Daily Brief Industrials: Trancom Co Ltd, Ventia, Young Poong Precision, Amaero International Ltd, JET2, Epwin Group PLC, Enviri and more

• Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one. 
• But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
• Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.

• Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
• Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
• There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.

• Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively. 
• The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples. 
• While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.   

• Our NAV valuation of Young Poong Precision suggests NAV of 325 billion won or NAV per share of 20,657 won which is 70% higher than current price.
• Young Poong Precision tender offer could become one of the most important case studies for future tender offers in Korea. 
• The biggest component of the NAV is Young Poong Precision’s 1.85% stake in Korea Zinc which is worth 255 billion won (133% of its current market cap). 

• RaaS Research Group has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following the completion of an upsized institutional placement to raise $25m at $0.35/share to fund capital equipment purchases and further fit out its Tennessee facility.
• The raise was not unexpected; we had factored in a $22.5m raise at $0.34/share in our modelling before 30 September.
• We have incorporated the raise into our forecasts with no impact on current numbers.Post raise, the company will have pro-forma cash of approximately $37.5m to fund the capex programme ahead of ramping up production and transitioning to commercial sales.

• Jet2 stock has been accumulating over the last 6 months, trading at a lower valuation compared to competitor BKNG
• Company has shifted focus to asset-light package holiday earnings, with majority of flight passengers now going on package holidays
• Despite being range-bound since COVID-19, Jet2 has continued to grow and execute its plans, offering an attractive investment opportunity with low earnings multiple and smart fleet choices by founder

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Epwin Group’s H124 results were robust, with management navigating inflationary pressures well. That said, we have reduced our revenue estimates reflecting the H1 performance, maintained underlying operating profit estimates and raised EPS forecasts due to the impact of the increased share buyback programme. Long-term, well-established growth trends imply that Epwin is well-placed to leverage increasing demand for its energy-efficient and low-maintenance building products. The company offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 9.3x, below the long-term average of 10.5x, and yields more than 5%. The extended share buyback programme should help support the share price.

• Enviri (NVRI) is an environmental services company undergoing a transformation to increase shareholder value
• Despite being overleveraged with near-term earnings challenges, the company has long-term growth opportunities in the environmental sector
• Insider buying and self-help initiatives are in progress, making now an opportune time to invest in the company.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.