Daily Brief Industrials: Benefit One Inc, Singapore Airlines, ZEEKR, Grab Holdings , SCG Decor PCL, NOW Inc, Azul SA, Braemar Shipping Services PLC and more

• Today after the close with Benefit One Inc (2412 JP) reporting earnings, M3 Inc (2413 JP) announced a Partial Tender Offer to buy 81.21-83.31mm shares of Benefit One at ¥1600/share.
• That cleans out Pasona, which owns 81.21mm shares. Or does it… Shareholder structure dynamics and the problems they cause later bear some detailed examination. 
• This one is going to be a fun special sit.

• Benefit One Inc (2412 JP) announced a partial tender offer from M3 Inc (2413 JP) at JPY1,600 per share, a 40.0% premium to the undisturbed price. 
• The transaction facilitates Pasona Group (2168 JP)‘s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%). 
• Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices. 

• Dearth of international flights from Chinese and Russian carriers — 2nd & 3rd biggest global aviation market, will distort supply, underpins strong yields and profitability.  
• SIA’s cost management is superior thanks to high asset utilisation, stable SGD vs. the USD, and access to attractive financing.  SIA’s competitors severely lack these attributes. 
• We forecast FY24 net profit of SGD2.4b (+13.1% YoY) and peg it to 10x PE to derive a TP of SGD8.07, +30% UPSIDE potential.  

• ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
• ZEEKR has launched three models – the luxury shooting brake coupe ZEEKR 001, the luxury pure electric MPV – ZEEKR 009 and the new luxury versatile SUV – ZEEKR X.
• The bull case rests on bestselling premium BEVs, rapid vehicle sales growth, rising gross margin, debt-free balance sheet and a favourable cash conversion cycle.

• Grab‘s 3Q2023 results demonstrate a high degree of success in achieving a delicate balance between growth and profitability, with significant progress across all verticals, and a  broadening of product offerings.
• The company turned adjusted EBITDA breakeven for the first time in 3Q2023, through lower incentives, cost efficiencies, and lower regional corporate costs, with further progress towards FCF breakeven in 4Q2023.
• Grab remains confident about the outlook with guidance revised upwards, with the company looking at some potentially interesting M&A, which should be earnings accretive and beneficial to the ecosystem. 

• SCG Decor PCL (SCGD TB) is looking to raise around US$180m in its Thailand IPO.
• SCG Decor (SCGD) is Siam Cement Group’s flagship company in the decor surfaces and sanitaryware business.
• In this note, we look at the firm’s past performance.

• DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023.
• 3Q23 US revenue was $448 million, 3% higher than 3Q22 despite an 11% fall in the average rig count.
• On a per rig basis, US 3Q23 revenue averaged ~$689,000, a 20% Y/Y gain

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Azul’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
• Founded in 2008, Azul SA is a Brazilian airline offering the largest number of flights and destinations in the domestic market.

Braemar announced today that it would be releasing its FY23 results and its 2023 Annual Report and Accounts on 16 November, followed by its H124 results for the period to 31 August on 29 November. This unusual situation follows the suspension of the shares in July, pending an investigation into a historical transaction. It will be seeking a relisting of the shares after the FY23 announcement.