Daily Briefs

• BayCurrent Consulting (6532 JP) replaces Mitsubishi Logistics (9301 JP) in the Nikkei 225 (NKY INDEX) at the close of trading on 31 March.
• Since announcement, BayCurrent Consulting (6532 JP) stock is up with cumulative excess volume increasing, while Mitsubishi Logistics (9301 JP) is lower on a much bigger increase in cumulative excess volume.
• Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.

• SKF India Ltd (SKF IN) has announced the demerger of its industrial business, which will be listed separately for enhanced focus and operational efficiency in both segments.
• The company’s automotive business has high volume but low margins, whereas the industrial segment offers higher margins, highlighting a significant contrast in profitability between the two business segments.
• The automotive business would attract investors seeking long-term, steady growth, while the industrial segment would appeal to investors focused on higher margins and more lucrative returns.

• Local traders size up borrowing balances by comparing them to free-float shares, using KRX data for consistency. While not always exact, it’s the go-to reference for most traders.
• They usually watch for borrowing balances crossing 3% of float, triggering price action. With short selling back, many are now bumping that threshold to 4%.
• Borrowing balance structures differ between large and small/mid-caps. Traders use a 1 trillion KRW market cap threshold to split them, aligning with TMI indices for long/short setups.

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the June 2025 index rebal event.
• We see up to five M&A-related intra-review changes for the F250 index in the run up to the June 2025 review. Many could be very high impact.
• Separately, there could be one regular index change for the F250 index in June 2025. At present, we do not see any changes for the F100 index.

• InterGlobe Aviation Ltd (INDIGO IN) placed a record aircraft order and announced plans to double its size by 2030, including entry into long-haul international routes via Airbus A350s.
• This signals a shift from being a low-cost, short-haul leader to a global aviation player aiming for 40% international capacity by FY30.
• IndiGo is no longer just a domestic LCC story: its scale, global ambitions, and diversification make it a long-term structural compounder in aviation.

• DN Solutions (298440 KS) (DNS) aims to raise around US$1.1bn in its Korea IPO via selling a mix of primary and secondary shares.
• DNS is engaged in the manufacture and sale of machine tools and the business of automation solutions and services related thereto.
• We have looked at its past performance in our earlier notes. In this note, we will talk about valuations.

• Regal Rexnord’s fourth quarter performance exhibited both commendable strengths and notable challenges, painting a mixed picture of its financial health and future prospects.
• On the positive side, the company demonstrated strong operational execution, with significant progress in initiatives such as synergy realization, gross margin expansion, and debt reduction.
• Specifically, the Automation and Motion Control (AMC) segment exceeded revenue expectations and saw a near 9% increase in orders, while Power Efficiency Solutions (PES) achieved impressive growth in the residential HVAC vertical.

• In this edition: • Arcadis | completes acquisition of KUA Group

Genuit’s (GEN’s) FY24 revenue declined by 4.3% y-o-y to £561.3m due to subdued demand. However, market conditions stabilised in H224 with a 0.5% y-o-y revenue decline versus a 10.6% decline in H124. Reported operating profit decreased by 4.5% y-o-y to £59.2m, while underlying profit margin increased 40bp y-o-y to 16.4%, driven by productivity gains through the company’s Genuit Business System (GBS) and purchasing savings. Increased focus on working capital improvements resulted in underlying operating cash generation of £91.6m, representing 99.3% cash conversion on a post-capex basis. GEN further strengthened its balance sheet, reducing net debt/EBITDA to 0.9x (FY23: 1.1x). Underlying EPS decreased to 24.6p (FY23: 25.2p) due to lower operating profit and annualisation of the higher UK tax rate, while DPS increased to 12.5p (12.4p).

SIG has endured tough trading conditions and some questionable strategic initiatives over the last 10 years. Assuming that underlying construction markets in SIG’s core geographies can muster some growth from H225, the combination of top-line growth and reduced costs could drive the EBITDA margin towards management’s 8% target. If achieved, there is the potential to reduce debt and for SIG to benefit from a material re-rating.

