Daily Brief Industrials: Pasona Group, AerCap Holdings NV, Prosegur Cia De Seguridad Sa, HNI Corp, Mytilineos Holdings Sa and more

• A double dose of StubWorld this week as Pasona Group (2168 JP) finally takes the hint to sell (if not exit altogether) its holding in Benefit One Inc (2412 JP).
• Preceding my comments on Pasona/Benefit One are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• General Electric intends to offload its entire shareholding via a secondary offer, a positive development as it removes the share overhang
• Opportune time to own Aercap as aircraft is in high demand and supply chain disruptions mean limited supply over the medium-term, ensuring high lease rates and strong profits 
• BUY with target price of $81.45 (+21% UPSIDE) pegged to FY24 P/BV of 0.94x, Aercap is the best in the pack with superior net lease margin, finance cost, and ROE     

• Top shareholder Gubel (59.9% stake) launches a cash partial takeover offer for Prosegur Cia De Seguridad Sa (PSG SM) at €1.83/share, cum dividend, except for €0.0661/share dividend payable on 1 December.
• Premium 27.4%, 4.1x EV/Fwd NTM EBITDA, 7.5x Fwd P/E. The founders profit from an underperforming share price to increase their stake, and this could comfortably be financed with the dividends.
• Gross spread, including December dividend, is c. 7%, which is quite good even considering risk of apportionment, although patience may be needed to accumulate a large position.

• We are publishing this note to introduce a new HNI financial model inclusive of the acquisition of Kimball International.
• We expect this new model will be more user-friendly for investors who want to see how we arrive at our estimates or tinker with the assumptions.
• Per our discipline, our model is available on request or visible through our partners.

Mytilineos (MYTIL) is continuing to deliver on its transformation into a simpler structure based on two pillars, Energy and Metals. Its strategy is focused on realising synergies in the group and building its renewable energy sources (RES) business, with its existing industrial assets providing a solid platform for growth. In our view, €1bn/year in EBITDA looks achievable in FY23 and would reset earnings at a higher level. We are increasing our valuation from €36/share to €45/share, in part due to the growth of its RES business, partly funded by its asset rotation strategy.