Industrials

• 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 – Rakuten Bank (5838 JP), ZJLD Group (ZJLD HK), Mankind Pharma (6596876Z IN) and Merdeka Battery Materials (2012725D IJ) IPOs.
• Event-Driven developments – Lian Beng (LBG SP), Arcland Service (3085 JP), Essential Metals (ESS AU), Genesis Minerals (GMD AU), Healius (HLS AU), Newcrest Mining (NCM AU). 

• After a poor FY22, 1H23 will stay challenging for Lonking Holdings (3339 HK). However, we expect pick-up in business momentum going forward, and export is a major growth driver.
• Gross margin rebounded HoH and YoY in 2H22, and Lonking maintained good operating cost control. Recovery of equity market suggests potential big positive swing in investment income. 
• Including investment portfolio, 92% of the current market capitalisation is net cash, providing solid downside buffer. Its 6.5x PER, 9.2% yield and 0.52x P/B are very attractive valuations.

• Baycurrent reported fourth quarter and full-year FY02/2023 results on Friday. 4Q revenues increased 32.1% YoY to ¥21.2bn (vs consensus ¥20.7bn) and OP increased 60.8% to ¥9.6bn (vs consensus ¥8.3bn).
• Full-Year revenue and OP increased 32% and 39% YoY respectively to ¥76.1bn and ¥29.9bn, beating own guidance by 7% and 15% respectively.
• The company’s FY02/2023E guidance is too conservative as there has been no signs of an earnings slowdown as DX consulting and high-value add projects would drive next phase of growth.

• Since mid-March, spreads have generally tightened across our liquid universe (6 have widened, 12 tightened, 1 at same level).
• Possible trades long ordinary / short preferred shares: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
• Possible trades long preferred / short ordinary shares: Sixt, VW, Danieli, Grifols, Atlas Copco.

• 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 – Rakuten Bank (5838 JP), ZJLD Group (ZJLD HK), Mankind Pharma (6596876Z IN) and Merdeka Battery Materials (2012725D IJ) IPOs.
• Event-Driven developments – Lian Beng (LBG SP), Arcland Service (3085 JP), Essential Metals (ESS AU), Genesis Minerals (GMD AU), Healius (HLS AU), Newcrest Mining (NCM AU). 

• After a poor FY22, 1H23 will stay challenging for Lonking Holdings (3339 HK). However, we expect pick-up in business momentum going forward, and export is a major growth driver.
• Gross margin rebounded HoH and YoY in 2H22, and Lonking maintained good operating cost control. Recovery of equity market suggests potential big positive swing in investment income. 
• Including investment portfolio, 92% of the current market capitalisation is net cash, providing solid downside buffer. Its 6.5x PER, 9.2% yield and 0.52x P/B are very attractive valuations.

• Baycurrent reported fourth quarter and full-year FY02/2023 results on Friday. 4Q revenues increased 32.1% YoY to ¥21.2bn (vs consensus ¥20.7bn) and OP increased 60.8% to ¥9.6bn (vs consensus ¥8.3bn).
• Full-Year revenue and OP increased 32% and 39% YoY respectively to ¥76.1bn and ¥29.9bn, beating own guidance by 7% and 15% respectively.
• The company’s FY02/2023E guidance is too conservative as there has been no signs of an earnings slowdown as DX consulting and high-value add projects would drive next phase of growth.

• Since mid-March, spreads have generally tightened across our liquid universe (6 have widened, 12 tightened, 1 at same level).
• Possible trades long ordinary / short preferred shares: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
• Possible trades long preferred / short ordinary shares: Sixt, VW, Danieli, Grifols, Atlas Copco.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$300m in its upcoming HK IPO. The deal will be run by Citibank, Huatai and CCB International.
• The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series. 
• Its solutions and products cover a wide price range of vehicles and all types of driving scenarios, including highways, ring roads, complex urban roads, country roads, and parking areas.

• This is our first report on Dover Corporation, a multifaceted international manufacturer offering cutting-edge machinery and parts, consumables, aftermarket components, software and digital solutions, and support services.
• The company’s last result was an all-around beat resulting from a good execution by the management and better price dynamics.
• Demand for services, consumables, and pricing decisions helped the quarter be profitable.

• We expect JDL to report C1Q23 net revenue in-line with cons., and non-IFRS net margin lower than cons. by (0.5ppts). 
• Our FY23 revenue and net-profit forecasts are (5%) and (6%) below consensus, respectively. JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; 
• JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; We maintain JDL’s SELL rating and cut its TP to HK$ 9.2.

Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved. We maintain our estimates and our 252p/share valuation implying c 40% upside.

