Industrials

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In our previous notes, we talked about the company’s past performance. In this note, we undertake a peer comparison.

Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology

By Joe Jasper

Last week (8/22/23) we discussed our expectations for an oversold bounce due to an overwhelming number of indexes/Sectors/industries testing multi-month supports, combined with Treasury yields and the DXY testing resistance.
The bounce has begun with the SPP ending higher last week for the first time in a month, and it is possible we have seen the lows for this pause/pullback.
A meaningful correction cannot happen if the SPX is above 4300-4325, but we would not be surprised to see another month or more of consolidation between 4300 and 4600.

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below.

ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher

Solid Q2 results from ZTO, with deep unit cost reductions offseting weak pricing
But ultimately, Q2/H1 results are merely in-line with guidance — not better, nor worse
In this environment, it’s difficult to see what will move ZTO out of recent trading range

BES: Mixed Q3 Financials; Long-Term Thesis Intact

By Atrium Research

Braille reported Q3/23 financial results that were mixed compared to our expectations.
Braille Battery remains well positioned to expand internationally and return to its historical sales growth rate of ~15% while expanding gross margin in the process.
The results were mixed relative to our expectations, being in line for revenue and adjusted EBITDA but missing on gross margin.

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Aug 30

Daily Brief Industrials: Doosan Robotics, First Trust Dj Internet Ind, Shenzhen International, ZTO Express Cayman , Braille Energy Systems and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Doosan Robotics IPO: The Bull Case
Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition
Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology
Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
BES: Mixed Q3 Financials; Long-Term Thesis Intact

Doosan Robotics IPO: The Bull Case

By Arun George

Doosan Robotics (DOOSANROBO KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.
The international bookbuilding will run from 28 August to 15 September, while the domestic book will be open from 11 to 15 September. Pricing will be announced on 19 September.
The bull case rests on the market share gains, rapid forecasted growth, the industry’s largest product lineup, rapid expansion in sales channels and key accounts growth.

Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In our previous notes, we talked about the company’s past performance. In this note, we undertake a peer comparison.

Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology

By Joe Jasper

Last week (8/22/23) we discussed our expectations for an oversold bounce due to an overwhelming number of indexes/Sectors/industries testing multi-month supports, combined with Treasury yields and the DXY testing resistance.
The bounce has begun with the SPP ending higher last week for the first time in a month, and it is possible we have seen the lows for this pause/pullback.
A meaningful correction cannot happen if the SPX is above 4300-4325, but we would not be surprised to see another month or more of consolidation between 4300 and 4600.

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below.

ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher

Solid Q2 results from ZTO, with deep unit cost reductions offseting weak pricing
But ultimately, Q2/H1 results are merely in-line with guidance — not better, nor worse
In this environment, it’s difficult to see what will move ZTO out of recent trading range

BES: Mixed Q3 Financials; Long-Term Thesis Intact

By Atrium Research

Braille reported Q3/23 financial results that were mixed compared to our expectations.
Braille Battery remains well positioned to expand internationally and return to its historical sales growth rate of ~15% while expanding gross margin in the process.
The results were mixed relative to our expectations, being in line for revenue and adjusted EBITDA but missing on gross margin.

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Aug 29

Daily Brief Industrials: China Conch Venture Holdings, Doosan Robotics, Howmet Aerospace , S.F. Holding, Frontier Management Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

StubWorld: China Conch Plumbs New Lows
Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
Doosan Robotics IPO Valuation Analysis
Doosan Robotics IPO – The Negatives – But Losses Continue to Widen
Howmet Aerospace Inc.: 3 Factors Powering Its Dynamic Growth Trajectory Despite Strikes and Supply Chain Hurdles! – Major Drivers
SF Holding HK IPO = A Drive to ‘Internationalize’ | Exposure Update | Recent Deals | New Comp Group
2Q Follow-Up – Frontier Management Inc. (7038 JP) – Aug. 23, 2023

StubWorld: China Conch Plumbs New Lows

By David Blennerhassett

The China Conch Venture Holdings (586 HK)/ Anhui Conch Cement (600585 CH) ratio, and the implied stub, are now at all-time lows.
Preceding my comments on China Conch/Anhui are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Robotics IPO – The Positives – More than Doubled Its Revenue

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module
In this note, we will talk about the positive aspects of the deal.

