Daily Brief Industrials: Hanwha Aerospace, SITC International, Full Truck Alliance , Nexans SA and more

• KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.
• Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.
• This trade isn’t risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.

• SITC International (1308 HK)‘s management guided for a promising outlook for 2H24, with strong load performance in Jul-Aug, and better long-term contract rates YoY.  
• Gross margin expanded 4.5pp in 1H24 despite a 5.3% drop in average freight rate, thanks to good cost control with lower chartered-in costs and more self-owned vessels.
• Net cash increased 195% from end-FY23, and we are confident that its 70% payout ratio can be maintained. Its P/B is still below the 5-year average.

• Another set of strong results from YMM, revenue and core earnings both up
• Need to monitor orders per MAU; reason for decline in Q224 unclear
• Maintain US$9.45/ADS target price, ADSs are attractive closer to US$7

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Nexans’ ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Strong”.