Daily Brief Industrials: Timee Inc, IHI Corp, Adani Ports & Special Economic Zone, Simpson Manufacturing Co, Inc, Asia High Yield Bond Index, Acuity Brands, Severfield PLC, Resideo Technologies Inc, MillerKnoll and more

• Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the not so positive aspects of the deal.

• Japan’s rising defense budget and military collaboration with the US and Europe should support a high level of orders for the foreseeable future.
• Defense is the growth driver, but other divisions should hold up well due to the ongoing rationalization of operations.
• Profits should rebound this year and rise further in FY Mar-26, bringing the P/E down to 9X or less. The weak yen is a large positive. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Bharti Airtel
• Lippo Malls Indonesia Retail Trust
• Vedanta Resources

• Simpson Manufacturing Company showcased mixed results in its First Quarter 2024 financial performance amidst a challenging housing market landscape particularly marked by variability in the U.S. and Europe.
• The company reported a modest year-over-year decline in net sales totaling $530.6 million.
• Despite increased sales volumes in North America, which rose by 8% due to a flat U.S. housing market, broad gains were offset by the timing and calculation of volume discounts connected with previous price reductions.

• As we are entering the second half of 2024, inflation has remained sticky as expected.
• The lingering fear of a global recession has been mitigating rising shipping and production costs and, as a result, kept inflation in check.
• We see more opportunities in selected Chinese bonds in industries away from property and local government financing vehicle (LGFV) sectors and believe non-Asia emerging bonds offer better value.

• Acuity Brands, a leader in the lighting and building management solutions industry, showcased a robust fiscal second quarter for 2024, emphasizing solid execution across its operational and financial metrics.
• All segments of the business were reported to be contributing positively, with emphasis on the adjusted operating profit, margin expansion, and increased adjusted diluted earnings per share.
• The company has strategically aligned its portfolio, focusing on margin accretive products and efficient capital allocation to stimulate value creation.

The highlight of Severfield’s FY24 results was the 14% increase in underlying operating profit despite declining revenue. This gives a clue to the increasing quality of earnings as the company captures future projects and benefits from its internal digitalisation programme, Project Horizon. Furthermore, the Indian JV rapidly improved profit and is expanding capacity to meet growing demand. The balance sheet offers scope for both the £10m share buyback and potential M&A. Our forecasts are unchanged, and we introduce FY27 estimates. The 7.2x FY25e P/E is undemanding.

• Resideo Technologies Inc. reported its first quarter 2024 financial performance, showcasing an effective blend of strategic initiatives and operational adjustments aimed at long-term value creation and margin improvement, despite a backdrop of modestly declining revenue.
• The company’s revenue for the quarter stood at $1.49 billion, marking a 4% decrease compared to the previous year, primarily due to divestiture impacts.
• However, the adjusted EBITDA was relatively stable year-over-year, highlighting effective cost management and operational efficiency.

• EPS topped our estimate and consensus on margin strength.
• MillerKnoll posted 4QFY24 EPS of $0.67 versus $0.40 in 4QFY23 on continued margin strength even as the macro environment remains challenging.
• Adjusted EPS beat consensus of $0.54 and our estimate of $0.55.