Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Dalrymple Bay Infrastructure / Equity Capital Markets

<div><p>Dalrymple Bay Infrastructure (DBI from hereon) raised around US$500m in its Australian listing. It is owned by <a href="https://www.smartkarma.com/entities/brookfield-asset-manage-cl-a-0483cfb5-71a5-4931-af80-901e5f30aace" target="_blank" data-smartkarma-citation="entities:23741:1" rel="noopener">Brookfield Asset Management (BAM US)</a>. The stock will start trading tomorrow. </p></div><div><p>It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  </p></div><div>
<p>I've covered various aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/dalrymple-bay-infrastructure-highly-curious-timing" target="_blank" rel="noopener">Dalrymple Bay Infrastructure - Highly Curious Timing.</a></p>
<p>In this note, I'll talk about the trading dynamics and provide a table with implied valuations at different share price levels. </p>
</div>

Dalrymple Bay Infrastructure (DBI from hereon) raised around US$500m in its Australian listing. It is owned by Brookfield Asset Management (BAM US). The stock will start trading tomorrow. It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  
I've covered various aspects of the deal in my earlier note, Dalrymple Bay Infrastructure - Highly Curious Timing.
In this note, I'll talk about the trading dynamics and provide a table with implied valuations at different share price levels. 


Dalrymple Bay Infrastructure IPO Trading - Yield Limits Downside, for Now

<p>Dalrymple Bay Infrastructure (DBI from hereon) aims to raise around US$500m in its Australian listing. It is owned by <a href="https://www.smartkarma.com/entities/brookfield-asset-manage-cl-a-0483cfb5-71a5-4931-af80-901e5f30aace" target="_blank" data-smartkarma-citation="entities:23741:1" rel="noopener">Brookfield Asset Management (BAM US)</a>. </p><p>It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  </p><p>The terminal is a common-user facility providing services to a large number of mining customers. Approximately 80% of the coal shipped through DBT in 2019 was metallurgical (met) coal. It is the largest met coal terminal, handling 15% of global met coal in 2019 and 30% of Queensland coal exports. </p><p>While the current revenue for DBI is regulated and hence, fairly stable, it has been trying to change that so that it can set its own tariffs directly with clients. However, even if it manages to do that the upside might be limited.</p><p>As per my calculations, if it doesn’t manage to succeed in doing so, its revenue could drop by an amount far exceeding the projected upside. This doesn’t make DBI appear particularly attractive.</p>

Dalrymple Bay Infrastructure (DBI from hereon) aims to raise around US$500m in its Australian listing. It is owned by Brookfield Asset Management (BAM US). It holds a 99-lease for Dalrymple Bay Terminal (DBT), a coal export terminal. DBT was commissioned in 1983 and is located close to Bowen Basin, the world’s largest met coal export region, in Queensland.  The terminal is a common-user facility providing services to a large number of mining customers. Approximately 80% of the coal shipped through DBT in 2019 was metallurgical (met) coal. It is the largest met coal terminal, handling 15% of global met coal in 2019 and 30% of Queensland coal exports. While the current revenue for DBI is regulated and hence, fairly stable, it has been trying to change that so that it can set its own tariffs directly with clients. However, even if it manages to do that the upside might be limited.As per my calculations, if it doesn’t manage to succeed in doing so, its revenue could drop by an amount far exceeding the projected upside. This doesn’t make DBI appear particularly attractive.

