Daily Brief Industrials: Kawasaki Kisen Kaisha, Ana Holdings, Fortive , Norcros PLC and more

• Today, Kawasaki Kisen Kaisha (9107 JP) announced Q1 earnings. As expected, net was WAY down on weak container business. But the company revised up H1 and Full-Year.
• KLINE increased its FY2023 payout, upping its expected buyback plan from ¥50bn to ¥60bn. This is still cheap at 8.5x and 0.7x book, and there is non-container growth. 
• The structure of the buyback deserves attention. It may deserve a very short-term trade. The buyback construct has the possibility of “fun and games.”

• ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
• The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
• Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit

• Fortive Corporation delivered a strong result and managed an all-around beat in the last quarter, showcasing its portfolio’s durability and the strength of its execution.
• The company achieved higher core growth, margins, earnings, and free cash flows.
• Their focus on building leading positions across customers’ critical connected workflows has paid off, demonstrated by the significant margins and expansion in adjusted operating margins.

Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% upside.