation (ITF) of violating various labour rights. This included the illegal sacking of outsourced workers at its Madagascar terminal, paying “poverty wages” at the company’s terminals in Indonesia and Madagascar, discrimination against unionised workers, as well as safety breaches at various terminals. The ITF also accused ICTSI of profiting off dictatorships, by working with authoritarian governments in Sudan, Syria and the Democratic Republic of Congo. In March 2023, the Organised Crime and Corruption Reporting Project accused the company of bribing two officials from the PNG Ports Corporation in relation to concession awards for its terminals in Papua New Guinea. That said, ICTSI does not appear to be materially impacted by the controversies. Overall, the ESG Impact on Credit is “Neutral”.

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

• Edenred SE is a global payment solutions company with a strong financial performance and dominant industry position
• Company’s stock has declined -19.50% year-to-date due to a legal investigation in Italy
• Despite challenges, Edenred has a strong balance sheet, cash flow generation, and growth potential, making it a long opportunity for investors.

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.

• The WTR Sustainable Index was up 7.0% W/W versus the S&P 500 Index (up 0.9%), the Russell 2000 Index (up 6.0%), and the Nasdaq Index (down 0.3%).
• Energy Technology (15.1% of the index) was up 15.5%, while Industrial Climate and Ag Technology (58.5% of the index) was up 4.7%, ClimateTech Mining was down 3.4% and Advanced Transportation Solutions (21.2% of index) was up 9.0%.
• Top 10 Performers: ARVL, ZAPP, NAAS, VMC, PEGY, QS, LCID, OUST, EVGO, COMM

• Pyxis Tankers is a small illiquid microcap company that owns and operates charter tankers and dry bulk vessels
• Trading at a discount to liquidation value of vessels and lower EV/FCF ratio compared to peers
• Strong inside ownership and disciplined capital allocation, with bull thesis based on optimistic outlook for tanker rates in near term

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.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
• With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

• Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.
• Concerns over pricing continue to increase in Europe, following Lufthansa’s profit warning last week.
• We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.

• Rentokil Initial (RTO) is trading at a historically low valuation despite being in a resilient industry like pest control
• Rentokil is well-managed with a long-tenured management team that consistently exceeds guidance and has a track record of double-digit EPS growth
• With a P/E ratio of 17.5x, Rentokil presents an attractive investment opportunity with potential for a 30%+ return by the end of 2025 if targets are met and the multiple reverts to historical averages

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.

• Rolls Royce is a British company known for its power business, mainly converting stored energy into kinetic energy through big engines such as airplane engines.
• The company’s core business is in civil aerospace, with a focus on engineering excellence and a history dating back to the early 1900s.
• The publicly traded entity of Rolls Royce Holdings focuses on the aerospace market, specifically in the production of airplane engines for large commercial planes and business.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Blackline Safety provides gas detection and safety monitoring services, currently undervalued at 2.3x NTM sales
• Transitioning from hardware to SaaS will potentially double the company’s value in 3 years
• Management’s experience in the industry supports the company’s potential for future success and 100% upside over the next 3 years through revenue growth and margin improvement.

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.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
• With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

• Latest fare data suggests an incrementally more concerning trend for Ryanair pricing from June.
• Concerns over pricing continue to increase in Europe, following Lufthansa’s profit warning last week.
• We cut our FY25 net income by 9% to €2,289m albeit remain above consensus of €2,170m.

• Rentokil Initial (RTO) is trading at a historically low valuation despite being in a resilient industry like pest control
• Rentokil is well-managed with a long-tenured management team that consistently exceeds guidance and has a track record of double-digit EPS growth
• With a P/E ratio of 17.5x, Rentokil presents an attractive investment opportunity with potential for a 30%+ return by the end of 2025 if targets are met and the multiple reverts to historical averages

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.

• Rolls Royce is a British company known for its power business, mainly converting stored energy into kinetic energy through big engines such as airplane engines.
• The company’s core business is in civil aerospace, with a focus on engineering excellence and a history dating back to the early 1900s.
• The publicly traded entity of Rolls Royce Holdings focuses on the aerospace market, specifically in the production of airplane engines for large commercial planes and business.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Blackline Safety provides gas detection and safety monitoring services, currently undervalued at 2.3x NTM sales
• Transitioning from hardware to SaaS will potentially double the company’s value in 3 years
• Management’s experience in the industry supports the company’s potential for future success and 100% upside over the next 3 years through revenue growth and margin improvement.

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.