In today’s briefing:
- Fanuc (6954) | Bullish on Robots
- Avalon Technologies Pre-IPO – Sales Concentrated on a Handful. Market Tailwind Could Be Overstated
- EQT/Va-Q-Tec: Generous Agreed Offer
- Shenzhen Intl (152 HK): Numerous Drivers in Place to Boost FY23
Fanuc (6954) | Bullish on Robots
- Fanuc is a core structural growth stock that has fallen by -4% over the past year. We turn bullish with 8 days to earnings
- We believe that Fanuc is a key beneficiary of continued investment in automation and realignment of supply chains globally
- We focus on Fanuc’s core value drivers – revenue, margins, risk and investment – and see 25% upside for long term investors
Avalon Technologies Pre-IPO – Sales Concentrated on a Handful. Market Tailwind Could Be Overstated
- Avalon Technologies (6594468Z IN) is looking to raise about US$130m in its upcoming India IPO. The IPO is expected to consist of both a fresh issue and a secondary portion.
- Avalon Tech (Avalon) is a vertically integrated electronic manufacturing services (EMS) firm delivering box build solutions in India.
- As per F&S, the firm is one of the leading domestic EMS companies with end-to-end capabilities offering a full stack product and solution suite.
EQT/Va-Q-Tec: Generous Agreed Offer
- The acceptance period for EQT’s €26/share offer (46% premium, 16.1x EV/23eEBITDA) runs until 16 February. Minimum acceptance is 62.5% (49.4% of the float). EQT intends to implement a domination agreement.
- The deal makes sense from a strategic standpoint, although there are potential antitrust issues. The price offered seems generous considering my fair-value estimate of €18.67 (DCF-based).
- Gross spread is 3.7% (8.6% estimated annual return assuming settlement by 30 June), which is okayish for a not so liquid stock in the European space. Long.
Shenzhen Intl (152 HK): Numerous Drivers in Place to Boost FY23
- Share price of Shenzhen International (152 HK) started slow in this year, but it is on course for stronger earnings in FY23, following a dip in last year.
- Upside from logistics business, benefits to Shenzhen Expressway (548 HK) on border re-opening, potential massive contribution from logistics parks transformation and upgrading and lack of Shenzhen Airlines’ drag are drivers.
- ROE is expected to rebound to 11-12% in next two years, returning to FY20-21 level. Back then, its average P/B was 0.68x, suggesting at least 31% upside from 0.52x currently.
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