Daily Brief Industrials: Tokyo Metro, Samsung C&T, Polycab India , Derichebourg SA, SPX Technologies , Elbit Systems and more

• Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
• In Tokyo Metro (9023 JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on mid-tier revenue growth, low revenue diversification, the highest leverage among peers and a sizeable post-IPO share overhang. 

• NPS has filed a lawsuit against Samsung Group Chairman Lee Jae-Yong and others involved in the merger of Samsung C&T (028260 KS) and Cheil Industries nearly nine years ago.
• NPS is trying to recover damages estimated at up to 675 billion won. 
• If NPS is able to win in this lawsuit, it could result in other minority shareholders launching their own lawsuits which could further raise concerns on Samsung C&T. 

• Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
• Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
• In this note, we talk about the not-so-positive aspects of the deal.

• We spoke to cable distributors and industry experts to understand any concerns regarding industry-wide inventory levels and to gauge the current demand environment.
• Stocks in focus include Polycab India (POLYCAB IN); KEI Industries (KEII IN) & R R Kabel (2333180Z IN).  
• Overall industry business momentum remains strong, project delays and competition warrant attention. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Derichebourg’s ESG as “Adequate”, in line with the scores for the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Strong”. 

We note that the company is active in the recycling industry, which is generally a positive driver.

• SPX Technologies has demonstrated robust growth and strategic execution in its Q2 2024 results, prompting an increase in full-year guidance.
• The company’s business segments, particularly the HVAC (Heating, Ventilation, and Air Conditioning) and Detection & Measurement, have shown substantial growth and profitability improvements, driven primarily by increased operational efficiencies, strategic acquisitions, and strong demand in diverse markets such as data centers, health care, and industrial facilities.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Zacks Small-Cap Research Note for Elbit Systems (ESLT)