Industrials

AKR Corporindo (AKRA IJ) booked solid set of numbers despite a less favourable pricing environment with the additional boost from a ramp up of sakes at JIIPE.
JIIPE will become a more important contributor for AKR Corporindo, as it builds a critical mass of EV-battery-related tenants plus it benefits from increasing demand from smelters for chemicals
AKR Corporindo remains a core industrial holding in Indonesia, through both its petroleum and chemicals business plus its industrial estate, which is a multi-year growth story. Valuations remain attractive.

LianLian DigiTech IPO: The Bear Case

By Arun George

Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.
In LianLian DigiTech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on margin pressure on the fastest-growing business, operating losses, an unconvincing path to profitability, FCF burn with a weak balance sheet.

BES: Positive Operational Update

By Atrium Research

Braille Battery will be expanding its product offering for motorcycles, ATV/UTVs, and personal watercrafts.
This morning, Braille Energy Systems (BES:TSXV) provided an operational update on its three divisions, Braille Battery, Electrafy, and Firebulb.
Braille Battery BES announced that it will be expanding its product range of “Made in USA” Power Sports Batteries to provide additional ultra-high cranking and high-capacity lithium batteries for its Motorcycle V-Twin segment, ATV/UTVs, and personal watercrafts.

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Jul 28

Daily Brief Industrials: Toshiba Corp, AKR Corporindo, Lianlian DigiTech, Braille Energy Systems and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong
AKR Corporindo (AKRA IJ) – A Steely Operator
LianLian DigiTech IPO: The Bear Case
BES: Positive Operational Update

Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong

By Travis Lundy

It has been four months since JIP officially announced their intention to launch a Tender Offer for Toshiba Corp (6502 JP) by end-July. 7 weeks since Toshiba’s Board supported it.
There’s been no material public griping. Peers are sharply higher. There have been news stories suggesting a Western Digital/Kioxia deal is close. That’s now extended. The Toshiba deal possibly too.
But huge outperformance by peers, and possible clarity from Kioxia deal terms are unlikely to move the Toshiba Board to demand more.

AKR Corporindo (AKRA IJ) – A Steely Operator

AKR Corporindo (AKRA IJ) booked solid set of numbers despite a less favourable pricing environment with the additional boost from a ramp up of sakes at JIIPE.
JIIPE will become a more important contributor for AKR Corporindo, as it builds a critical mass of EV-battery-related tenants plus it benefits from increasing demand from smelters for chemicals
AKR Corporindo remains a core industrial holding in Indonesia, through both its petroleum and chemicals business plus its industrial estate, which is a multi-year growth story. Valuations remain attractive.

LianLian DigiTech IPO: The Bear Case

By Arun George

Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.
In LianLian DigiTech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on margin pressure on the fastest-growing business, operating losses, an unconvincing path to profitability, FCF burn with a weak balance sheet.

BES: Positive Operational Update

By Atrium Research

Braille Battery will be expanding its product offering for motorcycles, ATV/UTVs, and personal watercrafts.
This morning, Braille Energy Systems (BES:TSXV) provided an operational update on its three divisions, Braille Battery, Electrafy, and Firebulb.
Braille Battery BES announced that it will be expanding its product range of “Made in USA” Power Sports Batteries to provide additional ultra-high cranking and high-capacity lithium batteries for its Motorcycle V-Twin segment, ATV/UTVs, and personal watercrafts.

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Jul 27

Daily Brief Industrials: ZTO Express Cayman , Grab Holdings , Greenland Technologies Holdi, American Airlines Group, Csx Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Monthly Chinese Express Tracker | Mainstream ASPs Down 10% in June | J&T IPO Impact? | (July 2023)
Grab Holdings (GRAB IJ) – Winning with Trans-Cab and Deposits in Singapore
CLIMATETECH & SUSTAINABLE INVESTING – Greenland Technologies Holding Corp.
American Airlines Group Inc.: New Flight Additions To Cater To Rising Demand! – Key Drivers
CSX Corporation: Major Factors Responsible For The Good Results! – Financial Forecasts

Monthly Chinese Express Tracker | Mainstream ASPs Down 10% in June | J&T IPO Impact? | (July 2023)

In June, mainstream parcel pricing declined by over 10% Y/Y, but SF Holding saw ASPs rise
We believe J&T Global Express’ planned IPO could negatively impact the industry in H2
Pricing pressure has increased, in our view, and we expect margins to decline in H2 23

Grab Holdings (GRAB IJ) – Winning with Trans-Cab and Deposits in Singapore

Grab recently announced the acquisition of Trans-cab in Singapore, the 3rd largest taxi operator there. This will help to solve driver shortage issues and improve cost efficiencies.
Taxis pay the lowest COE prices plus Grab can improve the productivity of taxi drivers through access to the Grab app. Trans-cab gives Grab access to street hailing.
Grab‘s Singapore digital bank recently raised new capital but has also seen its deposit cap lifted significantly, which is helping to significantly boost deposit growth.

