Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Equity Bottom-Up

Tsingshan Holding Group / Equity Bottom-Up

<ul>
<li>A Chinese metal giant is scrambling to manage massive losses from shorting nickel futures after the metal went on an unprecedented rally.</li>
<li>Tsingshan Holding Group Ltd., one of the world’s biggest nickel and stainless steel producers, came under mounting pressure to meet margin calls for its short position</li>
<li>The price of the metal, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days</li>
</ul>


A Chinese metal giant is scrambling to manage massive losses from shorting nickel futures after the metal went on an unprecedented rally.
Tsingshan Holding Group Ltd., one of the world’s biggest nickel and stainless steel producers, came under mounting pressure to meet margin calls for its short position
The price of the metal, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days


Chinese Metal Giant Faces Heavy Losses on Wild Nickel Ride

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> is a fuel distribution and retailing business which owns and manages over 300 fuel stations in New Zealand under the Z and Caltex brands. Z Energy revealed a non-binding indicative proposal from <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Caltex Australia (ALD AU)</a>/Ampol to acquire it via a scheme of arrangement. Ampol is offering NZ$3.78 per share. The bid represents a 22% premium to the share price on 12 August (prior to receipt of the announced proposal), a 35% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 47% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).</p><p>Z Energy has agreed to grant Ampol a four-week exclusivity period to conduct due diligence. The indicative offer permits Z Energy to pay dividends up to NZ 10 cents on the scheme implementation to accommodate any regulatory-driven delays. Subject to discussions, Ampol’s offer may include a scrip component and a secondary New Zealand listing.  </p><p>Pushing for a better price is part of the M&amp;A game. The Board had rejected Ampol’s previous three offers as they did not represent compelling value. The Board was able to secure a sweetened bid which offers a 12.8% bump to Ampol’s first offer of NZ$3.35 per share.  </p><p>Ampol’s offer is a premium to Z Energy's historical EV/EBITDA multiples but a discount to pre-COVID-19 share prices. Z Energy’s CEO opines that Ampol’s bid could be a catalyst for other bidders that had previously signalled interest to make a move for Z Energy. Potential bidders could be <a href="https://www.smartkarma.com/entities/chevron-corp" target="_blank" data-smartkarma-citation="entities:11091:1" rel="noopener">Chevron Corp (CVX US)</a>, Vitol, <a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a>, Trafigura and Japanese refiners.</p><div class="content-highlight"><p>Overall, we think Ampol’s offer is a good starting point to lay down a valuation benchmark and suspect that there is some upside to the final offer price. At the last close price of NZ$3.48, Z Energy’s shares are trading at an 8.6% gross spread to the indicative offer.</p></div>

Z Energy Ltd (ZEL NZ) is a fuel distribution and retailing business which owns and manages over 300 fuel stations in New Zealand under the Z and Caltex brands. Z Energy revealed a non-binding indicative proposal from Caltex Australia (ALD AU)/Ampol to acquire it via a scheme of arrangement. Ampol is offering NZ$3.78 per share. The bid represents a 22% premium to the share price on 12 August (prior to receipt of the announced proposal), a 35% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 47% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).Z Energy has agreed to grant Ampol a four-week exclusivity period to conduct due diligence. The indicative offer permits Z Energy to pay dividends up to NZ 10 cents on the scheme implementation to accommodate any regulatory-driven delays. Subject to discussions, Ampol’s offer may include a scrip component and a secondary New Zealand listing.  Pushing for a better price is part of the M&amp;A game. The Board had rejected Ampol’s previous three offers as they did not represent compelling value. The Board was able to secure a sweetened bid which offers a 12.8% bump to Ampol’s first offer of NZ$3.35 per share.  Ampol’s offer is a premium to Z Energy's historical EV/EBITDA multiples but a discount to pre-COVID-19 share prices. Z Energy’s CEO opines that Ampol’s bid could be a catalyst for other bidders that had previously signalled interest to make a move for Z Energy. Potential bidders could be Chevron Corp (CVX US), Vitol, Glencore Plc (GLEN LN), Trafigura and Japanese refiners.Overall, we think Ampol’s offer is a good starting point to lay down a valuation benchmark and suspect that there is some upside to the final offer price. At the last close price of NZ$3.48, Z Energy’s shares are trading at an 8.6% gross spread to the indicative offer.