Doosan Robotics IPO Valuation Analysis

By Douglas Kim

Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range.
We estimate Doosan Robotics to generate sales of 61.7 billion won (up 37.2% YoY) in 2023 and 97.7 billion won (up 58.2% YoY) in 2024.
If Doosan Robotics is compared to Fanuc, Doosan Robotics’ valuation would be much lower. However, one could argue that Doosan Robotics should have higher valuation than Rainbow Robotics.

Doosan Robotics IPO – The Negatives – But Losses Continue to Widen

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In this note, we will talk about the not-so-positive aspects of the deal.

Howmet Aerospace Inc.: 3 Factors Powering Its Dynamic Growth Trajectory Despite Strikes and Supply Chain Hurdles! – Major Drivers

Howmet Aerospace delivered an all-around beat in the most recent quarterly result.
Revenues showed significant year-over-year and sequential growth, with a notable highlight in the commercial aerospace sector.
Moreover, Howmet maintained a healthy cash balance and generated robust free cash flow.

SF Holding HK IPO = A Drive to ‘Internationalize’ | Exposure Update | Recent Deals | New Comp Group

SF Holding’s HK listing document provides added details of current international revenue
Two recent moves show SF’s intent to raise international sales (and reduce China exposure)
As SF Holding courts a global investor base, its comps will become the global express names

2Q Follow-Up – Frontier Management Inc. (7038 JP) – Aug. 23, 2023

By Sessa Investment Research

In 2Q, net sales rose 26%, operating profit rose 28%, and net profit rose 46%.
The strong growth in net profit is attributed to the absence of the loss on valuation of investment securities recorded in the previous year.
Management Consulting business continued to perform well with sales rising 16%.

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Aug 29

Daily Brief Industrials: China Conch Venture Holdings, Doosan Robotics, Howmet Aerospace , S.F. Holding, Frontier Management Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

StubWorld: China Conch Plumbs New Lows
Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
Doosan Robotics IPO Valuation Analysis
Doosan Robotics IPO – The Negatives – But Losses Continue to Widen
Howmet Aerospace Inc.: 3 Factors Powering Its Dynamic Growth Trajectory Despite Strikes and Supply Chain Hurdles! – Major Drivers
SF Holding HK IPO = A Drive to ‘Internationalize’ | Exposure Update | Recent Deals | New Comp Group
2Q Follow-Up – Frontier Management Inc. (7038 JP) – Aug. 23, 2023

StubWorld: China Conch Plumbs New Lows

By David Blennerhassett

The China Conch Venture Holdings (586 HK)/ Anhui Conch Cement (600585 CH) ratio, and the implied stub, are now at all-time lows.
Preceding my comments on China Conch/Anhui are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Robotics IPO – The Positives – More than Doubled Its Revenue

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module
In this note, we will talk about the positive aspects of the deal.

Doosan Robotics IPO Valuation Analysis

By Douglas Kim

Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range.
We estimate Doosan Robotics to generate sales of 61.7 billion won (up 37.2% YoY) in 2023 and 97.7 billion won (up 58.2% YoY) in 2024.
If Doosan Robotics is compared to Fanuc, Doosan Robotics’ valuation would be much lower. However, one could argue that Doosan Robotics should have higher valuation than Rainbow Robotics.

Doosan Robotics IPO – The Negatives – But Losses Continue to Widen

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In this note, we will talk about the not-so-positive aspects of the deal.

