In today’s briefing:
- Nippon Express (9147 JP) – Buying the Overhang
- CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer
- Advantest (6857 JP): AI Speculation Discounted
- CIMC (1839 HK): Firm Offer. With A Bump!
- Full Truck Alliance: Strong Q423 Results | Solid Q124 Guidance | Cheap at 14x Consensus ’24 EPS
- Samhyun IPO Bookbuilding Results Analysis
- Qantm IP (QIP AU): Adamantem’s Rumoured Non-Binding Proposal at A$1.817
- TOCALO (3433): Recognized with B Score in Climate Change Report 2023 Published by CDP
- IDEC (6652): Q3 FY03/24 Update
- Mitsuboshi Belting (5192): Q3 FY03/24 Update
Nippon Express (9147 JP) – Buying the Overhang
- The Offering priced today at ¥7,338/share vs ¥8,039/share traded at the close on the day of the announcement. That’s an 8.7% discount for no dilution.
- Compared to a broad basket of Peer Baskets (yes, a basket of baskets), the stock has underperformed by 4.2%, and the 3% discount today puts it at 7+% move.
- Given the relative cheapness, one should be comfortable putting this on if it gets sold off. This is not different to my initial opinion.
CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer
- CIMC Vehicle Group Co Ltd (1839 HK) announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.
- Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable.
Advantest (6857 JP): AI Speculation Discounted
- Advantest has dropped back 11.5% from its recent high but is still up 43% year-to-date and up 2.3X from a year ago. Consolidation is likely to continue.
- Demand for High Bandwidth Memory (HBM) for use with AI processors could lift sales, profits and profit margins to new highs within the next two years.
- That could bring the projected P/E ratio down from 75.5x FY Mar-24 EPS guidance to 31x FY Mar-26 EPS in a favorable but not unreasonably optimistic scenario.
CIMC (1839 HK): Firm Offer. With A Bump!
- Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
- This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
- Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.
Full Truck Alliance: Strong Q423 Results | Solid Q124 Guidance | Cheap at 14x Consensus ’24 EPS
- Q423 revenue growth, core margins, and expense control all looked strong
- Evolving revenue mix bodes well for long-term improvement in core margin
- Buyback update & Q124 guidance both +ive; appears cheap at 14x consensus
Samhyun IPO Bookbuilding Results Analysis
- Samhyun reported excellent IPO bookbuilding results. Samhyun’s IPO price has been determined at 30,000 won per share, which is 20% higher than the high end of the IPO price range.
- A total of 2,168 institutional investors participated in this IPO book building. The demand ratio was 649 to 1. Samhyun will start trading on 21 March 2024.
- Our base case valuation of Samhyun is implied market cap of 396 billion won or target price of 37,402 won, which is 25% higher than the IPO price.
Qantm IP (QIP AU): Adamantem’s Rumoured Non-Binding Proposal at A$1.817
- The AFR reports that Adamantem Capital had submitted a non-binding indicative offer for Qantm Intellectual Property (QIP AU) at A$1.817 per share, a 30.7% premium to the last close.
- In response to a previous AFR article, Qantm disclosed a non-binding indicative offer from Rouse but declined to reveal a price or the structure (cash or scrip).
- AFR reports that other potential interested parties, such as Quadrant Private Equity and IPH, are also in the running. Adamantem’s attractive offer sets a high bar for other potential bidders.
TOCALO (3433): Recognized with B Score in Climate Change Report 2023 Published by CDP
- Tocalo Co Ltd (3433 JP) provides surface treatments that improve the performance of materials used across a range of industries by adding properties.
- In FY03/23, sales were JPY48.1bn, operating profit JPY10.6bn, recurring profit JPY11.0bn, and net income attributable to owners of the parent JPY7.4bn.
- Tocalo Co., Ltd. has announced that it has been recognized with a B score in the Climate Change Report 2023 published by CDP.
IDEC (6652): Q3 FY03/24 Update
- IDEC Corp (6652 JP) is a comprehensive manufacturer and vendor of control equipment, especially human-machine interface (HMI) devices such as switches.
- For FY03/23, the company reported revenue of JPY83.9bn, operating profit of JPY14.0bn, recurring profit of JPY14.4bn, and net income of JPY10.1bn, with EPS of JPY348.4.
- The company achieved its FY03/25 targets two years ahead of schedule, prompting management to announce upwardly revised targets for the same year in May 2023.
Mitsuboshi Belting (5192): Q3 FY03/24 Update
- Mitsuboshi Belting (5192 JP) manufactures power transmission belts for automobiles and general industrial machinery. The company belongs to a group of six or seven global leaders in this space.
- In FY03/23, revenue was JPY82.9bn (+10.7% YoY), operating profit JPY9.0bn (+18.2% YoY), recurring profit JPY10.5bn (+22.4% YoY), and net income attributable to owners of the parent JPY7.1bn (+10.8% YoY).
- In May 2022, the company announced the following targets as its vision for FY2030 (FY03/31): JPY100.0bn in revenue, operating profit of JPY13.0bn, and ROE of 10.0%.
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