Dalrymple Bay Infrastructure - Highly Curious Timing

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Quantitative Analysis

<p>In this Smartkarma Original, we bring to you a quantitative approach for identifying Asian companies that are likely to raise/cut dividend. Applying this approach to a universe of 920+ companies listed across Asia helped us identify 150+ and 20+ companies, respectively, that have a high likelihood of raising/cutting dividends, over the next five years.</p>
<div class="content-highlight">
<p><strong>What's Original?</strong></p>
<ul>
<li>We have two separate models, one for forecasting Dividend Raise and the other for Dividend Cut.</li>
<li>Our back test results are very encouraging with &gt;90% hit rate for our Dividend Raise model and 100% hit rate for our Dividend Cut model.</li>
<li>For our Dividend Raise model, we apply a combination of eight stringent parameters and use last 7Y historical data to find companies that have consistently performed strong, lending our model a high hit rate.</li>
<li>For our Dividend Cut model, we differentiate from other models by focusing on companies that have had high dividend payout ratio (&gt;50%) over last 3Y. This criterion helps us in identifying companies where there is limited scope for dividend growth through increase in dividend payouts. In our observation, such companies are most vulnerable to cut dividend when faced with weakening fundamentals or deteriorating balance sheet.</li>
</ul>
</div>
<h3>Insight Flow</h3>
<ul>
<li>Live Dashboard</li>
<li> Methodology
<ul>
<li>Philosophy</li>
<li>Dividend Raise Model</li>
<li>Dividend Cut Model</li>
</ul>
</li>
<li>Universe</li>
<li>Back Test Results
<ul>
<li>Dividend Raise Model</li>
<li>Dividend Cut Model</li>
</ul>
</li>
<li>Model Results
<ul>
<li>Companies with High Probability of Dividend Raise</li>
<li>Companies with High Probability of Dividend Cut</li>
</ul>
</li>
<li>Model Risks &amp; Limitations</li>
<li>Conclusion</li>
</ul>

In this Smartkarma Original, we bring to you a quantitative approach for identifying Asian companies that are likely to raise/cut dividend. Applying this approach to a universe of 920+ companies listed across Asia helped us identify 150+ and 20+ companies, respectively, that have a high likelihood of raising/cutting dividends, over the next five years.

What's Original?

We have two separate models, one for forecasting Dividend Raise and the other for Dividend Cut.
Our back test results are very encouraging with &gt;90% hit rate for our Dividend Raise model and 100% hit rate for our Dividend Cut model.
For our Dividend Raise model, we apply a combination of eight stringent parameters and use last 7Y historical data to find companies that have consistently performed strong, lending our model a high hit rate.
For our Dividend Cut model, we differentiate from other models by focusing on companies that have had high dividend payout ratio (&gt;50%) over last 3Y. This criterion helps us in identifying companies where there is limited scope for dividend growth through increase in dividend payouts. In our observation, such companies are most vulnerable to cut dividend when faced with weakening fundamentals or deteriorating balance sheet.


Insight Flow

Live Dashboard
 Methodology

Philosophy
Dividend Raise Model
Dividend Cut Model


Universe
Back Test Results

Dividend Raise Model
Dividend Cut Model


Model Results

Companies with High Probability of Dividend Raise
Companies with High Probability of Dividend Cut


Model Risks &amp; Limitations
Conclusion


Asia Dividend Forecasting | The Rise and Fall of Dividends Across Asian Companies

Aurizon Holdings / Equity Capital Markets

<p>Citigroup is selling US$592m/AUD814m worth of <a href="https://www.smartkarma.com/entities/983" target="_blank" data-smartkarma-citation="entities:983:1">Aurizon Holdings (AZJ AU)</a> shares owing to the termination of a cash-settled equity derivative position with The Children's Investment Master Fund (TCI). The sale represents 10.17% of the company's stake. Post the sale TCI will have an economic interest of 9.02% in the company. </p><p>The shares haven't been performing well and analysts don't seem to be bullish about the future prospects either. Thus, the deal doesn't score well on our framework an almost all parameters. While the deal is set to be already covered and has anchor investors as well, we don't feel particularly confident about the upside.</p>

Citigroup is selling US$592m/AUD814m worth of Aurizon Holdings (AZJ AU) shares owing to the termination of a cash-settled equity derivative position with The Children's Investment Master Fund (TCI). The sale represents 10.17% of the company's stake. Post the sale TCI will have an economic interest of 9.02% in the company. The shares haven't been performing well and analysts don't seem to be bullish about the future prospects either. Thus, the deal doesn't score well on our framework an almost all parameters. While the deal is set to be already covered and has anchor investors as well, we don't feel particularly confident about the upside.