Howmet Aerospace Inc.: 3 Factors Powering Its Dynamic Growth Trajectory Despite Strikes and Supply Chain Hurdles! – Major Drivers

Howmet Aerospace delivered an all-around beat in the most recent quarterly result.
Revenues showed significant year-over-year and sequential growth, with a notable highlight in the commercial aerospace sector.
Moreover, Howmet maintained a healthy cash balance and generated robust free cash flow.

SF Holding HK IPO = A Drive to ‘Internationalize’ | Exposure Update | Recent Deals | New Comp Group

SF Holding’s HK listing document provides added details of current international revenue
Two recent moves show SF’s intent to raise international sales (and reduce China exposure)
As SF Holding courts a global investor base, its comps will become the global express names

2Q Follow-Up – Frontier Management Inc. (7038 JP) – Aug. 23, 2023

By Sessa Investment Research

In 2Q, net sales rose 26%, operating profit rose 28%, and net profit rose 46%.
The strong growth in net profit is attributed to the absence of the loss on valuation of investment securities recorded in the previous year.
Management Consulting business continued to perform well with sales rising 16%.

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Aug 28

Daily Brief Industrials: CIMC Enric Holdings, Sinotrans, Keihin, Alight Inc, Hainan Meilan International Airport and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CIMC Enric (3899 HK): Demonstrating Sustained Resilience
Sinotrans (598 HK): Challenges Have Not Abated Yet
The Keihin Co (TYO 9312) – A Consistently Profitable and Growing Small Cap Logistics Company
Alight at the End of the Tunnel
Meilan Airport (357 HK): Not Out of the Woods Yet

CIMC Enric (3899 HK): Demonstrating Sustained Resilience

We like the 17.7% core earnings growth for CIMC Enric Holdings (3899 HK) as this has demonstrated its operating strengths under a challenging environment in 1H23.
With orders on hand of Rmb20.6bn (+18.8% YoY), we see forward earnings well-covered. Also, management has turned even more positive on earnings and margin outlook in 2H23.
The hydrogen energy business maintains solid momentum with order backlog surging 116.9%. The spin-off of CIMC Safeway Technologies on the ChiNext Board is a near-term catalyst.

Sinotrans (598 HK): Challenges Have Not Abated Yet

The 1H23 result of Sinotrans (598 HK) is unexciting as recurring profit contracted 9.8%. The decline has also accelerated to 13.5% in 2Q23, from just 4.6% in 1Q23.
Weak export (-14.5% YoY in Jul) and poor airfreight price (-45% YoY in Jul) did not bode well for profitability. The flattening of DHL-Sinotrans’ contribution also limits earnings upside.
Valuations are inexpensive at 5.3x PER and 9% yield for FY23, but growth outlook is not encouraging. We think it is a good time to take money off the table.

The Keihin Co (TYO 9312) – A Consistently Profitable and Growing Small Cap Logistics Company

By Altay Capital

The Keihin Co is a ¥10.94B ($74.7m) market cap logistics company in Japan that owns and operates warehouses and distribution facilities mostly in and around Tokyo.
They’ve been profitable for 19 of the last 20 years and have compounded tangible book value at 6.5% over the last decade while growing profits.
Stock has gone nowhere over the last decade despite compounding tangible book value and net income at a respectable clip.

Alight at the End of the Tunnel

By subSPAC

Two years ago, when SPACs were the talk of the town, Alight, a firm specializing in cloud-based HR and benefits services, took the plunge.
With a $7.3 billion merger supported by Bill Foley, they went public right in the midst of the SPAC craze.
Fast forward to today, the business climate is quite different.

Meilan Airport (357 HK): Not Out of the Woods Yet

By Eric Chen

1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.
We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.
While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.

