Daily Brief Industrials: Mitsubishi Corp, Zuiko Corp, SCG Chemicals, LG Energy Solution, Nexans SA, HNI Corp, Construcciones Y Auxiliar De F, T.S. Lines, ACCO Brands and more

• Mitsubishi Corp (8058 JP) yesterday announced earnings, forecast for FY23, higher dividend guidance, and a buyback. The headline number is 6% of shares and ¥300bn (which is nearer 4% now).
• ¥200bn of that ¥300bn is actually FY2022 “Additional Return” tacked onto a ¥100bn buyback for this year (FY23).  
• As is often the case, Shareholder Structure Matters. Because Berkshire Hathaway owns a large chunk of stock (7.4% according to interviews), that carves out a fair chunk not for sale.

• Diaper-Making machine maker Zuiko Corp (6279 JP) late last year introduced a shareholder benefit coupon program, and the stock has flown. Earnings improved from the trough too. 
• Now that the market cap is high enough, the company has applied to, and is now approved, to join TSE Prime, which means a TOPIX inclusion at end-June 2023.
• With 30 days of 6mo ADV, and much more of longer average ADV, this looks like a win, but there are…. considerations. Shareholder structure matters. Yet again. 

• SCG Chemicals (SCGC TB) (SCGC) is looking to raise around US$1bn in its upcoming Thailand IPO.
• SCG Chemicals, a part of the SCC group, is an integrated chemicals player in ASEAN, involved primarily in manufacturing, marketing and selling a diversified range of petrochemical products.
• In this note, we talk about the positive aspects of the deal.

• One of the biggest breakthroughs in the global EV rechargeable battery industry this year has been CATL and BYD’s launch of hybrid sodium-ion and lithium-ion batteries in 2H 2023.
• This is expected to take away market share from Korean EV battery makers including LG Energy Solution and Samsung SDI.
• It is expected that eventually, that sodium-ion batteries could be about 30-40% cheaper than conventional lithium-ion batteries.

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”.

• On May 9, HNI reported better-than-expected results, boosted by unexpected strength in Workplace Furnishings (WF) sales and a strong defense of margins in Residential Building Products (RBP) despite weak Hearth Products sales.
• 1Q23 GAAP EPS was $0.04 and $0.13 non-GAAP (adjusted) versus consensus of ($0.02) GAAP and ($0.03) non-GAAP (adjusted). Our non-GAAP (adjusted) forecast was ($0.02).
• Management noted improving results in its WF segment, driven by productivity and cost-cutting.

• Impressive backlog stands at €13.06bn and implies a backlog/revenue ratio of 4x.
• P/E of 10x and EV/EBITDA below 5x, trading below peers.
• Investment case includes feedback from our conversation with IR. Company perception should improve 

• T.S. Lines (TSL HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
• T.S. Lines (TSL) is a container shipping firm primarily operating in the Asia Pacific (APAC) region.
• As of Dec 22, its container shipping network covers a total of 24 countries and regions, 63 major ports and 42 services globally.

• ACCO reported first quarter results reaffirming the outlook provided three months ago where the business should begin to see gradual increase in orders from retailers later this year
• Retailers have reverted to their prior ordering patterns where much of the inventory carried is for the back-to-school shopping season
• ACCO reporting quarterly sales above $400 million did little to squash the concern related to sales declining in the first half of the year