Daily Brief Industrials: Mitsui Matsushima, Evergreen Marine Corp, Hansol Logistics, International Distributions Services, Deutsche Lufthansa , Rockwell Automation, Singapore Post and more

• Mitsui Matsushima (1518 JP) was a coal company starting over 100yrs ago. A bunch of years ago it started a solar energy business and then started M&A to diversify.
• Coal closed last year and since, MMH has become an investment holdco for “basic businesses” (drinking straws, conveyor system chains, document shredders, weighing machines, crystal measuring devices, mask blanks, etc).
• Murakami Group accumulated 4.98% in five weeks, then the next 14.9% in five days. Pump & Dump like Pacific Metals? Activism like JAFCO? Or something else more interesting?

• Using data from the close on 17 May, there could be 5 changes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in June.
• There will also be capping and funding flows that will lead to a one-way turnover of 12.6% and a one-way trade of US$1.13bn.
• Shorts have increased on the potential adds and potential deletes and covering will lead to rally in some stocks while providing support in others at rebalance implementation.

• After the market close on 20 May, Hansol Holdings announced that it is pursuing a tender offer for an additional 18.53% stake in its affiliate Hansol Logistics.
• The tender offer price is 3,000 won, which is 22% higher than the close price on 20 May. The tender offer period is from 21 May to 10 June.
• We have a positive view of this tender offer. Hansol Logistics trades at EV/EBITDA of 1.8x, P/E of 3.7x, and P/B of 0.6x based on 2023 figures.

• The UK Chancellor stated that any bid for International Distributions Services (IDS LN)  (Royal Mail owner) would be thoroughly evaluated for national security considerations to prevent any risks to essential infrastructure.
• The Board is “minded to accept” the improved 370p takeover proposal (4.8x EV/Fwd NTM EBITDA) from Czech billionaire Daniel Kretinsky’s EP Group, should a formal bid is made.
• The improved proposal seems fair. GLS is profitable, while Royal Mail aims break-even by March2025e. Concerns about potential developments post-offer pose a potential political issue. Gross spread is 13.5%.

• We update forecasts for the European airline sector, highlighting it will be difficult for most carriers to grow earnings in 2023.
• We publish detailed earnings bridges highlighting the damage to full year earnings from structural damage to 1Q results due to inflationary pressure and the loss of corporate traffic
• This also suggests opportunities for the sector to address winter woes to supplement strong summer performances.

• Rockwell Automation closed the second quarter of fiscal 2024 on a rather unsteady footing as a result of high inventory levels held by machine builders and slower ramp ups that are impacting shipments for the second half.
• The company has also had to reduce its guidance for the full fiscal year which is proving to be larger than initially expected.
• However, despite what looks like a rocky start to the fiscal year, Rockwell Automation has already set in motion a comprehensive program aimed at expanding margins as the company accelerates actions to align costs with the updated outlook on current year orders.

The ongoing transformation of Singapore Post (SingPost) from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. We believe expansion into the Australian logistics market offers long-term growth and that historical issues surrounding structural weakness in postal volumes may be resolved by growth in replacement volumes from e-commerce and review of postal services in constructive engagement with the regulator. Implementing the March 2024 strategic review recommendations could help unlock value. We believe there is c 50% upside in the share price.