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Aug 28

Daily Brief Industrials: CIMC Enric Holdings, Sinotrans, Keihin, Alight Inc, Hainan Meilan International Airport and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CIMC Enric (3899 HK): Demonstrating Sustained Resilience
Sinotrans (598 HK): Challenges Have Not Abated Yet
The Keihin Co (TYO 9312) – A Consistently Profitable and Growing Small Cap Logistics Company
Alight at the End of the Tunnel
Meilan Airport (357 HK): Not Out of the Woods Yet

CIMC Enric (3899 HK): Demonstrating Sustained Resilience

We like the 17.7% core earnings growth for CIMC Enric Holdings (3899 HK) as this has demonstrated its operating strengths under a challenging environment in 1H23.
With orders on hand of Rmb20.6bn (+18.8% YoY), we see forward earnings well-covered. Also, management has turned even more positive on earnings and margin outlook in 2H23.
The hydrogen energy business maintains solid momentum with order backlog surging 116.9%. The spin-off of CIMC Safeway Technologies on the ChiNext Board is a near-term catalyst.

Sinotrans (598 HK): Challenges Have Not Abated Yet

The 1H23 result of Sinotrans (598 HK) is unexciting as recurring profit contracted 9.8%. The decline has also accelerated to 13.5% in 2Q23, from just 4.6% in 1Q23.
Weak export (-14.5% YoY in Jul) and poor airfreight price (-45% YoY in Jul) did not bode well for profitability. The flattening of DHL-Sinotrans’ contribution also limits earnings upside.
Valuations are inexpensive at 5.3x PER and 9% yield for FY23, but growth outlook is not encouraging. We think it is a good time to take money off the table.

The Keihin Co (TYO 9312) – A Consistently Profitable and Growing Small Cap Logistics Company

By Altay Capital

The Keihin Co is a ¥10.94B ($74.7m) market cap logistics company in Japan that owns and operates warehouses and distribution facilities mostly in and around Tokyo.
They’ve been profitable for 19 of the last 20 years and have compounded tangible book value at 6.5% over the last decade while growing profits.
Stock has gone nowhere over the last decade despite compounding tangible book value and net income at a respectable clip.

Alight at the End of the Tunnel

By subSPAC

Two years ago, when SPACs were the talk of the town, Alight, a firm specializing in cloud-based HR and benefits services, took the plunge.
With a $7.3 billion merger supported by Bill Foley, they went public right in the midst of the SPAC craze.
Fast forward to today, the business climate is quite different.

Meilan Airport (357 HK): Not Out of the Woods Yet

By Eric Chen

1H23 results missed our expectation because stronger-than-expected revenue was outweighed by surge in operating costs as company took from its parent the overall operation of Phase I and II.
We expect slow recovery in duty-free sales and elevated cost base will continue pressuring its bottom line in 2H23 and see possibility to return to profitability by 1H24.
While recent share price correction has priced in the weak outlook somehow, we can’t rule out further volatility post results. We are now neutral on the stock.

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Aug 27

Daily Brief Industrials: Stanley Black & Decker and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Stanley Black & Decker Inc.: Breaking Down the Reasons Behind Their Revenue Surge! – Major Drivers

Stanley Black & Decker Inc.: Breaking Down the Reasons Behind Their Revenue Surge! – Major Drivers

Stanley Black & Decker exceeded analyst expectations in terms of revenue and earnings.
Second-quarter revenue decreased from the previous year due to reduced consumer outdoor and DIY volume.
Global automotive and aerospace continue to show momentum across Stanley Black & Decker’s industrial end sectors.

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Aug 27

Daily Brief Industrials: Stanley Black & Decker and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Stanley Black & Decker Inc.: Breaking Down the Reasons Behind Their Revenue Surge! – Major Drivers

Stanley Black & Decker Inc.: Breaking Down the Reasons Behind Their Revenue Surge! – Major Drivers

By Shifara Samsudeen, ACMA, CGMA

Stanley Black & Decker exceeded analyst expectations in terms of revenue and earnings.
Second-quarter revenue decreased from the previous year due to reduced consumer outdoor and DIY volume.
Global automotive and aerospace continue to show momentum across Stanley Black & Decker’s industrial end sectors.

