In today’s briefing:
- JR West (9021 JP) – Shareholder Structure Means Large-Ish Buyback Could Have Impact
- AZ-Com Maruwa Launches Hostile TOB on Chilled & Frozen Logistics (9099) – Expect More Fun To Come
- Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa Calls the Board’s Bluff, Launches the Offer
- The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid
- Saigon Cargo Services (SCS VN): Good Q1 2024 in the Bag, More Catalyst To Come
- TRS: Packing an Earnings Rebound
- UGRO: 1Q Review: Remain Calm & Conservative; Reiterate Buy, $8 PT
- Base Carbon, Inc. – Continued Execution Across All Projects
JR West (9021 JP) – Shareholder Structure Means Large-Ish Buyback Could Have Impact
- Yesterday, West Japan Railway Co (9021 JP) announced FY23 earnings, a higher dividend, an update to the Medium-Term Management Plan (p10~), and a Buyback.
- Short & Sweet: Revenues were +17.2%yoy, OP +114.1%, NP +1.6%. OPM was 11.0% and ROE 9.2% (both best since FY18). Guidance is Revenue up, OP down, NP tiny up.
- The new FY25 (Mar26) OP guide in the MTMP is the old Mar28 target (mostly inbound tourism-driven). The Buyback is biggish. It is worth looking at the details.
AZ-Com Maruwa Launches Hostile TOB on Chilled & Frozen Logistics (9099) – Expect More Fun To Come
- Chilled & Frozen Logistics Holdings (9099 JP) had been sending out questions, and trying to get AZ-Com Maruwa Holdings (9090 JP) to delay the start until at least late-May.
- AZ-Com Maruwa answered questions (first and second set) and on the 24th, C&F asked AZ-Com to extend. They did not extend. AZ-Com announced the Tender Offer at ¥3,000 today.
- C&F responded today saying the TOB is launched without C&F Board approval. Then they said some other things that might be disclosed when C&F’s Board presents its Target Opinion.
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa Calls the Board’s Bluff, Launches the Offer
- AZ-Com Maruwa Holdings (9090 JP) has satisfied the precondition for its hostile Chilled & Frozen Logistics Holdings (9099 JP) JPY3,000 offer. The offer closes on 17 June (31 business days).
- AZ-COM Maruwa has called the Board’s bluff by providing sufficient time (extending the offer period from 20 to 31 business days) for a white knight to lob a competing bidder.
- While a bump is probable, the shares already factor in a significant bumpitrage premium. A potential bump has a good chance of being lower than the last close.
The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid
- Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%.
- Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
- Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact.
Saigon Cargo Services (SCS VN): Good Q1 2024 in the Bag, More Catalyst To Come
- Sai Gon Cargo Service (SCS VN) reported revenues/profits up 31%/30% YoY. Net cash on the balance sheet ended the quarter at 15% of market capitalization (approximately 300 mn USD).
- Catalysts we cited in our insight Sai Gon Cargo Services (SCS VN) Update: Price Hikes, Strong Q1 2024 Operational Numbers are playing out, resulting in earnings upside in the future.
- Trading at 12.5x FY24 PE and 6.8% dividend yield, this is an excellent micro-cap worth exploring for exposure to the Vietnam market.
TRS: Packing an Earnings Rebound
- TRS reported first quarter results confirming a turnaround in the packaging segment could be underway
- Packaging is TRS’s largest business segment and had undergone a restructuring last year. The increase in sales has done little to impress investors
- TRS reported first quarter sales of $227.1 million compared to our estimate of $216.2 million. The biggest driver for the outperformance was the packaging segment
UGRO: 1Q Review: Remain Calm & Conservative; Reiterate Buy, $8 PT
- We are reiterating our Buy rating and $8 price target and conservatively leaving our 2024 and 2025 revenue and Adjusted EBITDA projections unchanged after urban-gro registered upside in 1Q top and Adjusted EBITDA and reiterated prior 2024 guidance.
- That said, with the Drug Enforcement Agency approving the reclassification of cannabis from a Schedule I to Schedule III drug, and the potential for Florida to approve recreational cannabis usage in November, we believe our 2H24 and especially 2025 projections could prove highly conservative.
- As such, we are reiterating our Buy rating and $8 price target.
Base Carbon, Inc. – Continued Execution Across All Projects
- Recent update highlights a proven and replicable cash- generating business model.
- In the two-plus years since its founding, Base Carbon has successfully sourced, invested, and developed three projects that are on time, on budget, and are either producing credits or will be in the coming quarters.
- Credit sales from Vietnam have already generated ~$18 million in cash, Rwanda has produced its first credits, and the Indian ARR project is on track to deliver its first credits in early 2025.
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