• BayCurrent Consulting (6532 JP) replaces Mitsubishi Logistics (9301 JP) in the Nikkei 225 (NKY INDEX) at the close of trading on 31 March.
• Since announcement, BayCurrent Consulting (6532 JP) stock is up with cumulative excess volume increasing, while Mitsubishi Logistics (9301 JP) is lower on a much bigger increase in cumulative excess volume.
• Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.

• SKF India Ltd (SKF IN) has announced the demerger of its industrial business, which will be listed separately for enhanced focus and operational efficiency in both segments.
• The company’s automotive business has high volume but low margins, whereas the industrial segment offers higher margins, highlighting a significant contrast in profitability between the two business segments.
• The automotive business would attract investors seeking long-term, steady growth, while the industrial segment would appeal to investors focused on higher margins and more lucrative returns.

• Local traders size up borrowing balances by comparing them to free-float shares, using KRX data for consistency. While not always exact, it’s the go-to reference for most traders.
• They usually watch for borrowing balances crossing 3% of float, triggering price action. With short selling back, many are now bumping that threshold to 4%.
• Borrowing balance structures differ between large and small/mid-caps. Traders use a 1 trillion KRW market cap threshold to split them, aligning with TMI indices for long/short setups.

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the June 2025 index rebal event.
• We see up to five M&A-related intra-review changes for the F250 index in the run up to the June 2025 review. Many could be very high impact.
• Separately, there could be one regular index change for the F250 index in June 2025. At present, we do not see any changes for the F100 index.

• InterGlobe Aviation Ltd (INDIGO IN) placed a record aircraft order and announced plans to double its size by 2030, including entry into long-haul international routes via Airbus A350s.
• This signals a shift from being a low-cost, short-haul leader to a global aviation player aiming for 40% international capacity by FY30.
• IndiGo is no longer just a domestic LCC story: its scale, global ambitions, and diversification make it a long-term structural compounder in aviation.

• DN Solutions (298440 KS) (DNS) aims to raise around US$1.1bn in its Korea IPO via selling a mix of primary and secondary shares.
• DNS is engaged in the manufacture and sale of machine tools and the business of automation solutions and services related thereto.
• We have looked at its past performance in our earlier notes. In this note, we will talk about valuations.

• Regal Rexnord’s fourth quarter performance exhibited both commendable strengths and notable challenges, painting a mixed picture of its financial health and future prospects.
• On the positive side, the company demonstrated strong operational execution, with significant progress in initiatives such as synergy realization, gross margin expansion, and debt reduction.
• Specifically, the Automation and Motion Control (AMC) segment exceeded revenue expectations and saw a near 9% increase in orders, while Power Efficiency Solutions (PES) achieved impressive growth in the residential HVAC vertical.

• In this edition: • Arcadis | completes acquisition of KUA Group

Genuit’s (GEN’s) FY24 revenue declined by 4.3% y-o-y to £561.3m due to subdued demand. However, market conditions stabilised in H224 with a 0.5% y-o-y revenue decline versus a 10.6% decline in H124. Reported operating profit decreased by 4.5% y-o-y to £59.2m, while underlying profit margin increased 40bp y-o-y to 16.4%, driven by productivity gains through the company’s Genuit Business System (GBS) and purchasing savings. Increased focus on working capital improvements resulted in underlying operating cash generation of £91.6m, representing 99.3% cash conversion on a post-capex basis. GEN further strengthened its balance sheet, reducing net debt/EBITDA to 0.9x (FY23: 1.1x). Underlying EPS decreased to 24.6p (FY23: 25.2p) due to lower operating profit and annualisation of the higher UK tax rate, while DPS increased to 12.5p (12.4p).

SIG has endured tough trading conditions and some questionable strategic initiatives over the last 10 years. Assuming that underlying construction markets in SIG’s core geographies can muster some growth from H225, the combination of top-line growth and reduced costs could drive the EBITDA margin towards management’s 8% target. If achieved, there is the potential to reduce debt and for SIG to benefit from a material re-rating.