In today’s briefing:
- Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value
- WISE Secondary Cell Rebalancing (TIGER ETF): Long/Short Tradable Names
- VIX Index Shows Trouble Ahead
- Dongfang Electric (1072 HK): Beaten Down Too Excessively
- Japan’s Governance: Article on the Composition of the Board of Directors of JTEKT Corporation (6473)
- PSL: Short-Term Outlook Is Lack of Interest, but Positive for Long-Term
Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value
- Yangzijiang Shipbuilding (YZJSGD SP) aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.
- YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.
- This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.
WISE Secondary Cell Rebalancing (TIGER ETF): Long/Short Tradable Names
- Next Thursday, the rebalancing trading of the WISE Secondary Cell Index will occur. The current AUM is ₩1.26T, and the AUM has slightly increased in the last two weeks.
- Six names (2 Longs & 4 Shorts) are screened: SK Innovation, LG Energy Solution, Posco Chemical, SKC Co Ltd, Iljin Materials, & Solus Advanced Materials.
- Considering the 20-day price returns, long/short basket trading seems valid as the long targets have relatively outperformed. However, since Solus Advanced Materials is short-restricted, we need to exclude it.
VIX Index Shows Trouble Ahead
- The VIX Index has turned up after declining by the same magnitudes as the previous two occasions
- This warns of another leg up over the coming days and weeks
- As a consequence it is a sign of renewed weakness on the S&P 500
Dongfang Electric (1072 HK): Beaten Down Too Excessively
- We think the recent price weakness of Dongfang Electric (1072 HK) is overdone, and there is strong value proposition on the stock based on its current multiples.
- DEC’s orderbook has well covered in the next two years, while we see cost management measures will help mitigating the pressure on margin.
- It is well positioned to capture the wind power boom (26% of FY21 revenue) and remains the prime beneficiary of China’s hydrogen economy and pumped storage demand in the longer-term.
Japan’s Governance: Article on the Composition of the Board of Directors of JTEKT Corporation (6473)
- I considered the article reported by Nikkei, “Halving the Number of In-House Directors to Three, Equal to Outside Directors. It was misleading because it didn’t consider the board composition.
- This change in the board composition is merely a measure to meet the listing criteria of prime market means and will not immediately lead to improved transparency of the board.
- It must be said that there are numerous issues to be improved for the Company, looking into the corporate practices in detail of the company.
PSL: Short-Term Outlook Is Lack of Interest, but Positive for Long-Term
- We downgrade PSL to HOLD rating while trim target price to Bt16.0 (Previous TP:Bt21.20) derived from 1.5xPBV’22E, Asia-ex-Japan transportation sector. We believe peak point of the market upcycle
- We anticipate a slowdown in demand for dry bulk commodities trading to continue at least until 1H22, which was mainly pressured by tension between Russia-Ukraine and China city lockdown.
- Supply side in short-term will still benefit from trend of containerized cargoes and issue over port congestion, but these factors are likely to fade in 2H22
Before it’s here, it’s on Smartkarma
