In today’s briefing:
- Pan Ocean To Sell 5.8% Stake in Hanjin Kal To Secure Funds to Acquire HMM
- Virgin Australia – Outperforming Most LCCs Globally; Positioned for New Era of Cash Flow Generation
- J&T Global Express IPO: Peer Comparison and Valuation
- Cainiao Smart Logistics IPO: The Bull Case
- Liquid Universe of European Ordinary and Preferred Shares: October‘23 Report
- Initiating Coverage – Intloop (9556)
- Cainiao Pre-IPO – Initial Thoughts on Valuation
Pan Ocean To Sell 5.8% Stake in Hanjin Kal To Secure Funds to Acquire HMM
- On 17 October, Pan Ocean (028670 KS) announced that it will sell its 3.9 million shares (5.85% stake) in Hanjin KAL Corp (180640 KS) for about 163 billion won.
- The main purpose of this stake sale is to secure more funds for Pan Ocean to potentially acquire HMM Co., Ltd. (011200 KS).
- As evidenced by the recent increase in Baltic Dry Index, the potential expansion of the war in Israel could benefit major bulk shipping companies such as Pan Ocean.
Virgin Australia – Outperforming Most LCCs Globally; Positioned for New Era of Cash Flow Generation
- FY23 performance positions VA at the top table relative to global LCC financial performance
- Global analysis of #2 positions behind a strong market leaders suggests an efficient VA should be well positioned to sustainably outperform the global airline industry’s average financial performance
- Forecasting mean reversion for operating performance but aircraft financing savings should sustain superior profitability and cash flow generation than pre-COVID.
J&T Global Express IPO: Peer Comparison and Valuation
- J&T Global Express (1519 HK) has announced the terms for its IPO. The company plans to issue 327m shares at HK$12 per share, which should raise proceeds of around US$501m.
- Though profitability of the company’s China business has improved, SEA margins continue to decline, hence our analysis suggests that J&T may not be able to generate profits in the near-term.
- Our SOTP valuation offers per share value of HK$9.48 per share which is at a 21% discount to the indicative IPO price suggesting J&T’s IPO is overvalued.
Cainiao Smart Logistics IPO: The Bull Case
- Cainiao Smart Logistics (1437124D HK), a global leader in e-commerce logistics, has filed for a HKEx IPO to raise at least US$1 billion at a US$15-20 billion valuation.
- According to CIC, Cainiao is the world’s leading cross-border e-commerce logistics company regarding parcel volume in 2022, with one of the world’s largest logistics networks in terms of geographic reach.
- The bull case rests on market share gains in China, improving performance of the largest business (international logistics), and rising gross and operating margins.
Liquid Universe of European Ordinary and Preferred Shares: October‘23 Report
- Since mid-September, spreads have generally tightened across our European liquid universe of ordinary and preferred shares (12 have tightened, 7 widened).
- Recommended trades long preferred / short ordinary shares: Media-for-Europe, Sixt, Volkswagen (still the most interesting situation), Grifols, Atlas Copco.
- Recommended trades long ordinary / short preferred shares: Fuchs, SSAB Svenska Stal.
Initiating Coverage – Intloop (9556)
- Business model transforming – INTLOOP is an upstream consulting services firm utilizing both freelance and in-house consultants primarily as a competitive ‘hybrid’ subcontractor offering
- It has successfully sustained high double-digit sales growth and embarked on a strategic transformation to become a full-service consultancy.
- This is being driven by bolt-on M&A starting with the 58.3% acquisition of DICS Holdings in September 2023 and accelerated recruitment to grow its in-house consultant resources.
Cainiao Pre-IPO – Initial Thoughts on Valuation
- Cainiao Smart Logistics, Alibaba Group Holding’s logistics linked arm, is planning to raise at least US$1bn in its Hong Kong IPO.
- Cainiao is the largest provider of cross-border e-commerce logistics services globally and a leader in China logistics services, according to CIC.
- In our previous note we looked at the company’s past performance and undertook a peer comparison. In this note, we will talk about valuations.
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