In today’s briefing:
- AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet
- Hanwha Corp: Updated NAV Analysis – Defense Assets Undervalued
- Shenzhen Intl (152 HK): A Big Step Forward
- The Four Listed Chinese Express Companies Suffered Significant Margin Erosion in Q323
- PACCAR Inc: Does The Battery Revolution Imply A Possible Investment Opportunity? – Major Drivers
- Waste Management: Recycling Tech Transforms Business! Inside their Next-Gen Sustainability Approach! – Major Drivers
- General Electric Company: A Lucrative Strategy Of Future-Proof Investments Revealed! – Major Drivers
- ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
- Illinois Tool Works Inc.: Surge in China’s Automotive Segment – Unveiling Recent Big Winners! – Major Drivers
- 3M Company: How They’re Dominating the Market! – Major Drivers
AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet
- We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 14 stocks from MidCap to SmallCap.
- Some stocks are expected to be inclusions to global indices later this month while others are potential NIFTY Index and/or Nifty Next 50 Index changes in March.
- On average, the upward migrating stocks have outperformed the downward migrating stocks by close to 100% over the last 8 months. The passive flow can be used as an exit.
Hanwha Corp: Updated NAV Analysis – Defense Assets Undervalued
- We provide an updated NAV analysis of Hanwha Corporation which is a holding company of the Hanwha Group. We argue that Hanwha Corp’s shares are trading excessively below its NAV.
- Hanwha Corp is down 10.5% YTD, underperforming Hanwha Aerospace (up 54.2% YTD). Hanwha Corp’s stake in Hanwha Aerospace is worth 1.9 trillion won (14% higher than Hanwha Corp’s market cap).
- Our NAV analysis of Hanwha Corporation (000880 KS) suggests NAV of 2.3 trillion won or NAV per share of 30,203 won which is 33% higher than current price.
Shenzhen Intl (152 HK): A Big Step Forward
- Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
- The sum equals a significant 9% of SZI’s market capitalisation. The agreement also kick-started the project’s long-term contribution, which may provide an income stream lasting 3-5 years.
- The deal showcased SZI’s ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.
The Four Listed Chinese Express Companies Suffered Significant Margin Erosion in Q323
- Given declining prices and slowing volume growth, we anticipated lower Q3 express margins
- The four China-listed express firms saw Op Inc margin fall from 5.3% in Q2 to 3.9% in Q3
- SF fared better than ‘sort & transport’ names, but its freight forwarding segment still a drag
PACCAR Inc: Does The Battery Revolution Imply A Possible Investment Opportunity? – Major Drivers
- PACCAR managed to surpass the revenue and earnings expectations of Wall Street, with net income surging by 60% year-over-year to a historic $1.23 billion, accompanied by a 23% increase in revenues.
- PACCAR Parts also played a pivotal role in the company’s success, with third-quarter revenues reaching $1.58 billion and Parts pretax profits increasing by 10% to $412 million.
- PACCAR Financial achieved an impressive pretax income of $134 million in the financial sector in the third quarter.
Waste Management: Recycling Tech Transforms Business! Inside their Next-Gen Sustainability Approach! – Major Drivers
- Waste Management delivered a mixed result in the recent quarter, with revenues below market expectations but surpassed the analyst consensus regarding earnings.
- The solid waste business was the driving force behind this achievement, with organic revenue growth in collection and disposal aligning well with expectations.
- The resilience of solid waste volumes, with positive trends in commercial volumes and special waste growth, stood out.
General Electric Company: A Lucrative Strategy Of Future-Proof Investments Revealed! – Major Drivers
- General Electric Company delivered an all-around beat in the previous quarter.
- Orders increased by double digits, with services up by 15% and equipment up by 22%, driven primarily by the commercial aerospace sector.
- The aerospace segment, in particular, experienced substantial growth, with commercial engines and services leading the way.
ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
- Ask Automotive (7175293Z IN) is looking to raise around US$145m in its upcoming India IPO.
- ASK Automotive (ASKA) is the largest manufacturer of brake-shoe and advanced braking (AB) systems for 2Ws in India, in terms of FY23 production volume for OEMs and the branded IAM.
- As per CRISIL, it had an approximate 50% market share in said market. The IPO is expected to consist of 100% secondary shares, with promoters trimming their stakes.
Illinois Tool Works Inc.: Surge in China’s Automotive Segment – Unveiling Recent Big Winners! – Major Drivers
- Illinois Tool Works delivered a mixed set of results in its most recent results, with revenues falling short of Wall Street expectations but above-par earnings.
- The company had relatively stable organic growth in the quarter, with a 2% increase on an equal-day basis.
- Operating margin for the third quarter reached 26.5%, marking a 200-basis point increase compared to the previous year.
3M Company: How They’re Dominating the Market! – Major Drivers
- 3M Company delivered an all-around beat in the most recent quarterly result.
- This success has positioned the company for a promising conclusion to the year 2023.
- The company also addresses potential risk and uncertainty by resolving significant litigation matters, such as Combat Arms and PFAS litigation.
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