In today’s briefing:
- Outsourcing (2427 JP): Tender Start Delayed, but Does Bain Need to Bump?
- Three Scenarios in a Bidding Battle
- Samsung C&T: Share Cancellation of Nearly 1.1 Trillion Won Worth of Treasury Shares in 2023
- (Mostly) Asia M&A, Jan 2024: Newmark, Eureka, Aoki, Medley, Payroll, Kerry Express, Genetron, TDCX
- Nihon M&A: Earnings Begin to Recover..
- ANA Holdings -Big Upgrade with Big Read Across for JAL
- Korean Air – 4Q Loss Driven by Exceptional Financial Costs; Underlying Picture Healthier
- nVent Electric: Initiation of Coverage – 5 Explosive Growth Strategies Behind Their Rise! – Major Drivers
- ASGN Incorporated: Initiation of Coverage – From Crisis to Triumph! The Secret Behind ASGN’s Resilience and Growth Post-Economic Downturn! – Major Drivers
- Equity Research Flash Note – Costain Group Plc
Outsourcing (2427 JP): Tender Start Delayed, but Does Bain Need to Bump?
- Bain has delayed the Outsourcing Inc (2427 JP) tender start from late January due to more time required to satisfy the European regulatory approval pre-condition.
- Potential reasons for bumping are opportunistic timing, re-rating of Japanese peers, a high minority acceptance rate, and an offer below the mid-point of the IFA DCF valuation range.
- Potential reasons for keeping terms unchanged are no activists, a 52.1% premium to the undisturbed price, and an offer still attractive compared to Japanese peers’ multiples and price ratios.
Three Scenarios in a Bidding Battle
- According to Expansion, Amber Equity (I Squared/TDR consortium vehicle), has signal its readiness to counteroffer between €10.65-€11 per Applus Services SA (APPS SM) share and drop minimum acceptance condition to 50.01%.
- There are three scenarios now: Amber withdraws (unlikely), final sealed envelope auction or splitting the bounty at the highest offer price, the latter seems increasingly likely considering similar past situations.
- At current market prices, IRR by year 8 would be 13.3%. The bidders must indeed be contemplating M&A and economies of scale to boost returns.
Samsung C&T: Share Cancellation of Nearly 1.1 Trillion Won Worth of Treasury Shares in 2023
- Samsung C&T announced that it plans to cancel treasury shares including 7,807,563 shares of common stock (4.2% of outstanding shares) and 159,835 shares of preferred stock (9.8% of outstanding shares).
- This would represent share cancellation amount of 1.1 trillion won and 17 billion won for Samsung C&T (028260 KS) (common) and Samsung C&T (02826K KS) (preferred).
- For the remaining treasury shares, the company will cancel 7.8 million shares in 2025 and 7.8 million shares in 2026.
(Mostly) Asia M&A, Jan 2024: Newmark, Eureka, Aoki, Medley, Payroll, Kerry Express, Genetron, TDCX
- For the month of January 2024, 8 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$2bn.
- The average premium for the new transactions announced (or first discussed) in January was ~34%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
Nihon M&A: Earnings Begin to Recover..
- Nihon M&A Center (2127 JP) reported 3QFY03/2024 results yesterday. Both revenue and OP increased 22.5% and 64.6% YoY respectively and were above consensus estimates.
- M&A revenues for the quarter saw significant growth after seeing two consecutive quarters of YoY decline driven by growth in the no. of deals and revenue per transaction.
- The company’s share price has moved up by around 15% following the earnings announcement, however, share price has been down by more than 30% over the last 12-months.
ANA Holdings -Big Upgrade with Big Read Across for JAL
- ANA has revised its FY24 to March 2024 profit guidance upward on higher revenues; EBIT up from ¥120bn to ¥190bn in line with consensus (AIRCT ¥182bn).
- Air Transportation naturally drives the upgrade, with its EBIT guide up ¥60bn as higher revenues outweigh higher costs.
- This upgrade also has major relevance for JAL, where expect a FY24 EBIT guidance upgrade. We are at ¥177bn versus consensus of ¥142bn/guidance of ¥130bn.
Korean Air – 4Q Loss Driven by Exceptional Financial Costs; Underlying Picture Healthier
- Korean Air has reported a 4Q23 net loss of KRW235bn, which is down from a profit of KRW354bn in 4Q22. We had expected KRW264bn profit but higher opex/financing costs weighed
- We highlight 4Q23 saw KRW409bn in other financial expenses, which compared to an income of KRW322bn in 9M23. Without this, KAL would have generated profit of around KRW200bn in 4Q23
- Pre-Pandemic, 4Q saw a near-breakeven performance (KRW17-38bn losses in 4Q18-4Q19) so a KRW184bn profit in 4Q23 still remains strong relative to pre-pandemic levels
nVent Electric: Initiation of Coverage – 5 Explosive Growth Strategies Behind Their Rise! – Major Drivers
- This is our first report on electrical connection and protection products manufacturer, nVent Electric.
- The company had a decent quarterly result and reported record sales, robust free cash flow and strong income growth for Q3 2023.
- The company attributes its Q3 performance to the concentrated attention on high-growth verticals, new products, acquisitions and geographic expansion.
ASGN Incorporated: Initiation of Coverage – From Crisis to Triumph! The Secret Behind ASGN’s Resilience and Growth Post-Economic Downturn! – Major Drivers
- This is our first report on staffing and IT solutions provider, ASGN Inc.
- The company’s Q3 2023 earnings update provided a detailed insight into the company’s financial performance which revealed trends that could influence future investment decisions.
- During the quarter, ASGN’s performance matched the company’s expectations resulting in $1.12 billion in revenue, a figure slightly above the midpoint of their guidance.
Equity Research Flash Note – Costain Group Plc
- Costain Group PLC is a United Kingdom-based sustainable infrastructure company.
- The Company offers a range of services across the whole lifecycle of its customers’ assets.
- The Company operates through two segments: Natural Resources and Transportation.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
