Industrials: Toshiba Corp, Xiamen International Port H, Air China Ltd (H), Bangkok Aviation Fuel Services, Dilip Buildcon Ltd and more

• Since Toshiba reported lacklustre earnings and guidance, there has been a steady flow of articles in the press about the privatisation process going on behind the scenes.
• On 25 March, Toshiba let it be known a privatisation process would start. On 31 March, Bain gave notice it would participate. Toshiba has been in talks since 21 April
• First round bids were due 30 May, and 10 total submissions were made, with 8 privatisation proposals proffered. Now we wait…

• Toshiba provided an update today on its management policy and the status of discussions with potential investors. 
• The management targets unveiled looked plausible but rather optimistic while the only real new information on the potential privatisation was that 8 bids had been submitted. 
• In the end the most interesting takeaway for us was that Toshiba Tec would play a key role in Toshiba’s data business.

• Xiamen International Port H (3378 HK) announced a pre-conditional privatisation offer from Xiamen Port Holding at HK$2.25 per H share + final dividend of RMB0.021 per share (ex-div: 15 June). 
• The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.  
• The offer is attractive in comparison to historical share prices and multiples. We think that the privatisation proposal will likely succeed. At the last close, the gross spread is 55.2%.

• National flag carrier Air China Ltd. (601111.SH) is planning to take control of Shandong Airlines as part of a bailout of the debt-ridden regional airline, it said this week.
• The state-owned giant is stepping in as its smaller peer suffers along with the rest of the country’s civil aviation industry, with companies racking up huge losses due to the Covid-19 pandemic.
• Air China is already the second-largest shareholder of Shandong Airlines Group Co. Ltd. with a 49.4% stake

• Maintain BUY recommendation for BAFS with a target price of Bt34.0. Business performance are expected to turn profit by 3Q22, driven by recovery in aviation fuel services volume along
• BAFS report 1Q22 net loss at Bt77m, the smallest loss in the past eight quarters. The result came out slightly above our expectation.
• The least loss in the past eight quarters supported by dividend income recognition worth Bt50m from power plant business in Japan (acquired in 4Q21)and an increase in aviation fuel volume

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