In today’s briefing:
- Dai Nippon Printing – Gauging The Upside
- Nippon Yusen – New MidTermPlan = New Shareholder Return Policy
- Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts
- Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing
- LG Corp: A Family Feud! (Mother & Sisters Sue Their Chairman Son) Enter the Private Equity Dragons?
- Acceptance Period for Triton’s Offer Commences, Irrevocables for Bain’s Cease to Be in Effect
- [JD Logistics(2618 HK) DG to SELL]: JD’s Low-Price Strategy Hurts JD Logistics
- Leonardo: +26% Since Initial Note. 2022 Results Are Strong.
Dai Nippon Printing – Gauging The Upside
- Despite the strong performance from Dai Nippon Printing following the announcement of Elliott’s stake we feel upside remains.
- Operating results should benefit from normalisation of the economy and light restructuring potential.
- In addition, we do not see much evidence to suggest that valuations are particularly stretched.
Nippon Yusen – New MidTermPlan = New Shareholder Return Policy
- Today at lunch, Nippon Yusen Kk (9101 JP) released a New Medium-Term Management Plan Presentation (FY2023 to 2026). “Sail Green, Drive Transformations 2026 – A Passion for Planetary Wellbeing.”
- It has basic investment plans, including growing scale of ONE container shipping alliance, growing auto logistics, spending on fuel conversions, offshore wind, hydrogen/ammonia, and doing some logistics M&A
- They also plan a new Shareholder Return Policy. That raises minimum dividend, expected payout ratio, and involves ¥200bn of buybacks the next two fiscal years. Read on.
Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts
- Today, Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) announced they would launch the TOB to take over Nippon Steel Trading Corporation (9810 JP) starting Monday.
- I wrote about the deal and its parameters in December 2022 in Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium.
- This gets done easily I expect. Boring, but decent very short-term carry on the bid side.
Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing
- SK Oceanplant will likely be listed on KOSPI in late May or early June. There are no clear reasons for KRX to oppose SK Ocean Plant’s move to KOSPI.
- The top reserved issue in INDUSTRIALS, Sun Kwang (003100 KS), will replace it in KOSDAQ 150. The effective date is the delisting day.
- The impact size on the delisting day alone may be well above 1x ADTV for both companies, so we will likely see a significant price movement.
LG Corp: A Family Feud! (Mother & Sisters Sue Their Chairman Son) Enter the Private Equity Dragons?
- There is a major family feud on LG Group. Koo Kwang-Mo (Chairman of LG Group)’s mum and sisters are suing Chairman Koo to demand more money.
- We believe that this family feud among the members of the LG Group regarding the inheritance recovery is likely to heighten the importance of the controlling stake in LG Corp.
- Similar to what has happened with Osstem Implant, it is very possible that mum and sisters are discussing various strategies with some of the biggest private equity dragons in Asia/globally.
Acceptance Period for Triton’s Offer Commences, Irrevocables for Bain’s Cease to Be in Effect
- On 8 March, the Bain’s consortium announced that it will lower the minimum acceptance threshold from over 66.66% to over 50%. Irrevocables seem to have ceased to be in effect.
- Triton’s all in: the acceptance period for its offer commenced on 8 March, has agreed to purchase up to 22.8% and will resume buying in the market.
- Gross spread is 1.1%. I’d be long in case the Bain’s consortium improves Triton’s offer, which may depend on the additional debt than private members of Bain’s consortium could afford.
[JD Logistics(2618 HK) DG to SELL]: JD’s Low-Price Strategy Hurts JD Logistics
- In C4Q22, JDL reported in line results for both revenue and profit. In C1Q23, we expect JDL’s topline growth continue to decelerate due to decline of parcels.
- JD has adopted the low-price strategy, which hinders the growth of JDL. The price competition in eCommerce negatively affects JDL but benefits ZTO.
- We cut our 2023 revenue forecast by 6%, which is (5%) below cons. Downgrade JDL to SELL with TP of HK$10.
Leonardo: +26% Since Initial Note. 2022 Results Are Strong.
- 2022 results were solid, exceeding guidance. 2024: Guidance in-line with consensus
- Defense industry on fire. Refer to initial note for further info regarding increased defense budgets
- Given the very strong performance YTD, we recommend taking some profit here for shorter-term investors. For long-term investors TP remains €12.80. We like the sector
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