In today’s briefing:
- Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO
- Auckland Airport Possible Placement – Will Be Very Well Flagged US$540m Block
- Takuma (6031) | AVI to Turn Waste into Wealth
- China CRSC (3969 HK): Uniquely Positioned with Strong Financials
- Dow Testing 1-Year Resistance at 34,280 Ahead of FOMC; Buy Ideas Within Manufacturing/Industrials
- SPY: Moderate Gains In Store?
Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO
- Today, YFO (WK1 Limited) filed an amendment to its Large Shareholder Filing saying it had increased its stake from 27.19% to 28.51%. GK Yamauchi No10 Family Office bought 1.32%.
- Almost immediately, Toyo Construction (1890 JP) said YFO had likely conducted an illegal act according to US Securities Exchange Act of 1934, Rule 14e-5. This is likely hogwash.
- YFO is upping its stake for a zero premium tender and Toyo is fighting old battles. And the stock chugs higher.
Auckland Airport Possible Placement – Will Be Very Well Flagged US$540m Block
- Auckland City Council plans to sell 7% of Auckland Intl Airport (AIA NZ) to fund its budget requirements for 2023-24.
- Auckland City Mayor has been talking about selling the stake since at least Dec 2022 and hence, the deal is already very well flagged.
- In this note, we will talk about the possible placement and other deal dynamics.
Takuma (6031) | AVI to Turn Waste into Wealth
- Takuma presents an undervalued investment opportunity with strong financials, and a robust balance sheet. The focus on environmental solutions position it to capitalize on the demand for carbon neutrality.
- The recent involvement of AVI Japan as activist investors adds an exciting catalyst to Takuma’s investment case. We expect AVI to work with management to unlock further value.
- Takuma’s management is targeting enhanced profitability by transitioning from a more volatile EPC model to a recurring revenue-driven approach centred on O&M. Attractive valuations underpin our bullish view.
China CRSC (3969 HK): Uniquely Positioned with Strong Financials
- China Railway Signal & Communication (3969 HK) (CRSC) has achieved good share price performance YTD, but we think there is more room to go for the rest of the year.
- We like its steady domestic growth, exposure to overseas recovery, strong order backlog, and net cash position. 1Q23 new contracts reached Rmb13.7bn, an impressive 35.8% YoY growth.
- Unlike the highly-geared infrastructure construction peers, CRSC’s net cash equals 52% of the share price. On such basis, its P/B of 0.7x relative to ROE of 9-10% is inexpensive.
Dow Testing 1-Year Resistance at 34,280 Ahead of FOMC; Buy Ideas Within Manufacturing/Industrials
- The S&P 500 has marginally surpassed the 4300-4325 area which we have anticipated would cap upside for 2023.
- As noted in our 6/6/23 Compass, we are vigilant at these levels given we expect inflation to remain elevated, but we cannot be bearishif the SPX is above 4165-4200
- Breadth has continued to improve within the Russell 2000, and the $IWM is approaching our first target of $190 following the breakout above $180. Also see breadth improving within SPX.
SPY: Moderate Gains In Store?
- The SPDR® S&P 500 ETF Trust is primed to receive support from lower implied risk premiums amid an interest rate slowdown from the Federal Reserve.
- However, a broad-based analysis suggests that the S&R 500 and the SPDR S &P 500ETF Trust are potentially undervalued.
- The S&P 500’s (SP500) year-to-date surge might have surprised many, as the talk of the town at the turn of the year was geared toward a sustained market drawdown until an interest rate pivot occurred.
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