Daily Brief Industrials: Shenzhen International, Bababos, J&T Global Express, Carr’s Group PLC and more

• Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
• Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
• Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.

• MSMEs play a big role in Indonesia’s economy. In 2019, the Indonesian government reported that there were 65.4 million MSMEs in Indonesia, constituting 60.5% of its GDP.
• But for many of these small companies across the region, digitalization is still a new concept, and this provides opportunities for big tech companies as well as startups to fill the gap.
• One such player is Indonesia-based Bababos, which targets SMEs in the manufacturing space. The startup operates a platform that matches these SMEs with suppliers of raw materials like steel, polymers, and chemicals.

• J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
• We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

FY23 trading has continued according to the early August update, demonstrating the benefit of two unrelated activities at Carr’s Group: the Engineering division’s strength countering the weakness seen in the Speciality Agriculture business. Both have underlying longer-term growth attractions to drive earnings, along with the recovery potential in the agriculture end-markets.