In today’s briefing:
- Siemens Energy/Siemens Gamesa: What Now?
- A Pair Trade Between Doosan Corp & Doosan Enerbility
- Shenzhen Expressway (548 HK): Cautiously Optimistic
- Rites: Robust Order Book & Execution Prowess to Regain Momentum; Retain BUY
- NESCO – Gradual Revival in IT Park & F&B Amid Opening up of Economy
Siemens Energy/Siemens Gamesa: What Now?
- Siemens Energy seems to have the backing of both BlackRock and Norges, and could then count on 72.55% of the votes vs. 75% approval at EGM needed for delisting.
- The shares have seen high purchasing activity since the offer announcement (€158 million average turnover since Monday). Gross spread is 1.5%, 3.7% estimated annual return (assuming settlement on 24 October).
- One could sell part of the shares if the share price rises above the offer price and await a possible sweetening, and tender the rest during the acceptance period.
A Pair Trade Between Doosan Corp & Doosan Enerbility
- There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short).
- First, share prices of two companies have diverged too much this year. Second, Doosan Corp is currently trading at a 76% discount to its NAV, which is excessive.
- Third, as investors have poured capital into nuclear power themed Doosan Enerbility, they have neglected its parent Doosan Corp.
Shenzhen Expressway (548 HK): Cautiously Optimistic
- Shenzhen Expressway Co H (548 HK) guided that many drivers are presented for the rest of the year to support growth, after a 24% YoY decline in 1Q22 net profit.
- Toll road business should benefit from organic growth and project completions, while clean energy and waste treatment businesses will experience astronomical growth from capacity acquisitions.
- There exists room to leverage up for growth as liabilities-to-asset ratio is still 11pp below its tolerance level of 65%. Besides below-average PERs, FY22F yield of 10% is attractive too.
Rites: Robust Order Book & Execution Prowess to Regain Momentum; Retain BUY
- RITES Ltd. (RITES) reported a good set of Q4FY22 numbers with revenues of Rs 766 Cr (up 20% YoY), supported by the higher export sales, EBIDTA of Rs 204 Cr (up 10% YoY), and APAT of Rs 141 Cr (down 1% YoY).
- The company registered EBITDA Margins of 26.7% in Q4FY22 (our estimate: 26.8%) as against 29.2% in Q4FY21
- We roll over our estimate to FY24 and retain a BUY rating on the stock, valuing the company at 11.5x FY24E EPS to arrive at a target price of Rs 275/share (Rs 305/share earlier), implying an upside of 10% from the CMP.
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NESCO – Gradual Revival in IT Park & F&B Amid Opening up of Economy
- Consolidated revenue decreases by 2.5% QoQ but increases by 21.3% YoY to Rs910.7mn in 4QFY22
- NESCO reported 4QFY22 revenue of Rs910.7mn, up 21.3% YoY but down by 2.5% QoQ.
- IT Park segment’s revenue stood at Rs705mn, up 15% YoY and 3% QoQ.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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