Aurizon Holdings Placement - Too Big for Comfort

Credit Analyst, BondAdviser

Jack Pobjoy

Credit Analyst

Australian bonds & fixed income research

BondAdviser

BondAdviser is the central reference point for intelligent information on Australian fixed income markets. We help you make informed decisions by providing unbiased research, transparent pricing data, analytics, portfolio tools and education.

BondAdviser has the broadest coverage of retail-accessible ASX-listed and over-the-counter Australian bonds and fixed income securities. We make it easy for you to review and compare investments before you place an order with your broker or dealer.

Credit

<p data-id="block-ember6165" data-generated-at="15341423197990.8638221467235319" data-align="left">Week 2 of Australian reporting season began today with <a href="https://www.smartkarma.com/entities/983" target="_blank" data-smartkarma-citation="entities:983:1">Aurizon Holdings (AZJ AU)</a> and <a href="https://www.smartkarma.com/entities/682" target="_blank" data-smartkarma-citation="entities:682:1">Bendigo And Adelaide Bank (BEN AU)</a><strong data-id="entity-ember6168"> </strong>both releasing full year results (FY18). <a href="https://www.smartkarma.com/entities/168" target="_blank" data-smartkarma-citation="entities:168:1">Gpt Group (GPT AU)</a> also provided its interim results (1H18).</p>
<p data-id="block-ember6165" data-generated-at="15341423197990.8638221467235319" data-align="left">We are expecting our first high-yield credit, namely <strong data-id="entity-ember6173">Centuria Capital</strong> to release its full year results (FY18) on Tuesday. <strong>Challenger</strong> is also expected to release its full year results (FY18) on Tuesday.  <strong data-id="entity-ember6174">Insurance Australia Group, Wesfarmers </strong>and <strong data-id="entity-ember6175">Villa World</strong> are set to report on…</p>

Week 2 of Australian reporting season began today with Aurizon Holdings (AZJ AU) and Bendigo And Adelaide Bank (BEN AU) both releasing full year results (FY18). Gpt Group (GPT AU) also provided its interim results (1H18).
We are expecting our first high-yield credit, namely Centuria Capital to release its full year results (FY18) on Tuesday. Challenger is also expected to release its full year results (FY18) on Tuesday.  Insurance Australia Group, Wesfarmers and Villa World are set to report on…

Australian Reporting Season: Aurizon Holdings, Bendigo & Adelaide Bank and GPT Group

Australia

Aurizon Holdings Ltd is a rail freight company. The Company provides coal, bulk and general freight haulage services, operating on the Central Queensland Coal Network (CQCN) and including specialised track maintenance and workshop support functions.

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Aurizon Holdings (AZJ AU)

Dalrymple Bay Infrastructure IPO Trading - Yield Limits Downside, for Now

Dalrymple Bay Infrastructure (DBI from hereon) raised around US$500m in its Australian listing. It is owned by Brookfield Asset Management (BAM...

Sumeet Singh

Dalrymple Bay Infrastructure - Highly Curious Timing

Dalrymple Bay Infrastructure aims to raise around US$500m in its Australian IPO. DBI is owned by Brookfield Asset Management.

Sumeet Singh

Asia Dividend Forecasting | The Rise and Fall of Dividends Across Asian Companies

Methodology Back Test Results Companied

Ankit Agrawal, CFA

Aurizon Holdings Placement - Too Big for Comfort

Citigroup is selling US$592m/AUD814m worth of Aurizon Holdings (AZJ AU) shares owing to the termination of a cash-settled equity derivative...

Sumeet Singh

Australian Reporting Season: Aurizon Holdings, Bendigo & Adelaide Bank and GPT Group

Week 2 of Australian reporting season began today with Aurizon Holdings (AZJ AU) and Bendigo And Adelaide Bank (BEN AU) both releasing full year...

BondAdviser

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