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group Holding (BABA US)</a> plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press reports. Alibaba is hoping to take advantage of an anticipated record sales on Singles Day to push ahead with its Hong Kong listing hearing. If the listing hearing is successful, the deal could price as soon as the end of the week.</p><div class="content-highlight"><p>If successful, Alibaba will be the largest company to have a secondary listing in Hong Kong with a primary listing in the US. Alibaba will likely price its H-shares at a discount to its ADRs to entice investors to participate in the secondary listing. Our analysis suggests that Alibaba pricing its H-shares at a 1.5% to 3.0% discount to its ADRs would be reasonable.</p></div>

Alibaba Group Holding (BABA US) plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press reports. Alibaba is hoping to take advantage of an anticipated record sales on Singles Day to push ahead with its Hong Kong listing hearing. If the listing hearing is successful, the deal could price as soon as the end of the week.If successful, Alibaba will be the largest company to have a secondary listing in Hong Kong with a primary listing in the US. Alibaba will likely price its H-shares at a discount to its ADRs to entice investors to participate in the secondary listing. Our analysis suggests that Alibaba pricing its H-shares at a 1.5% to 3.0% discount to its ADRs would be reasonable.

Alibaba HK Listing: Thoughts on the Premium/Discount to the ADRs

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Alpha Factors

<p><strong>INVESTMENT CONCLUSION:  </strong>We recommend Buying <a href="https://www.smartkarma.com/entities/vale-indonesia-tbk" target="_blank" data-smartkarma-citation="entities:19226:1" rel="noopener">Vale Indonesia Tbk (INCO IJ)</a> shares with a price target of Rp.4,500/sh.  INCO is a beneficiary of stronger <a href="https://www.smartkarma.com/entities/nickel" target="_blank" data-smartkarma-citation="entities:26790:1" rel="noopener">Nickel (NICKEL COMDTY)</a> prices and we forecast 4Q19 EBITDA jumping back toward the US$100mn level or US$400mn on an annualized level, which is well ahead of the current consensus forecasts today. </p>

INVESTMENT CONCLUSION:  We recommend Buying Vale Indonesia Tbk (INCO IJ) shares with a price target of Rp.4,500/sh.  INCO is a beneficiary of stronger Nickel (NICKEL COMDTY) prices and we forecast 4Q19 EBITDA jumping back toward the US$100mn level or US$400mn on an annualized level, which is well ahead of the current consensus forecasts today. 

PT Vale Indonesia: Consensus Looks Too Conservative - Trading Buy

<p><a href="https://www.smartkarma.com/entities/1104" target="_blank" data-smartkarma-citation="entities:1104:1">Wesfarmers Ltd (WES AU)</a> launched a conditional, non-binding indicative proposal for <a href="https://www.smartkarma.com/entities/20374" target="_blank" data-smartkarma-citation="entities:20374:1">Lynas Corp Ltd (LYC AU)</a>, one of the world’s only rare earths suppliers based outside China. Wesfarmers’ proposal of A$2.25 cash per share values Lynas at A$1.5 billion. Lynas’ share price jumped 35% to A$2.10 before going into a trading halt. </p><div class="content-highlight"><p>The bid comes at a turbulent time for Lynas, which is caught in a regulatory dispute with authorities in Malaysia. While Wesfarmers proposal could be viewed as a lifeline for Lynas, we believe that Wesfarmers’s proposal is opportunistic and unattractive.</p></div>

Wesfarmers Ltd (WES AU) launched a conditional, non-binding indicative proposal for Lynas Corp Ltd (LYC AU), one of the world’s only rare earths suppliers based outside China. Wesfarmers’ proposal of A$2.25 cash per share values Lynas at A$1.5 billion. Lynas’ share price jumped 35% to A$2.10 before going into a trading halt. The bid comes at a turbulent time for Lynas, which is caught in a regulatory dispute with authorities in Malaysia. While Wesfarmers proposal could be viewed as a lifeline for Lynas, we believe that Wesfarmers’s proposal is opportunistic and unattractive.

Lynas (LYC AU): Wesfarmers’ Unattractive Bid

Switzerland

Glencore is one of the world's largest globally diversified natural resource companies. It produces, sources, markets, and recycles a wide range of raw materials including metals, minerals, and energy products essential for everyday life and the transition to a low-carbon economy. The company was founded in 1974 and is headquartered in Baar, Switzerland.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Glencore (GLEN LN)

Chinese Metal Giant Faces Heavy Losses on Wild Nickel Ride

A Chinese metal giant is scrambling to manage massive losses from shorting nickel futures after the metal went on an unprecedented rally.

Caixin Global

Ampol Lobs an Offer for Z Energy

Z Energy revealed a non-binding indicative proposal from Ampol at NZ$3.78 per share. We suspect that there is some upside to the final offer price....

Arun George

Alibaba HK Listing: Thoughts on the Premium/Discount to the ADRs

Alibaba Group Holding (BABA US) plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press...

Arun George

PT Vale Indonesia: Consensus Looks Too Conservative - Trading Buy

INVESTMENT CONCLUSION: We recommend Buying Vale Indonesia Tbk (INCO IJ) shares with a price target of Rp.4,500/sh. INCO is a beneficiary of...

Charles Spencer

Lynas (LYC AU): Wesfarmers’ Unattractive Bid

Wesfarmers Ltd (WES AU) launched a conditional, non-binding indicative proposal for Lynas Corp Ltd (LYC AU), one of the world’s only rare earths...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)