CLIMATETECH & SUSTAINABLE INVESTING – Greenland Technologies Holding Corp.

By Water Tower Research

Greenland Technologies President and CEO Raymond Wang joined WTR’s Tim Regan and Graham Mattison for a discussion of the company’s transmission business and its evolution to selling all-electric powered industrial equipment in the US through its HEVI division.
Here are a number of highlights from our podcast episode.
All-electric HEVI front loaders and excavators match a comparable diesel’s performance.

American Airlines Group Inc.: New Flight Additions To Cater To Rising Demand! – Key Drivers

American Airlines Group managed to surpass the revenue expectations as well as the earnings expectations of analysts.
While overseas unit revenue increased, domestic unit revenue decreased.
In the first half of the year, American Airlines received 13 deliveries, and by the end of the year, it anticipates receiving 10 more planes.

CSX Corporation: Major Factors Responsible For The Good Results! – Financial Forecasts

CSX Corporation’s performance in the second quarter was largely disappointing with revenues below par and earnings in line with expectations.
The only silver lining was the successful performance of its merchandise sector.
In the second quarter, CSX moved more than 1.5 million carloads, driven by a 3% volume increase in merchandise and a 4% volume increase in coal.

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Jul 27

Daily Brief Industrials: ZTO Express Cayman , Grab Holdings , Greenland Technologies Holdi, American Airlines Group, Csx Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Monthly Chinese Express Tracker | Mainstream ASPs Down 10% in June | J&T IPO Impact? | (July 2023)
Grab Holdings (GRAB IJ) – Winning with Trans-Cab and Deposits in Singapore
CLIMATETECH & SUSTAINABLE INVESTING – Greenland Technologies Holding Corp.
American Airlines Group Inc.: New Flight Additions To Cater To Rising Demand! – Key Drivers
CSX Corporation: Major Factors Responsible For The Good Results! – Financial Forecasts

Monthly Chinese Express Tracker | Mainstream ASPs Down 10% in June | J&T IPO Impact? | (July 2023)

In June, mainstream parcel pricing declined by over 10% Y/Y, but SF Holding saw ASPs rise
We believe J&T Global Express’ planned IPO could negatively impact the industry in H2
Pricing pressure has increased, in our view, and we expect margins to decline in H2 23

Grab Holdings (GRAB IJ) – Winning with Trans-Cab and Deposits in Singapore

Grab recently announced the acquisition of Trans-cab in Singapore, the 3rd largest taxi operator there. This will help to solve driver shortage issues and improve cost efficiencies.
Taxis pay the lowest COE prices plus Grab can improve the productivity of taxi drivers through access to the Grab app. Trans-cab gives Grab access to street hailing.
Grab‘s Singapore digital bank recently raised new capital but has also seen its deposit cap lifted significantly, which is helping to significantly boost deposit growth.

CLIMATETECH & SUSTAINABLE INVESTING – Greenland Technologies Holding Corp.

By Water Tower Research

Greenland Technologies President and CEO Raymond Wang joined WTR’s Tim Regan and Graham Mattison for a discussion of the company’s transmission business and its evolution to selling all-electric powered industrial equipment in the US through its HEVI division.
Here are a number of highlights from our podcast episode.
All-electric HEVI front loaders and excavators match a comparable diesel’s performance.

American Airlines Group Inc.: New Flight Additions To Cater To Rising Demand! – Key Drivers

American Airlines Group managed to surpass the revenue expectations as well as the earnings expectations of analysts.
While overseas unit revenue increased, domestic unit revenue decreased.
In the first half of the year, American Airlines received 13 deliveries, and by the end of the year, it anticipates receiving 10 more planes.

CSX Corporation: Major Factors Responsible For The Good Results! – Financial Forecasts

CSX Corporation’s performance in the second quarter was largely disappointing with revenues below par and earnings in line with expectations.
The only silver lining was the successful performance of its merchandise sector.
In the second quarter, CSX moved more than 1.5 million carloads, driven by a 3% volume increase in merchandise and a 4% volume increase in coal.

