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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a> is likely to reject <a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yanzhou Coal Mining Company Limited H (1171 HK)</a>’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> share, <a href="https://www.reuters.com/markets/europe/glencore-reject-offer-yancoal-australia-stake-too-low-sources-2022-06-02/" target="_blank" rel="noopener">according to Reuters</a>.</li>
<li>If the privatisation succeeds, we estimate that Yankuang’s additional claim on <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a>’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.</li>
<li>The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. </li>
</ul>



Glencore Plc (GLEN LN) is likely to reject Yanzhou Coal Mining Company Limited H (1171 HK)’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per Yancoal Australia (YAL AU) share, according to Reuters.
If the privatisation succeeds, we estimate that Yankuang’s additional claim on Yancoal Australia (3668 HK)’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.
The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. 


Glencore and Yankuang’s Disparate Valuations of Yancoal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yanzhou Coal Mining Company Limited H (1171 HK)</a>/Yankuang, a 62.26% shareholder, aims to offer H Share convertible bonds for US$3.60 (HK$28.26 or A$5.07) per <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> share.</li>
<li>Yankuang’s implied offer price is -16.6% and -14.5% below the last close price on the ASX and HKEx, respectively. At first glance, the offer seems to be a non-starter.  </li>
<li>Yankuang’s end game is likely to provide large shareholders with a liquidity event to hit the 90% compulsory acquisition threshold. This ploy could work subject to FIRB approval. </li>
</ul>



Yanzhou Coal Mining Company Limited H (1171 HK)/Yankuang, a 62.26% shareholder, aims to offer H Share convertible bonds for US$3.60 (HK$28.26 or A$5.07) per Yancoal Australia (YAL AU) share.
Yankuang’s implied offer price is -16.6% and -14.5% below the last close price on the ASX and HKEx, respectively. At first glance, the offer seems to be a non-starter.  
Yankuang’s end game is likely to provide large shareholders with a liquidity event to hit the 90% compulsory acquisition threshold. This ploy could work subject to FIRB approval. 


Yancoal’s Unusual Low Bid from Yankuang Energy

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.</li>
<li>Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.</li>
<li>Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.</li>
</ul>


Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.
Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.
Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.


Opportunities Within Energy and Materials

<ul>
<li>We continue to see some encouraging signs that suggest that the lows may have been established for this correction.</li>
<li>We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.</li>
<li>With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).</li>
</ul>


We continue to see some encouraging signs that suggest that the lows may have been established for this correction.
We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.
With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).


Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

<ul>
<li>Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.</li>
<li>We view this as a <em>potential</em> signal that the lows may have been established for this correction, but we need to see more upside follow-through.</li>
<li>Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, <em>not</em> on areas that are just now spiking from oversold levels within downtrends.</li>
</ul>


Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.
We view this as a potential signal that the lows may have been established for this correction, but we need to see more upside follow-through.
Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, not on areas that are just now spiking from oversold levels within downtrends.


Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

United Kingdom

Anglo American PLC is a global mining company. The Company's mining portfolio includes bulk commodities including iron ore, manganese and metallurgical coal, base metals including copper and nickel and precious metals and minerals including platinum and diamonds.  Anglo American PLC has mining operations in Africa, Europe, North and South America, Asia and Australia.

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

Anglo American (AAL LN)

Glencore and Yankuang’s Disparate Valuations of Yancoal

Glencore is likely to reject Yankuang’s offer, according to Reuters. While Glencore is said to be a willing seller, we think that Yankuang will...

Arun George

Yancoal’s Unusual Low Bid from Yankuang Energy

Yankuang’s implied offer price is materially below the last close price on both the ASX and HKEx. The strategy is likely to secure large...

Arun George

Opportunities Within Energy and Materials

Global indexes remain below our key lines in the sand of $54 on $ACWX, $75.25 on $EFA, and the 200-day MA on $ACWI. As long as prices are below...

Vermilion Research

Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

We continue to see some encouraging signs that suggest that the lows may have been established for this correction. Still, cyclical value remains...

Vermilion Research

Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

We are sticking with Sectors and stocks that have remained technically sound throughout this correction, not on areas that are just now spiking...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)