Daily Brief Industrials: Keisei Electric Railway Co, Yang Ming Marine Transport, Sg Fleet, United Integrated Services, Keppel Corp, Polymatech Electronics, Mears Group PLC, MNC Solution and more

• Keisei Electric Railway Co (9009 JP) rose 14% after reports that a fund linked to activist investor Murakami bought a stake, while Oriental Land also gained 2.9% in a volatile market.
• Down 50% since February 2024, Keisei Electric seems to have limited downside risks. We believe its valuation could increase if Murakami’s stake leads to activism.
• The long Keisei Electric, short Oriental Land (4661 JP) trade could work well too, especially if Murakami’s activism and the risks to Oriental Land’s guidance materialize.

• Yang Ming Marine Transport (2609 TT) is forecast to be added to the Yuanta/P-Shares Taiwan Top 50 ETF in December, replacing Airtac International (1590 TT). 
• Yang Ming Marine Transport (2609 TT) is also expected to be added to the Yuanta/P-shares Dividend Plus ETF in December, so there will be buying from multiple trackers.
• Shorts are near their lows in Yang Ming Marine Transport (2609 TT) while there has been covering in Airtac International (1590 TT) after an increase in the last few months.

• Sg Fleet (SGF AU) confirmed it received a non-binding indicative proposal from Pacific Equity Partners at A$3.50 per share, a 31.1% premium to the undisturbed price. 
• In consultation with Bluefin Investments, the largest shareholder, PEP has been granted exclusive due diligence access, which ends on November 29.
• The offer is attractive compared to peer multiples and represents an all-time high. The talks are in the final stages, as due diligence ends at the end of the week.

• The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
• Today is the base date for the final ranks for the December 2024 index rebal event.
• In this insight, we take a look at our final expectations for ADDs/DELs and their flow implications for the TDIV index which will also have a rebalance event in December.

• SG Fleet (SGF AU), an Aussie provider of fleet leasing services, has announced a A$3.50/share non-binding and indicative proposal from Sydney PE outfit Pacific Equity Partners (PEP). 
• SGF’s board, in consultation with South Africa’s Super Group (SPG SJ), its largest shareholder, has granted PEP exclusive due diligence. 
• A$3.50/Share is a 31% premium to undisturbed. The exclusivity period expires on the 29th November 2024. That short timeframe suggests a firm Offer is imminent. 

• Keisei Electric Railway Co (9009 JP) gained 13.8% yesterday on news that activist investor Murakami-san had acquired a stake.
• Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• This is the third report issued by CML on Keppel’s transformation to a global asset manager per its Vision 2030.
• CML has earlier issued two reports on this subject. The first examines the lack of disclosure by Keppel on critical information and data pertaining to its asset management business.
• This is disappointing as Keppel is almost halfway to its fund under management (‘FUM”) target of S$200bn, and we include peers which are similar in size.

• Polymatech Electronics (POLM IN) revenues have skyrocketed by 27x in the last three years, but the balance sheet is filled with several red herrings. 
• Topline looks out of sync with production and have been largely aided by receivables. Being an R&D oriented company, the R&D expense only appeared in FY24, when sales were INR6bn
• Mis-Classification of cash flows, questionable RPT with promoters, dubious transition towards IND AS, absurd nature of some key expenses, also warrant attention

In one of my articles published earlier this year, I explored three key advantages that investors can use to outperform the market.

While the first two—better information and superior analysis—tend to favor institutional investors, even they often struggle to maintain these edges over extended periods. The third edge, however, is behavior.

Unlike the others, this is an advantage that individual investors can cultivate and sustain over time, as human behavior has remained fundamentally unchanged since the Stone Age.

• MNC Solution (MNC KS) is looking to raise US$200m in its upcoming Korea IPO.
• MNC Solutions (MNC) supplies high-precision control components for maritime and aviation weaponry, and travel devices for stabilization to the defense industry.
• In our previous note, we looked at the firm’s past performance. In this note, we undertake a peer comparison.