Daily Brief Industrials: Aneka Gas, Daifuku Co Ltd, CEL Corp and more

In today’s briefing:

Aneka Gas (AGII IJ) – Out of Thin Air

Aneka Gas is an interesting concept in that its product literally comes out of thin air given its position as Indonesia’s leading Industrial gas player with a 45% market share.
The company provides investors with wide-ranging exposure to the Indonesian economy from industry to infrastructure, consumer goods, healthcare, and SME amongst others, which also reduces risk through diversity.
Aneka Gas 9M2022 numbers reflected a change in revenue mix and demand for medical gas reduces post-COVID and other areas such as industry, retail, and infrastructure started to recover.

Daifuku is a growth stock that has fallen by 26% YTD reflecting near term risks to growth and margins
We believe that Daifuku is a major beneficiary of continued investment in automation, especially in e-commerce and logistics
We analyse Daifuku’s core valuation drivers and see around 16% upside for the stock

The cash comes from a one-off asset sale. CEL hasn’t been building cash on the balance sheet for years. While management has no intention of paying out the cash at present, they plan to use it for acquisitions. It won’t stay on the balance sheet for ever.
CEL’s operating business is not a great business, but it’s not terrible either. CEL earned an average of 15% pretax on capital employed over the last three years (FY20-FY22). The operating business earns above its cost of capital, is consistently profitable and ~40% of earnings are paid out as dividends.
Management has a lot of skin in the game. CEL’s founder and president, Masatsugu Shinno, owns 60% of the company, which aligns his interests with shareholders.

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