In today’s briefing:
- Nidec (6594)| Q1 Beat, but Some One-Offs
- Zinka Logistics (Blackbuck) Pre-IPO Tearsheet
- Sai Gon Cargo Service (SCS VN): Strong Q2 2024, 8% Dividend Yield, >40% ROEs, Net Cash
- Azul – Cash Flow Overhang Requires Structural Solution
Nidec (6594)| Q1 Beat, but Some One-Offs
- Nidec reported Q1 OP of ¥60b, above the consensus of ¥53b. However this also included a gain from the consolidation of Nidec PSA
- The key earnings driver was small precision motors, which are benefiting from recovery in HDD market and new earnings from cooling systems from AI Servers
- We revise up our full year forecasts but do not believe the share price will react strongly to the “beat.” Maintain bullish view on valuations
Zinka Logistics (Blackbuck) Pre-IPO Tearsheet
- Blackbuck (1355652D IN) is looking to raise up to US$300m in its upcoming India IPO. The deal will be run by Axis Capital, Morgan Stanley, JM Financial, IIFL Securities.
- Blackbuck is India’s largest digital platform for truck operators, with 963,345 operators in India transacting on its Blackbuck platform in FY24, comprising 27.52% of India’s truck operators, as per Redseer.
- Through Blackbuck, its customers digitally manage payments for tolling and fueling, monitor drivers and fleets using telematics, find loads on its marketplace and get access to used vehicle financing.
Sai Gon Cargo Service (SCS VN): Strong Q2 2024, 8% Dividend Yield, >40% ROEs, Net Cash
- Sai Gon Cargo Service (SCS VN) reported a solid set of Q2 2024 numbers, with revenue up 53.2% YoY and profits up 46.8% YoY.
- Volumes were up 50% YoY, and the balance revenue growth was from recent tariff hikes ( Sai Gon Cargo Services (SCS VN) Update: Price Hikes, Strong Q1 2024 Operational Numbers )
- The stock trades at 13x FY24e PE and a 7.5% dividend yield with upside from the current earnings trajectory. Finding 80% EBITDA operators with >40% ROE is rare.
Azul – Cash Flow Overhang Requires Structural Solution
- Azul’s valuation looks optically below, but we publish a deep dive illustrating that cash outflow concerns are the key driver.
- Heavy levels of payment arrears built up through COVID are likely to take time to wash through the cash flow statement, which should be a watch point for Abra discussions
- Given Azul’s margins are top tier by global standards, and Abra airlines Avianca and GOL have moderate leverage, we struggle to see major synergies that would change Azul’s situation.
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