In today’s briefing:
- SK Square + SK Networks Merger Swap: A Guide to Pre-Merger Arb Spread Calculations
- Ecocare Indo Pasifik (HYGN IJ) – Hygiene Is a Secular Growth Story in Indonesia
- The Beat Ideas- Ramkrishna Forgings: A Strategic Growth Opportunity
- Grab Holdings (GRAB US) – Facing Off the Competition
- Kyodo Printing (7914 JP): Coverage Initiaion
- The AZEK Company Inc.: The 5 Reasons Why We Are Optimistic About Them! – Financial Forecasts
SK Square + SK Networks Merger Swap: A Guide to Pre-Merger Arb Spread Calculations
- SK Square’s market cap exceeds SK Networks’ by over 10 times, qualifying this merger as small-scale. Thus, only SK Networks needs shareholder approval and grants appraisal rights solely to shareholders.
- The current arbitrage spread for SK Networks’ appraisal rights is 1.95%, and for the swap, it’s 4.16%. These are nominal values excluding trading costs and taxes.
- Today’s SK Square and SK Networks prices reflect arbitrage spreads. Yesterday’s 8% spread widened, focusing on narrowing appraisal rights and swap spreads, essential before next week’s announcement.
Ecocare Indo Pasifik (HYGN IJ) – Hygiene Is a Secular Growth Story in Indonesia
- Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
- The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry.
- Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on.
The Beat Ideas- Ramkrishna Forgings: A Strategic Growth Opportunity
- Rising exports, as it has higher margins and Growth in Non-Auto sectors
- Acquisition of ACIL, JMT auto, TSUYO, and Multitech Auto will drive revenue
- Reducing dependency on a single product or categories and single customer
Grab Holdings (GRAB US) – Facing Off the Competition
- Grab Holdings (GRAB US) continues to face off the competition with product-led initiatives which continue to gain traction, improving retention rates, and increasing user spend and frequency.
- Competition from new players in Singapore is evident but given Grab’s market position, which allows it to virtually guarantee driver’s daily income, whilst competition often affects smaller players more.
- Grab Holdings (GRAB US) continues to reinvest excess margins in growth but the real kicker will come next year once new product initiatives fully take hold.
Kyodo Printing (7914 JP): Coverage Initiaion
- In FY03/24, revenue was JPY97.0bn (+3.9% YoY), operating profit was JPY1.6bn (+103.5% YoY), recurring profit was JPY2.1bn (+61.6% YoY), and net income attributable to owners of the parent was JPY1.5bn (+19.3% YoY). Information Security earnings expanded due to a recovery in demand for transportation IC cards as inbound demand increased with the end of the COVID-19 pandemic.
- On the other hand, operating loss in Information Communication increased due to lower demand for publication printing.
- Kyodo Printing’s full-year forecast for FY03/25 calls for revenue of JPY104.0bn (+7.2% YoY), operating profit of JPY3.1bn (+96.6% YoY), recurring profit of JPY3.6bn (+72.8% YoY), and net income attributable to owners of the parent of JPY3.3bn (+117.4% YoY).
The AZEK Company Inc.: The 5 Reasons Why We Are Optimistic About Them! – Financial Forecasts
- The AZEK Company reported robust performance for the second quarter of fiscal 2024.
- The company’s ability to outperform market expectations stemmed from strong residential segment growth, strategic channel partnerships, and innovative product offerings.
- This performance has led The AZEK Company to raise its fiscal year outlook for both net sales and adjusted EBITDA.
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