In today’s briefing:
- Toyo Construction (1890) Tender Situation Indeed Getting Funky
- Air New Zealand Rights and Possible Shortfall – Delayed Boarding but Its Priced to Fly
- 51job (JOB US): EGM On The 27 April
- Hazama Ando (1719 JP) – Big Buyback Is Set & Forget
- JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Mar 2022
- Sinotrans (598 HK): Record FY21, Takeaways from Post-Result Call
- Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value
- Channel Insight #30 – Kajaria, Indigo Paints, Finolex Pipes
- First Local Aerospace & UAM (Urban Air Mobility) ETF in Korea
Toyo Construction (1890) Tender Situation Indeed Getting Funky
- Toyo Construction (1890 JP)‘s Independent Committee thought this deal was being done too cheaply, but they signed off on it. I thought it was cheap too.
- I thought that a leading activist in the name would think so too, and try his hand because of his running start of 7+%. Huge volume Day1 sparked wider interest.
- It has traded every day so far above terms so far but on the first full day of trading, the activist Murakami-san bailed. That changes things, but… it’s still funky.
Air New Zealand Rights and Possible Shortfall – Delayed Boarding but Its Priced to Fly
- Air New Zealand (AIR) aims to raise around US$827m (NZ$1.2bn) via a renounceable rights issue.
- The deal has been in the works for months and has been put off multiple times before owing to COVID-19 induced New Zealand (NZ) lockdowns.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
51job (JOB US): EGM On The 27 April
- On the 1 March, 51 Job Inc (JOBS US) said it had entered into a revised merger agreement at US$61.00/share, 22.8% down from the initial terms.
- 51job has now announced that it has called an extraordinary general meeting of shareholders to be held on April 27.
- Despite regulatory opacity, this transaction appears done. Separately, 51job’s FY21 financials will be released tomorrow.
Hazama Ando (1719 JP) – Big Buyback Is Set & Forget
- Hazama Ando spent a long time coming out of its doldrums. In February 2020, it started to improve. It started a buyback, scarfing up 22% of volume in 6 weeks.
- Later in 2020, another, and in 2021, another still, now with the last one finished in a hurry, they announced another. They’ve bought back stock 17 months in a row.
- It’s not clear the master rules of the buyback, but historically they have been reasonably aggressive. I expect that continues.
JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Mar 2022
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-March 2022.
Sinotrans (598 HK): Record FY21, Takeaways from Post-Result Call
- Sinotrans (598 HK) has a record year in FY21 with recurring earnings increased 44% YoY. Margin for 4Q21 has shown some improvements against 9M21.
- Management is generally cautiously optimistic for this year, but also highlighted weaker visibility for the outlook given high base, sporadic COVID-19 outbreak and geopolitical uncertainties.
- We expect slower earnings growth in FY22, with e-commerce segment being the best-performing. We see lesser credit and asset impairments, and it is cheap at 3.7x PER and 10% yield.
Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value
- Shenzhen International (152 HK) posted 11% profit decline for FY21, with Shenzhen Airlines the main drag. Stripping this and one-off items out, its bottom line would have grown by 46.6%.
- Logistics growth pipeline is highly visible, and this adds to potential gains from logistics park transformation and strategic offload of matured and suitable projects through REIT or private fund.
- The stock remains a deeply undervalued asset play at just 0.48x P/B. Its willingness to share gains with investors has put its dividend yield at 10.4% on current share price.
Channel Insight #30 – Kajaria, Indigo Paints, Finolex Pipes
- We speak to channels of Kajaria Ceramics (KJC IN) , Indigo Paints (INDIGOPN IN) & Finolex Industries (FNXP IN) to understand the current operating environment.
- For Kajaria Ceramics (KJC IN) volume outlook is cloudy. Paint customers are opting for some down trading but within organised players only.
- Improved product quality at competitive price is aiding Finolex Industries (FNXP IN) to gain some market share.
First Local Aerospace & UAM (Urban Air Mobility) ETF in Korea
- On 29 March, Hanwha Asset Management launched the first local stocks-focused, aerospace & UAM (Urban Air Mobility) themed ETF named ‘ARIRANG iSelect Aerospace & UAM ETF’.
- The share prices of the 18 stocks included in this ETF are up on average 6% YTD, outperforming KOSPI which is down 7.8% in the same period.
- As of 30 March, iSelect Aerospace & UAM ETF had a market cap of 10.1 billion won which is likely to increase much higher in the coming months.
Before it’s here, it’s on Smartkarma
