Daily Brief Industrials: Toyo Construction, Hainan Meilan International Airport, Tryt Inc, J&T Global Express, Cintas Corp, Norcros PLC and more

• The Nikkei has an article today with details of an interview with new Toyo Construction (1890 JP) Chairman Yoshida and President Obayashi. There will be a 2-3 month governance review.
• It will review decision-making process, “profit management” (利益管理), and business investment decisions (事業への投資判断).  Chairman Yoshida had a quote on neutrality on a YFO proposal. My wording there was carefully chosen.
• The President also said they expect ongoing synergies with Infroneer, and will maintain MTMP/Mitsui OSK Partnership management plans. Their words were chosen carefully too. 

• Back On 29 September 2019, Hainan Meilan International Airport (357 HK) entered into a subscription agreement with Hopu-affiliate Aero Infrastructure, for 200mn new H shares at HK$4.69/share.
• That issuance failed as CSRC approval was not secured by the Long Stop. Hopu reckoned HMIA reneged on its duties to secure approval and lodged a notice of arbitration.
• HKIAC recently agreed and opines HMIA did not use its best endeavours to complete the subscription. Hopu is seeking up to HK$6.962bn in compensation. Quite the overhang.

• TRYT Group is engaged in job placement and temporary staffing in the medical and welfare fields. The company has filed for an IPO and plans to raise around $450m.
• The company’s top line has continued to expand; however, margins have continued to narrow down over the last 3-4 years.
• We remain concerned over the company’s growth prospects and would only recommend subscribing if the IPO is priced attractively.

• In this insight, we examine J&T Global Express (1936374D CH)‘s operation in SE Asia, where it’s the region’s dominant player, with market share of 22.5% by volume 
• We profile SE Asian demand and supply and compare these to the development of China’s express industry, acknowledging the key role Alibaba (ADR) (BABA US) has played there
• We also present a framework for estimating the value of J&T’s SE Asian operation by identifying the most appropriate comps and EV valuation multiples

• Cintas managed to exceed analyst expectations in terms of revenue as well as earnings.
• The Uniform Rental and Facility Services segment experienced solid organic growth driven by increased volume and new customer acquisitions.
• The company’s First Aid and Safety Services segment revenue grew 16.4% organically, driven by strong demand for first aid products and services, as well as training and compliance solutions whereas its All Other segment revenue grew 14.7% organically, driven by growth in fire protection services and direct sale uniform businesses.

Norcros’s final results highlighted a solid FY23 performance, and although we have reduced our estimates to reflect a weaker macro outlook, we believe Norcros has an excellent base to evolve its strategy, which should allow it to unlock significant market share opportunities. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We have trimmed our valuation from 252p/sh to 246p, implying c 50% upside.