In today’s briefing:
- SMC (6273) Buyback – Small Short Sharp
- Persol Holdings Placement – Selldown by Cross-Shareholder
- Nihon: False Recording of Sales Leads to More Than 40% Drop; Can Nihon Regain Investor Confidence?
- Liquid Universe of European Ordinary and Preferred Shares: February ‘22 Report
- ZZ CRRC Times Electric (3898): Electrification
- Pick of the Week: HG Infra Engineering Ltd
SMC (6273) Buyback – Small Short Sharp
- SMC Corp (6273 JP) announced better Q3 and an upward revision to still-below consensus for this year. Consensus is for up-and-to-the-right the next few years (but implied Q4 looks light).
- The company raised its dividend so now it is 1% yield.
- And the company announced a small but intriguing buyback. If you own the stock or trade in the space, it is worth understanding
Persol Holdings Placement – Selldown by Cross-Shareholder
- Kelly Services Inc A (KELYA US) aims to raise around US$200m via selling its 3.8% stake in Persol Holdings (2181 JP).
- Kelly Services mentioned that it was looking to end its cross-shareholding with Persol Holdings in its earnings announcement. The two share a JV in PersolKelly.
- In this note, we will run the deal through our ECM framework and comment on other deal dynamics.
Nihon: False Recording of Sales Leads to More Than 40% Drop; Can Nihon Regain Investor Confidence?
- Nihon M&A Center (2127 JP) reported 3QFY03/2021 results yesterday alongside publication of investigation report over false recording of sales contracts on the internal system between FY03/2019 to 2QFY03/2021.
- The company announced on 20th December 2021 that it has commenced an investigation over the above issue and postponed the announcement of its 3Q results.
- Revenue for 3QFY03/2021 increased 14.6% YoY to JPY10.85bn (vs consensus JPY12bn) while OP dropped 5.1% YoY to JPY4.0bn (vs consensus JPY6.0bn).
Liquid Universe of European Ordinary and Preferred Shares: February ‘22 Report
- Spreads have generally tightened across our liquid universe, 410 bps in the case of Volkswagen. Spreads in Sixt (45.7%) and Schroders (37%) are worth mentioning.
- Recommendations Long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken.
- Recommendations Long prefs / short ords: BMW, Grifols, Roche, Telecom Italia (takeover interest), Volkswagen.
ZZ CRRC Times Electric (3898): Electrification
- The new product in IGBT for NEV will be the main driver going ahead riding on the growing EV ecosystem in China.
- The recent sell-off provides a good entry point for new investors. For those who are already invested, it provides an opportunity to add at a better price.
- It is a lesser-known NEV name in China that is still trading at a lower valuation compared to the mega-cap names such as CATL and BYD.
Pick of the Week: HG Infra Engineering Ltd
- H.G. Infra Engineering Limited (HGIEL) – incorporated in 2003, is a Jaipur (Rajasthan) based infrastructure company
- Over the last 18 years, the company has successfully transformed itself into a primary road developer from a sub-contractor
- We recommend a Buy the stock for a target price of Rs 680 implying an upside of 11% from CMP.
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