In today’s briefing:
- ANA and NYK to Trade NCA, So JAL/ANA GTG
- Doosan Bobcat: Block Deal Sale of 4.8% of Outstanding Shares
- Doosan Bobcat Placement – Past Deal Didn’t Do Well, This Time Could Be Different
- Ventia Services Group Placement – Well-Flagged and Coming off Escrow
- Balaji Speciality Chemicals Pre-IPO – Stupendous Growth but Likely to Normalize
- China Southern Airlines Co Ltd (1055 HK) – LT Charts Delivering Potential for a 20%+ Uptrend in 2023
- Southwest Airlines Co.: Major Drivers
- American Airlines Group Inc.: Major Drivers
ANA and NYK to Trade NCA, So JAL/ANA GTG
- ANA announced their FY23-25 Mid-Term Corporate Strategy last month. In it, a plan to increase cargo.
- Today, Ana Holdings (9202 JP) and Nippon Yusen Kk (9101 JP) announced ANA would take over NYK sub Nippon Cargo Airlines 1 October 2023 – price and method TBD.
- This would add ~45-50% to ANA’s cargo volume, and more to its capacity. But it means NYK sells cheap OR it means a chunk of ANA cash/stock. Overhang.
Doosan Bobcat: Block Deal Sale of 4.8% of Outstanding Shares
- On 7 March, Doosan Bobcat announced a block deal sale of 4.87 million shares, representing 4.8% of outstanding shares. The block deal discount range is from 6.11% to 8.03%.
- We have a Negative view on this block deal sale and we continue to have a Negative view on Doosan Bobcat’s shares.
- There are visible signs of the construction sector slowdown in North America and Europe driven by higher interest rates, housing price declines, and decline in the residential/commercial construction markets.
Doosan Bobcat Placement – Past Deal Didn’t Do Well, This Time Could Be Different
- A group of shareholders aim to raise around US$138m by selling all of their remaining stake in Doosan Bobcat.
- The same shareholders had earlier sold in Nov 22, see Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag. That deal didn’t do well.
- In this note, we will run the deal through our ECM framework and comment on other deal dynamics.
Ventia Services Group Placement – Well-Flagged and Coming off Escrow
- Ventia (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, aim to raise around US$272m via a secondary block deal.
- The deal is a relatively large one to digest at 77 days of three month ADV and about 19.5% of current mcap.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Balaji Speciality Chemicals Pre-IPO – Stupendous Growth but Likely to Normalize
- Balaji Speciality Chemicals (1742663D IN) is looking to raise about US$126m in its upcoming India IPO.
- Balaji Speciality Chemicals (BSC) is the sole manufacturer in India of niche chemicals such as Ethylenediamine, Piperazine (Anhydrous), Diethylenetriamine, Amino Ethyl Ethanol Amines and Amino Ethyl Piperazine, according to CRISIL.
- BSC’s profitability growth has been stupendous, given its quick production ramp up. However, its growth is very likely to normalize.
China Southern Airlines Co Ltd (1055 HK) – LT Charts Delivering Potential for a 20%+ Uptrend in 2023
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- The 2021/2023 period has produced definitive evidence of bullish LT trend change. We see this in both trend structure and also LT momentum triggers.
- Since 2015, peaks have been in the 8.50/11.00 range. Conservatively, the 2023 uptrend targets the top of the parallel uptrend channel in the 7.25/7.45 range (20%+), likely in H2 2023.
Southwest Airlines Co.: Major Drivers
- Southwest Airlines had a disastrous quarter and failed to meet the revenue expectations of Wall Street while continuing to face a variety of new difficulties.
- Also, consumer refunds and reimbursements continue to be a top priority as they remain laser-focused on their clients and future plans.
- Although disappointing, Southwest Airlines anticipates another loss in Q1 of this year due to a drag on revenue from the operational disruption.
American Airlines Group Inc.: Major Drivers
- American Airlines Group’s performance was solid in the last quarter as it delivered an all-around beat.
- The company reported a net income of $827 million for the fourth quarter and $328 million for the entire year and performed considerably better than peers, particularly Southwest.
- We give American Airlines Group a ‘Hold’ rating with a revised target price.
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