Daily Brief Industrials: Samsung C&T, Toyo Construction, INOX India Limited, Severfield PLC and more

• On 14 December, it was reported that US based Whitebox Advisors has started an activist campaign on Samsung C&T (028260 KS).
• Whitebox estimates that Samsung C&T’s stock price is about 68% undervalued compared to its NAV.
• In addition to Whitebox, there are two other foreign investors including Palliser Capital and City of London Investment Management that have requested Samsung C&T to improve corporate governance.

• The Toyo Construction (1890 JP) Board has opposed YFO’s potential tender offer price of JPY1,255 per share but has kept the door open for an improved offer. 
• YFO is running out of options as a YFO candidate-heavy special committee opposed its proposal, and the share price is trading through terms. 
• YFO has three options: a hostile offer at an unchanged price, an improved price, or exit its position. Each option has issues suggesting a lack of short-term share price support.  

• INOX India Limited (INOX IN) is looking to raise up to US$175m in its Indian IPO.
• Inox India is a manufacturer of cryogenic equipment. As per CRISIL, the firm was the largest Indian exporter of cryogenic tanks in terms of FY23 sales.
• In our previous note, we looked at the company’s background. In this note, we talk about the company’s performance and share our quick thoughts on valuation.

Severfield’s H124 results highlighted profit growth despite declining revenue, and management continues to expect full-year results to be in line with previous guidance. The total order book has also remained at elevated levels despite the loss of a large studio contract, highlighting the quality of future work in the UK and Europe, and that it is a key indicator of future earnings visibility. The FY24e P/E rating of 7.0x is comfortably below the long-term average of c 10x, implying some risk is discounted in the rating. The stock yields nearly 6%, which is an added attraction.