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Jul 26

Daily Brief Industrials: Titagarh Wagons, Applus Services SA, Lockheed Martin, Hidrovias Do Brasil S.A., Hunt (Jb) Transprt Svcs and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Titagarh Rail Systems Ltd- Forensic Analysis
Apollo/Applus: Blocking Minorities
Lockheed Martin Corporation: 4 Reasons Behind Lockheed Martin’s Successful Quarter! – Financial Forecasts
Hidrovias – ESG Report – Lucror Analytics
J.B. Hunt Transport Services Inc.: 4 Factors Why The Company Is Thriving in an Uncertain Environment! – Financial Forecasts

Titagarh Rail Systems Ltd- Forensic Analysis

By Nitin Mangal

Titagarh Wagons (TWL IN) (now ‘Titagarh Rail Systems’) has seen an extraordinary momentum in its share price in last couple of years, especially after bagging crucial contracts for Indian Railways.
The company was limping until F22 due to its Italian subsidiary (TFA). However, the recapitalization of TFA (including change in accounting) in F23 should make the balance sheet look better.
Forensic analysis revealed several takeaways, ranging from write-offs and internal audit issues to heavy contingent liabilities.

Apollo/Applus: Blocking Minorities

The spread has been in positive territory since the announcement. Apollo only bid the minimum requested by the Board. Investors hope for a counteroffer or Apollo sweetening its offer.
Exceeding the 75% threshold is key for Apollo to be able to quickly and effectively carry out the delisting of Applus+, the objective stated in the offer announcement.
Risk arbitrageurs holding now over 25%, may give that gentle push, otherwise delisting will be in jeopardy. A sweetening/counteroffer in the range €10-10.5/share seems very likely.

Lockheed Martin Corporation: 4 Reasons Behind Lockheed Martin’s Successful Quarter! – Financial Forecasts

Lockheed Martin Corporation delivered a positive result and managed an all-around beat in the last quarter.
Lockheed had revenues of $16.7 billion, an increase of 8% year on year, and double-digit growth in both Aeronautics and Space.
We give Lockheed Martin Corporation a ‘Hold’ rating with a revised target price.

Hidrovias – ESG Report – Lucror Analytics

By Charles Macgregor

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Hidrovias’ ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Adequate”.
Headquartered in Sao Paulo, Hidrovias Do Brasil SA is South America’s largest independent provider of integrated inland waterway logistics transport services. Its operations include shipping, trans-shipment, storage and port services for dry-bulk cargo (including agricultural commodities, iron ore and bauxite) in the Paraguay-Parana and Trombetas-Tapajos-Amazon river systems.

J.B. Hunt Transport Services Inc.: 4 Factors Why The Company Is Thriving in an Uncertain Environment! – Financial Forecasts

J.B.
Hunt Transport Services delivered a disappointing set of results as the company was unable to meet the revenue as well as the earnings expectations of Wall Street.
Revenue for the quarter decreased 18% from the prior year on a consolidated GAAP basis.

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Jul 26

Daily Brief Industrials: Titagarh Wagons, Applus Services SA, Lockheed Martin, Hidrovias Do Brasil S.A., Hunt (Jb) Transprt Svcs and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Titagarh Rail Systems Ltd- Forensic Analysis
Apollo/Applus: Blocking Minorities
Lockheed Martin Corporation: 4 Reasons Behind Lockheed Martin’s Successful Quarter! – Financial Forecasts
Hidrovias – ESG Report – Lucror Analytics
J.B. Hunt Transport Services Inc.: 4 Factors Why The Company Is Thriving in an Uncertain Environment! – Financial Forecasts

Titagarh Rail Systems Ltd- Forensic Analysis

By Nitin Mangal

Titagarh Wagons (TWL IN) (now ‘Titagarh Rail Systems’) has seen an extraordinary momentum in its share price in last couple of years, especially after bagging crucial contracts for Indian Railways.
The company was limping until F22 due to its Italian subsidiary (TFA). However, the recapitalization of TFA (including change in accounting) in F23 should make the balance sheet look better.
Forensic analysis revealed several takeaways, ranging from write-offs and internal audit issues to heavy contingent liabilities.

Apollo/Applus: Blocking Minorities

The spread has been in positive territory since the announcement. Apollo only bid the minimum requested by the Board. Investors hope for a counteroffer or Apollo sweetening its offer.
Exceeding the 75% threshold is key for Apollo to be able to quickly and effectively carry out the delisting of Applus+, the objective stated in the offer announcement.
Risk arbitrageurs holding now over 25%, may give that gentle push, otherwise delisting will be in jeopardy. A sweetening/counteroffer in the range €10-10.5/share seems very likely.

Lockheed Martin Corporation: 4 Reasons Behind Lockheed Martin’s Successful Quarter! – Financial Forecasts

Lockheed Martin Corporation delivered a positive result and managed an all-around beat in the last quarter.
Lockheed had revenues of $16.7 billion, an increase of 8% year on year, and double-digit growth in both Aeronautics and Space.
We give Lockheed Martin Corporation a ‘Hold’ rating with a revised target price.

