Industrials: Go Air Limited, Orient Overseas International, Biffa, ZTO Express Cayman Inc, Cahya Mata Sarawak and more

• GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia Industries (BRIT IN).
• Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
• In this note, we will talk about the positive aspects of the deal.

• OOIL’s (316 HK) macro uptrend remains intact but does exhibit some weak tactical signals for a pullback to the 200 support zone. 270 is the near sell zone.
• Buy volumes on the rise in late May showed a slowing pace and the recent sell down saw sell volumes pick up. Wedge support is due to come under pressure.
• RSI shows support pressure to break post uptick. WTI key levels to hold/break are 115 and 105 as pressure release valves.

• ECP offers 445p/share (37% premium, implied equity value is €1,361 million, implied EV is €1,939 million), subject to satisfactory due diligence. PUSU deadline is 5 July.
• The offer represents 1.3x EV/Fwd revenue, 8.8x EV/Fwd EBITDA and 28.4x Fwd P/E. Suez was taken at similar multiples: 1.5x, 8.1x and 27.4x respectively. My fair value estimate (DCF-based) is 426p.
• The equity value prior to approach was undemanding, and the shares are escaping the market sell-off. Gross spread as of 13 June is 8.9%. Recommendation is long BIFF LN.

• ZTO Express Cayman Inc (2057 HK) has outperformed industry volume growth in 1Q22 and such trend continues into 2Q22 with good ASP improvement and cost control. 
• Its strong operating cash flow and declining capex will lead to an accumulation of cash over the next few years, adding to the 1Q22 net cash position of Rmb4.1bn. 
• We think the stock’s underperformance against peers not warranted. With a below-sector earnings multiple, leadership position and successful business model, we consider ZTO a “Growth at a reasonable price”.

• GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia.
• Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
• In this note, we talk about the not so positive aspects of the deal.

• Tactical BUY maintained
• Deal completion by 4Q22
• No distribution to shareholders
• An opportune exit, in our view

CMS had, on 14 Jun, entered into a conditional share sale agreement (SSA) with OM Materials (S) for the disposal of its 25%-stake in both OM Materials (Sarawak) and OM Materials (Samalaju). The entire disposal proceed has been earmarked for future acquisitions/investments, capex and working capital. We make no change to our earnings forecasts and MYR1.27 TP (on 7x FY22E PER; -1SD of mean) pending deal completion.