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Aug 26

Daily Brief Industrials: Grab Holdings , Happy Forgings Limited, Rockwell Automation and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform
Happy Forgings Limited Pre-IPO Tearsheet
Grab: Profitability Seems Not So Easy to Sustain
Rockwell Automation Inc.: Decoding High Teens Growth in Semiconductor Sales and Beyond! – Major Drivers

Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform

By Angus Mackintosh

Grab Holdings (GRAB US) released another set of positive results but this time the balance between profitability and growth was well-struck, as it reduced incentives yet increased its market share.
Grab saw GMV growth in both deliveries more notably in mobility, with revenues growing at a faster pace and adjusted EBITDA surprising on the upside, bringing forward breakeven to 3Q2023.
Prospects for 2H2023 look even better with Grab’s affordability initiatives gaining traction and improving retention and profitability.

Happy Forgings Limited Pre-IPO Tearsheet

By Clarence Chu

Happy Forgings Limited (6596652Z IN) is looking to raise around US$160m in its upcoming India IPO.
Happy Forgings Limited (HF) is a manufacturer of complex and safety critical, heavy forged and high precision machines components in India.
As per the Ricardo Report, the firm is the fourth largest firm domestically in terms of FY23 forging capacity.

Grab: Profitability Seems Not So Easy to Sustain

Grab’s share price moved up by about 10% following its 2Q2023 earnings announcement as the market got excited over the company’s prospect of reaching profits in the next few quarters.
Mobility GMV is nearing pre-Covid levels, however, there has been a sharp increase in incentive spending during 2Q2023 suggesting incentives is a key driver of GMV growth.
Our analysis on deliveries biz suggests that segment’s margins have very little room for improvement and further reducing incentives could stall growth going forward.

Rockwell Automation Inc.: Decoding High Teens Growth in Semiconductor Sales and Beyond! – Major Drivers

By Shifara Samsudeen, ACMA, CGMA

Rockwell Automation’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street.
This quarter, the company saw a double-digit increase in both sales and earnings as component shortages eased.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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Aug 26

Daily Brief Industrials: Grab Holdings , Happy Forgings Limited, Rockwell Automation and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform
Happy Forgings Limited Pre-IPO Tearsheet
Grab: Profitability Seems Not So Easy to Sustain
Rockwell Automation Inc.: Decoding High Teens Growth in Semiconductor Sales and Beyond! – Major Drivers

Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform

By Angus Mackintosh

Grab Holdings (GRAB US) released another set of positive results but this time the balance between profitability and growth was well-struck, as it reduced incentives yet increased its market share.
Grab saw GMV growth in both deliveries more notably in mobility, with revenues growing at a faster pace and adjusted EBITDA surprising on the upside, bringing forward breakeven to 3Q2023.
Prospects for 2H2023 look even better with Grab’s affordability initiatives gaining traction and improving retention and profitability.

Happy Forgings Limited Pre-IPO Tearsheet

By Clarence Chu

Happy Forgings Limited (6596652Z IN) is looking to raise around US$160m in its upcoming India IPO.
Happy Forgings Limited (HF) is a manufacturer of complex and safety critical, heavy forged and high precision machines components in India.
As per the Ricardo Report, the firm is the fourth largest firm domestically in terms of FY23 forging capacity.

Grab: Profitability Seems Not So Easy to Sustain

Grab’s share price moved up by about 10% following its 2Q2023 earnings announcement as the market got excited over the company’s prospect of reaching profits in the next few quarters.
Mobility GMV is nearing pre-Covid levels, however, there has been a sharp increase in incentive spending during 2Q2023 suggesting incentives is a key driver of GMV growth.
Our analysis on deliveries biz suggests that segment’s margins have very little room for improvement and further reducing incentives could stall growth going forward.

Rockwell Automation Inc.: Decoding High Teens Growth in Semiconductor Sales and Beyond! – Major Drivers