• This is our first report on a major LTL shipping company, Old Dominion Freight Line.
• As a result, the company delivered double-digit growth in earnings per diluted share in the fourth quarter.
• Besides that, the productive labor expenses as a percentage of revenue decreased by 170 basis points within their direct operating costs, while their purchase transportation costs decreased by 200 basis points.

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$300m in its upcoming HK IPO. The deal will be run by Citibank, Huatai and CCB International.
• The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series. 
• Its solutions and products cover a wide price range of vehicles and all types of driving scenarios, including highways, ring roads, complex urban roads, country roads, and parking areas.

• This is our first report on Dover Corporation, a multifaceted international manufacturer offering cutting-edge machinery and parts, consumables, aftermarket components, software and digital solutions, and support services.
• The company’s last result was an all-around beat resulting from a good execution by the management and better price dynamics.
• Demand for services, consumables, and pricing decisions helped the quarter be profitable.

• We expect JDL to report C1Q23 net revenue in-line with cons., and non-IFRS net margin lower than cons. by (0.5ppts). 
• Our FY23 revenue and net-profit forecasts are (5%) and (6%) below consensus, respectively. JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; 
• JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; We maintain JDL’s SELL rating and cut its TP to HK$ 9.2.

Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved. We maintain our estimates and our 252p/share valuation implying c 40% upside.

• This is our first report on a major LTL shipping company, Old Dominion Freight Line.
• As a result, the company delivered double-digit growth in earnings per diluted share in the fourth quarter.
• Besides that, the productive labor expenses as a percentage of revenue decreased by 170 basis points within their direct operating costs, while their purchase transportation costs decreased by 200 basis points.

• Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
• The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
• Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.

• Back on the 8 March 2021, Jardine Matheson (JM SP) made a cash acquisition for the 15% of Jardine Strategic (JS SP)‘s share capital it did not already own.
• The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.
• On the 20 April 2022, the Bermuda Court dismissed Jardine’s application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal. 

• Adi Sarana Armada (ASSA IJ) provides unique exposure across Indonesia’s mobility ecosystem from car leasing to auctions and omnichannel used car sales together with logistics and last-mile delivery.
• The company booked relatively strong sales growth last year, with very strong growth from used cars and logistics with slower auctions but profitability was impacted by bigger losses at Anteraja.
• The outlook for 2023 looks more positive for both sales and profitability, with the ongoing growth in used car sales, recovery in the auction business, and last mile under Anteraja. 

XP Power confirmed that trading in Q123 was in line with its expectations. As expected, order intake declined from the record level a year ago, reflecting an improving supply chain and softening end-market demand, particularly for semiconductor equipment and industrial technology. Revenue and profitability were higher than a year ago. The strong backlog provides good visibility for the remainder of the year and we expect it to gradually reduce as current year orders are shipped and customers revert to pre-pandemic ordering patterns. We maintain our forecasts.

• Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
• The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
• Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.

• Back on the 8 March 2021, Jardine Matheson (JM SP) made a cash acquisition for the 15% of Jardine Strategic (JS SP)‘s share capital it did not already own.
• The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.
• On the 20 April 2022, the Bermuda Court dismissed Jardine’s application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal. 

• Adi Sarana Armada (ASSA IJ) provides unique exposure across Indonesia’s mobility ecosystem from car leasing to auctions and omnichannel used car sales together with logistics and last-mile delivery.
• The company booked relatively strong sales growth last year, with very strong growth from used cars and logistics with slower auctions but profitability was impacted by bigger losses at Anteraja.
• The outlook for 2023 looks more positive for both sales and profitability, with the ongoing growth in used car sales, recovery in the auction business, and last mile under Anteraja. 

XP Power confirmed that trading in Q123 was in line with its expectations. As expected, order intake declined from the record level a year ago, reflecting an improving supply chain and softening end-market demand, particularly for semiconductor equipment and industrial technology. Revenue and profitability were higher than a year ago. The strong backlog provides good visibility for the remainder of the year and we expect it to gradually reduce as current year orders are shipped and customers revert to pre-pandemic ordering patterns. We maintain our forecasts.

• HPL Electric & Power (HPLE IN) is one of the key players in domestic electric meters market and domestic on-load, change-over switches market. The company also manufactures LED products.
• Forensic overview of the company indicates poor capital allocation in the past, along with cash generation issues.
• One must also keep a note of the inherent credit risk, as well as some interesting line items such as software and designs, on the balance sheet.

• HPL Electric & Power (HPLE IN) is one of the key players in domestic electric meters market and domestic on-load, change-over switches market. The company also manufactures LED products.
• Forensic overview of the company indicates poor capital allocation in the past, along with cash generation issues.
• One must also keep a note of the inherent credit risk, as well as some interesting line items such as software and designs, on the balance sheet.