Hidrovias – ESG Report – Lucror Analytics

By Charles Macgregor

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Hidrovias’ ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Adequate”.
Headquartered in Sao Paulo, Hidrovias Do Brasil SA is South America’s largest independent provider of integrated inland waterway logistics transport services. Its operations include shipping, trans-shipment, storage and port services for dry-bulk cargo (including agricultural commodities, iron ore and bauxite) in the Paraguay-Parana and Trombetas-Tapajos-Amazon river systems.

J.B. Hunt Transport Services Inc.: 4 Factors Why The Company Is Thriving in an Uncertain Environment! – Financial Forecasts

J.B.
Hunt Transport Services delivered a disappointing set of results as the company was unable to meet the revenue as well as the earnings expectations of Wall Street.
Revenue for the quarter decreased 18% from the prior year on a consolidated GAAP basis.

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Jul 25

Daily Brief Industrials: SCREEN Holdings, Lianlian DigiTech and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty
LianLian DigiTech Pre-IPO Tearsheet

Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty

By Scott Foster

Japan’s new restrictions on exports of semiconductor production equipment to China are a potential threat to Screen.
TSMC’s announcement that 2023 capex is likely to be at the low end of the forecast range is another negative.
Share price consolidation should continue until guidance is lowered or verified.

LianLian DigiTech Pre-IPO Tearsheet

By Sumeet Singh

Lianlian DigiTech is looking to raise at least US$500m in its upcoming HK IPO. The deal will be run by CICC and JP Morgan.
LianLian DigiTech is a digital technology company that provides a range of digital payment services and value-added services to customers in China and around the world.
The firm ranked first among all independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost & Sullivan.

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Jul 25

Daily Brief Industrials: SCREEN Holdings, Lianlian DigiTech and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty
LianLian DigiTech Pre-IPO Tearsheet

Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty

By Scott Foster

Japan’s new restrictions on exports of semiconductor production equipment to China are a potential threat to Screen.
TSMC’s announcement that 2023 capex is likely to be at the low end of the forecast range is another negative.
Share price consolidation should continue until guidance is lowered or verified.

LianLian DigiTech Pre-IPO Tearsheet

By Sumeet Singh

Lianlian DigiTech is looking to raise at least US$500m in its upcoming HK IPO. The deal will be run by CICC and JP Morgan.
LianLian DigiTech is a digital technology company that provides a range of digital payment services and value-added services to customers in China and around the world.
The firm ranked first among all independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost & Sullivan.

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Jul 24

Daily Brief Industrials: Hainan Meilan International Airport, DWF Group, AP Moeller – Maersk A/S, Lavoro and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company
Inflexion/DWF: Deal Announcement
Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)
Harvesting Gains

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

By Eric Chen

We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
The takeaway is mixed as we see both positives and negatives relative to our expectations.
We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

Inflexion/DWF: Deal Announcement

There were no surprises and Inflexion launched the offer for DWF Group (DWF LN) well ahead of the 7 August PUSU deadline. DWF shares increased by c. 15%.
The final proposal maintains what was announced: 97p in cash plus a 3p dividend,8.0x EV/Fwd NTM EBIT and 8.2x Fwd P/E, and an 18% discount to the IPO price.
The closing share price pre-first announcement was 56.5p, taking it as break, the market is pricing a 94% chance to complete the deal. Spread is 2.6%/6.2% (gross/annualised). Long.

Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)

Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
We expect Q2/H1 results to support our view that the worst of the storm has passed

Harvesting Gains

By subSPAC

In the past several years, the agricultural market has been subject to escalating uncertainty, catalyzed by a triad of disruptive forces, including a global pandemic, the geopolitical uncertainty exemplified by the ongoing war in Ukraine, and unpredictable climatic events leading to droughts and diminished yields.
These factors have injected volatility into the market, causing prices to move unpredictably due to periods of shortages and excess supply.
Despite the volatility, however, prices remain on a long-term upward trajectory.

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Jul 24

Daily Brief Industrials: Hainan Meilan International Airport, DWF Group, AP Moeller – Maersk A/S, Lavoro and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company
Inflexion/DWF: Deal Announcement
Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)
Harvesting Gains

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

By Eric Chen

We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
The takeaway is mixed as we see both positives and negatives relative to our expectations.
We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

Inflexion/DWF: Deal Announcement

There were no surprises and Inflexion launched the offer for DWF Group (DWF LN) well ahead of the 7 August PUSU deadline. DWF shares increased by c. 15%.
The final proposal maintains what was announced: 97p in cash plus a 3p dividend,8.0x EV/Fwd NTM EBIT and 8.2x Fwd P/E, and an 18% discount to the IPO price.
The closing share price pre-first announcement was 56.5p, taking it as break, the market is pricing a 94% chance to complete the deal. Spread is 2.6%/6.2% (gross/annualised). Long.

Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)