In today’s briefing:
- Toshiba – Privatisation Rebuttal and Then a Change in CEO…
- FTSE All Cap Korea Rebalancing: VEA (Developed Ex-US All Cap)-Triggered Flow Estimations
- MTR Corp (66): Lower Traffic from Lockdown.
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Misumi Group (9962): Approach with Caution
- GXO Logistics/Clipper Logistics: Recommended Cash & Stock Offer
- PSP Projects: Embarking On the Next Phase of Growth
Toshiba – Privatisation Rebuttal and Then a Change in CEO…
- Yesterday Bloomberg published an interview with Toshiba CEO Satoshi Tsunakawa where he effectively said a privatisation was not going to happen.
- Today, Toshiba announced that Tsunakawa and his deputy, Mamoru Hatazawa would be resigning effective immediately.
- What an interesting coincidence… one which could make shorting Toshiba quite attractive.
FTSE All Cap Korea Rebalancing: VEA (Developed Ex-US All Cap)-Triggered Flow Estimations
- The ETF that directly impacts the flow of Korean stocks within the FTSE indices is the Vanguard Developed Markets ETF (VEA), which tracks the FTSE Developed All Cap ex-US.
- The FTSE rebalancing impact on Korean stocks has shown a pattern of bringing additional flow in the same direction as the VEA-triggered flow.
- So, we may want to consider basket trading of those stocks with a more substantial level of passive impact x ADTV towards March 18.
MTR Corp (66): Lower Traffic from Lockdown.
- Zero COVID policy calls for another lockdown in Hong Kong as the number of cases rises.
- A reduction in the number of services will help to cushion the blow but may not help the overall grim prospect of the firm.
- Lower traffic is negative for MTR Corp (66 HK)transport revenue as well as the commercial business from the station which combined make up to 50% of total revenue.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets were mixed on Monday with the S&P Nasdaq ending 0.2% lower and Nasdaq ending 0.4% higher. Sectoral gains were led by Energy, up 2.6%. European markets were lower – DAX, CAC and FTSE were down 0.7%, 1.4% and 0.4%. US 10Y Treasury yields eased 5bp to 1.85%. Brazil’s Bovespa was closed on account of Carnival holidays. In the Middle East, UAE’s ADX was up 2.2% and Saudi TASI was up 1.4%. Asian markets have opened with a positive bias – Shanghai, STI and Nikkei are up 0.3%, 0.8%, 1.5% and HSI was down 0.1% respectively. US IG CDS spreads widened 1.4bp and HY spreads were 6.1bp wider. EU Main CDS spreads were 3.1bp wider and Crossover CDS spreads were a 12.8bp wider. Asia ex-Japan CDS spreads were 4bp wider.
Misumi Group (9962): Approach with Caution
- The shares have dropped back nearly 30% and their valuation is now reasonable. Guidance looks reasonable, but recent sales and profit trends show weakness.
- Factory Automation, Die Components and the VONA e-commerce business have all recovered.
- A new era of higher profitability may be at hand, but in view of market and economic uncertainty, approach with caution.
GXO Logistics/Clipper Logistics: Recommended Cash & Stock Offer
- Consideration is 690p + 0.0359 new GXO shares, an implied equity value of £961 million. Multiples are 12.8x EV/Fwd EBITDA (vs. a median 11.3x for comparable M&A transactions) and 33.3x Fwd P/E.
- My TP for Clipper is 857p (DCF, WACC 9.5%, 9.0x 5y EBITDA exit, 1% perpetuity growth rate). The offer price seems fair, with 40% of synergies accruing to Clipper shareholders.
- This is a friendly deal with a compelling 49% premium. Considering GXO’s M&A experience, the merger should be successful. The spread (as of 28 February closing share prices) is 2.7%.
PSP Projects: Embarking On the Next Phase of Growth
- We initiate coverage with a BUY rating and value the company 10.5x FY24E EPS to arrive at a target price of Rs 620/share.
- We believe PSPPL is well-placed to take advantage of the government’s focus on infrastructure development
- Strong and diversified order book provides robust revenue growth visibility.
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.
Before it’s here, it’s on Smartkarma
