Daily Brief Industrials: Yang Ming Marine Transport, Kawasaki Heavy Industries, Baimtec Material , Quess Corp Ltd, Environmental Group, bpost SA, Duskin Co Ltd and more

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
• The base date for the December 2024 review was 25th November 2024. However, after the base date, the index selection methodology has been changed.
• As a result, we are revising our expectations for index changes and flow expectations.

• The recent pull-back in the share price of KHI provides a cheap entry point into the defense spending thematic
• KHI’s defense revenues are projected to soar by 40% to ¥406 billion in FY24, outpacing industry leader MHI’s 20% growth
• KHI and MJI to benefit from Japan’s defense spending doubling to 2% of GDP by 2027 and ¥43 trillion ($320 billion) earmarked over five years. 

• The December 2024 index review results for the CSI National Defense Industry Index were announced after market close on Friday 29th November 2024.
• There will be seven changes  for the CSI National Defense Industry Index. 
• In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance.

• Quess Corp Ltd (QUESS IN) will spinoff into 3 different companies, each representing a business vertical of its consolidated operations. All three companies are expected to be listed during Q1FY26.
• It has received approval from the stock exchanges and is now awaiting the go ahead from National Company Law Tribunal (NCLT).
• Improving business performance and sum-of-the-parts valuation of the three separate listed businesses indicate potential upside from the current valuation.

• Core business driving increasing recurring revenue profile: Strong growth history with recent successful conversion to recurring revenue – now 50%+ of the business’ revenue – provides more visible earnings certainty.
• Recent history of solid growth is set to continue in core operating segments, while commercialising water treatment technology is option for potential upside in the stock.
• Cash generative, profitable, and capital-light business model: Energy (boilers) and Baltec (exhaust systems) in particular provide cash generative and profitable support for the business to prosecute building out its suite of environmental engineered solutions.

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• In this edition: • Unilever | confirms its intention to sell off certain local brands • bpostgroup | CEO stresses sense of urgency for a quick transformation • Black Friday update | iDEAL transactions on Black Friday lower than last year’s

• The key takeaway from the Q1-2 FY3/25 result is that Duskin is making solid strides forward, although previous earnings projections appear to have been too ambitious.
• Management has experienced challenges in aligning earnings guidance with actual performance, and there is a risk over whether it can deliver the planned ROI on the major ¥21bn capex automation project at the Direct Selling Group.
• The Food Group continues to perform positively towards its full potential at ‘Mister Donut’, and we believe this segment will continue to be the core contributor to earnings growth.