In today’s briefing:
- Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability
- Discussing How We Should Time the KEPCO E&C Block Deal
- 2022 High Conviction – Recruit: More Downside Ahead with Normalisation of Recruitment Markets
- Samsung C&T and Hyundai E&C: Two Main Beneficiaries of Neom (World’s Biggest Construction Project)
- Beijing Capital Intl Airport (694 HK): Preparing to Take Off
Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability
- An article this morning in the Yomiuri suggested JIC was bidding, even though they have not been in any “lists of 8 bidders” I have seen. The market yawned.
- An article this evening says bidders are offering “up to ¥7,000/share” but there is a range of pricing and conditions. Not surprising, but we know little.
- Shareholder structure matters. This has been event-y for a long time so I expect not many new buyers are ready to come in. This just shifts the range. And risk.
Discussing How We Should Time the KEPCO E&C Block Deal
- Since KEPCO announced the sale of its stake in KEPCO E&C, this will happen. But the question is when, and the market was betting that it would not happen immediately.
- But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.
- KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.
2022 High Conviction – Recruit: More Downside Ahead with Normalisation of Recruitment Markets
- Recruit Holdings (6098 JP) shares have declined 44.35% YTD as the company’s earnings have started normalising following easing off of Covid-19 conditions.
- 4QFY03/2022 results showed that the strong growth in earnings that the company experienced in FY03/2022 has started to weaken with normalisation of recruitment and staffing markets.
- With weakening earnings, we think there is further downside and Recruit will be a good short over the next few weeks.
Samsung C&T and Hyundai E&C: Two Main Beneficiaries of Neom (World’s Biggest Construction Project)
- Neom is the largest construction project in the world with total project size of nearly $500 billion.
- Neom has started to provide construction project awards for key projects in 1H 2022. Hyundai E&C and Samsung C&T consortium recently won a project estimated at $1 billion for Neom.
- Samsung C&T and Hyundai E&C are two key companies in Korea that will be long-term beneficiaries of the Neom futuristic city construction in Saudi Arabia.
Beijing Capital Intl Airport (694 HK): Preparing to Take Off
- Share price of Beijing Capital International Airport (BCIA) (694 HK) underperformed that for Air China Ltd (753 HK) by wide margin in this year, which we believe is not justified.
- Removal of lockdowns in various districts in Beijing and the revival of international passengers will be the major driver for BCIA to close the valuation gap.
- The gradual relaxation of inbound international passengers at Beijing and the potential for a full border opening in early next years are the catalysts for BCIA’s performance.
Before it’s here, it’s on Smartkarma
