In today’s briefing:
- Horizon Construction Development IPO: Valuation Insights
- HUUUGE Ushio (6925) Buyback
- C.H. Robinson Worldwide: Can Automation & Digitization Save The Day? – Major Drivers
- AEYE, INC – Automotive-First, Capital-Light, and Partnership with Continental Position AEye Well
- Old Dominion Freight Line Inc.: Is The Bad Result A Sign Of Trouble Or A Bargain? – Major Drivers
- Otis Worldwide Corporation: The Moat Source That Helps It Thrive In An Oligopolistic Market – Major Drivers
- PACCAR Inc.: Renewed Growth
- NOW, INC. – 1Q23 Solid Start to the Year
- Fortive Corporation: What You Need To Know About The Q1 Success & Why It Matters – Key Drivers
- Norfolk Southern Corporation: Improved Network Reliability and Productivity Saving The Day? – Major Drivers
Horizon Construction Development IPO: Valuation Insights
- Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), has launched its HKEx listing at HK$4.52-4.80 per share to raise up to US$223 million.
- We previously discussed the IPO in Horizon Construction Development IPO: The Bull Case and Horizon Construction Development IPO: The Bear Case.
- Our valuation analysis suggests that HCD is fully priced at the IPO price range. Therefore, we are inclined to pass on the IPO.
HUUUGE Ushio (6925) Buyback
- Ushio Inc (6925 JP) reported earnings on 11 May, with revenue +17.6% on the year, OP +21.4%, and NP +8.7% on the year. Div was unchanged at ¥50/share.
- Forecasts are for revenue +7.4%, OP -21.2%, and NP -27% (¥90.6/EPS). But importantly, the company also announced a HUUUUUGE Buyback.
- Buying ≦20mm shares (17.0%) spending ≦¥30bn from 29May2023 to 10May2024. That’s 13.3% at the 12 May close. How this will work is unknown. There’s less detail than one would want.
C.H. Robinson Worldwide: Can Automation & Digitization Save The Day? – Major Drivers
- C.H.
- Robinson had a disappointing result in Q1 and it failed to meet the revenue expectations and earnings expectations of analysts.
- They believe that an increased digitization and automation are critical components of providing an improved client experience and operating leverage.
AEYE, INC – Automotive-First, Capital-Light, and Partnership with Continental Position AEye Well
- 1Q23 revenue came in at the midpoint of guidance at $0.6 million.
- CEO Matt Fisch has been making changes and said that after “a comprehensive review of AEye’s business, it was clear that we needed to intensify our focus on automotive and our path to commercialization with Continental, while aligning our resources with this streamlined business model.”
- The company’s automotive-first strategy, capital-light model, and strategic partnership with Continental should position it well in the upcoming LiDAR market.
Old Dominion Freight Line Inc.: Is The Bad Result A Sign Of Trouble Or A Bargain? – Major Drivers
- Old Dominion Freight Line produced a highly disappointing set of results as a result of the persistent downturn in the local economy and the volume decline.
- The revenue decline and slight deterioration in Old Dominion’s operating ratio caused the earnings per diluted share for the quarter to decline by 0.8% to $2.58.
- We give Old Dominion Freight Line an ‘Underperform’ rating with a revised target price.
Otis Worldwide Corporation: The Moat Source That Helps It Thrive In An Oligopolistic Market – Major Drivers
- Despite ongoing market volatility, Otis Worldwide Corporation produced a good first quarter to begin 2023, delivering an all-around beat.
- Otis’s service division’s contribution to organic sales growth allowed it to increase adjusted service operating profit margins by 40 basis points, which resulted in mid-single-digit adjusted EPS growth.
- We give Otis Worldwide Corporation a ‘Hold’ rating with a revised target price.
PACCAR Inc.: Renewed Growth
- PACCAR had a strong first quarter and the company achieved revenues and net income that were well above market expectations, driven by strong demand for trucks, parts, and financial services.
- PACCAR’s management attributes this growth to its investments in new truck models, global expansion, and the strong performance of PACCAR Parts.
- PACCAR Financial, the company’s financial services arm, also had an excellent quarter, achieving a pretax income of $149 million, similar to the same quarter of last year.
NOW, INC. – 1Q23 Solid Start to the Year
- DistributionNOW’s 1Q23 revenue totaled $584 million, a 23% Y/Y increase and a 7% increase from 4Q22.
- US revenue climbed 28% Y/Y, while International revenue climbed by 30%.
- Canadian revenue was 1% higher. The US contributed 73% of total revenue in the quarter.
Fortive Corporation: What You Need To Know About The Q1 Success & Why It Matters – Key Drivers
- Fortive Corporation made a solid start to the year, achieving sales, margins, and higher profitability than Wall Street expectations in the first quarter.
- Each of their key regions experienced another quarter of rapid sales growth.
- Precision Technologies also reported another quarter of double-digit core revenue growth or a 14% revenue increase.
Norfolk Southern Corporation: Improved Network Reliability and Productivity Saving The Day? – Major Drivers
- Norfolk Southern Corporation delivered strong results in the quarter with revenues in accordance with analyst expectations and managed an earnings beat.
- However, these improvements boosted the company’s network’s reliability and made it even more productive.
- We give Norfolk Southern Corporation a ‘Hold’ rating with a revised target price.
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