In today’s briefing:
- Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
- Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book
- Daikin – Material Costs Look to Be Impacting Margins
- DAX Index: Quiddity Leaderboard for March 2022 (2.0)
- China Everbright Environment (257 HK): Roaring in the Year of Tiger!
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- HG Infra Engineering: Strong Execution Led Operating Beat
- Grindwell Norton: Mixed Performance
- Timken India: Decent Set of Operational Numbers
- Astral Ltd: Robust Performance with Market Share Gain Continues
Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
- Another quarter, another Toshiba Medium Term Plan as activist investors keep sending management back to the drawing board until they come back with a privatisation.
- Except there is still no sign of any significant appetite among buyers and no sign that they would be allowed to go through with it even if there was.
- So Toshiba management shuffled a few deck chairs and the market yawned.
Meitetsu Transport (9077) Takeover – Parent “Stealing” Logistics Assets at 0.55x Book
- This should come as no surprise. Nagoya Railroad (9048 JP) is buying out minorities in logistics unit Meitetsu Transport (9077 JP).
- Given the shareholder structure, this can be done and squeezed out with not a single share tendered, but it’s ugly.
- Logistics REITs trade at 1.3-1.5x book. This is being done at 0.55x book where just 1.0x book for the warehouse assets would be more than the EV at Takeover Price.
Daikin – Material Costs Look to Be Impacting Margins
- Daikin 3Q results were mixed with revenue of ¥743bn (-2.2% QoQ, 21.3% YoY) looking strong but OP of ¥66.8bn, implying an OPM decline to 9.0% from 10.3% last quarter.
- Reported revenue was 6.0% higher than consensus while OP was 4.2% lower.
- The company revised its FY22 revenue guidance to ¥3,050bn (+4.1%) but OP was raised just ¥10bn to ¥310bn (+3.3%) which may disappoint.
DAX Index: Quiddity Leaderboard for March 2022 (2.0)
- DAX is a German blue-chip index that currently tracks the 40 largest companies listed on the Regulated Market of the Frankfurt Stock Exchange.
- The DAX Index is reviewed on a quarterly basis in March, June, September, and December.
- In this insight, we take a look at the potential constituency changes that can happen in the March 2022 review.
China Everbright Environment (257 HK): Roaring in the Year of Tiger!
- The FY21 result of China Everbright Environment (257 HK) (CEE) should look impressive and we see improvement in cash flow to relieve market concerns on leverage and financial position.
- New project addition is solid over the last three months, adding about 5% to operational project portfolio. Strong special purpose bonds issuance in 4Q21 and 2022 will fuel pipeline momentum.
- Valuations look undemanding at 4.1x PER and 0.65x P/B for FY22F; and by maintaining payout ratio at c.30%, dividend yields are at attractive 6.4% and 7.4% for next 2 years.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets rose with the S&P and Nasdaq ending 0.5% and 1.6% higher. Sectoral gains were led by Consumer Discretionary, up over 3%. US 10Y Treasury yields rose 7bp to 1.90%. European markets were lower with the DAX, CAC and FTSE down 1.8% 0.8% and 0.2%. Brazil’s Bovespa closed 0.5% higher. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.5% higher. Asian markets have opened mixed with HSI and Nikkei down 0.31% and 0.73% while STI and Shanghai are up 0.32% and 1.91% respectively. US IG CDS spreads were 1bp wider and HY CDS spreads were 9.5bp wider. EU Main CDS spreads were 3.1bp wider and Crossover CDS spreads were 14.3bp wider. Asia ex-Japan CDS spreads were 3.2bp wider also.
HG Infra Engineering: Strong Execution Led Operating Beat
- HG Infra Engineering is a Jaipur (Rajasthan) based infrastructure company having primary focus on roads and allied sectors
- Additionally, the company is actively looking to diversify itself by targeting railways, airport, and water infra segments
- Target Price and Valuation: We value HG Infra at a target price of Rs 885
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Grindwell Norton: Mixed Performance
- Grindwell Norton (GNL) is the market leader in the India abrasive market with ~26% market share.
- The segments include abrasives (contributing ~57%), ceramics & plastics (33%) and IT services & others (10%).
- Target Price and Valuation: We value GNL at Rs 2035 i.e. 55x P/E on FY24E EPS
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.
Timken India: Decent Set of Operational Numbers
- Timken India is into manufacturing, distribution and sale of antifriction bearings, primarily tapered roller bearings, cylindrical roller bearing and other bearing components and accessories
- They are also in power transmission product brands & partner with renewable energy companies to power some of world’s largest wind mills
- Target Price and Valuation: We value Timken at Rs 2405 i.e. 48x P/E on FY24E EPS
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.
Astral Ltd: Robust Performance with Market Share Gain Continues
- Astral Ltd (ASTRAL) reported a healthy set of numbers for Q3FY22 in both pipes and adhesives, despite the inflation in raw material prices
- Consol. revenue/EBITDA/PAT grew 22.4%/2.9%/3.2% YoY, respectively, in-line with our estimates of 20%/0.6%/1.6% YoY
- Revenue for Q3FY22 came in at INR1099cr, led by the healthy performance of the pipes business(up ~24% YoY).
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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