Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Global mining services business <a href="https://www.smartkarma.com/entities/perenti-global-ltd" target="_blank" data-smartkarma-citation="entities:20505:1" rel="noopener">Perenti Global (PRN AU)</a> was formed through the merger of Barminco and Ausdrill in late 2018.</li>
<li>Revenues to Dec 2021 are up 156% vs the year to June 2018. Gross profits are up 156% too. OP is up much less because D&amp;A are up dramatically.</li>
<li>But the company today announced capital management and rationalisation activities had delivered A$134.7mm. They've launched a buyback to repurchase 10% of shares. It's worth a look.</li>
</ul>


Global mining services business Perenti Global (PRN AU) was formed through the merger of Barminco and Ausdrill in late 2018.
Revenues to Dec 2021 are up 156% vs the year to June 2018. Gross profits are up 156% too. OP is up much less because D&amp;A are up dramatically.
But the company today announced capital management and rationalisation activities had delivered A$134.7mm. They've launched a buyback to repurchase 10% of shares. It's worth a look.


Perenti Recycling Cash with Big (Impactful) Buyback

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<div><p>S&amp;P Dow Jones Indices will announce changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p></div><div>We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - <a href="https://www.smartkarma.com/entities/centuria-capital-group" target="_blank" data-smartkarma-citation="entities:15546:1" rel="noopener">Centuria Capital (CNI AU)</a>, <a href="https://www.smartkarma.com/entities/pinnacle-investment-manageme" target="_blank" data-smartkarma-citation="entities:20624:1" rel="noopener">Wilson (PNI AU)</a> and <a href="https://www.smartkarma.com/entities/sealink-travel-group-ltd" target="_blank" data-smartkarma-citation="entities:6400:1" rel="noopener">Sealink Travel (SLK AU)</a> while the potential deletions are <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/nrw-holdings-ltd" target="_blank" data-smartkarma-citation="entities:9271:1" rel="noopener">NRW Holdings (NWH AU)</a> and <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> is a close add and the corresponding deletion is <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a>.</div><div></div><div>There is a large impact expected on the inclusions while the impact on the deletions is lower.</div><div></div><div>For <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>, the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.</div>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - Centuria Capital (CNI AU), Wilson (PNI AU) and Sealink Travel (SLK AU) while the potential deletions are Nuix Limited (NXL AU), NRW Holdings (NWH AU) and G8 Education (GEM AU).
Galaxy Resources (GXY AU) is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with Orocobre Ltd (ORE AU).
De Grey Mining (DEG AU) is a close add and the corresponding deletion is Westgold Resources (WGX AU).There is a large impact expected on the inclusions while the impact on the deletions is lower.For G8 Education (GEM AU), the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

<p>Post market close today, S&amp;P Dow Jones Indices announced the list of changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> as part of the June index review that will be effective after the close of trading on 18 June.</p><p>There are 3 sets of the changes to the index at the June review.</p><p>The inclusions are <a href="https://www.smartkarma.com/entities/chalice-gold-mines-ltd" target="_blank" data-smartkarma-citation="entities:20193:1" rel="noopener">Chalice Gold Mines (CHN AU)</a>, <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and <a href="https://www.smartkarma.com/entities/uniti-group-ltd" target="_blank" data-smartkarma-citation="entities:29042:1" rel="noopener">Uniti Group Ltd (UWL AU)</a>. </p><p>The deletions are <a href="https://www.smartkarma.com/entities/austal-ltd" target="_blank" data-smartkarma-citation="entities:14420:1" rel="noopener">Austal Ltd (ASB AU)</a>, <a href="https://www.smartkarma.com/entities/perenti-global-ltd" target="_blank" data-smartkarma-citation="entities:20505:1" rel="noopener">Perenti Global (PRN AU)</a> and <a href="https://www.smartkarma.com/entities/resolute-mining-ltd" target="_blank" data-smartkarma-citation="entities:1960:1" rel="noopener">Resolute Mining (RSG AU)</a>. </p><p>There are only 5 trading days to implementation of the changes and quite a lot to trade for passive funds. There are no real surprises and there will be pre-positioning in some of the names.</p><p>Short interest has been dropping on the inclusions and rising on the deletions, another sign of pre-positioning prior to the announcement of the changes. We estimate more than half the passive flow has already been positioned for.</p>

Post market close today, S&amp;P Dow Jones Indices announced the list of changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the June index review that will be effective after the close of trading on 18 June.There are 3 sets of the changes to the index at the June review.The inclusions are Chalice Gold Mines (CHN AU), Orocobre Ltd (ORE AU) and Uniti Group Ltd (UWL AU). The deletions are Austal Ltd (ASB AU), Perenti Global (PRN AU) and Resolute Mining (RSG AU). There are only 5 trading days to implementation of the changes and quite a lot to trade for passive funds. There are no real surprises and there will be pre-positioning in some of the names.Short interest has been dropping on the inclusions and rising on the deletions, another sign of pre-positioning prior to the announcement of the changes. We estimate more than half the passive flow has already been positioned for.

ASX200 Index Rebalance: A Lot of Pre-Positions Built Up

Macro and Australian equity strategist, Macro Strategy Advisors

Shane Lee

Macro and Australian equity strategist

Macro Strategy Advisors

Cross Asset Strategy

<ul>
<li>
<strong>Despite relatively sluggish price performance, the ASX 200 has provided global investors with strong returns that have seen it outperform both Japan and Europe over the past few years</strong>. The market also performs well late in the global cycle when global volatility is rising because a relatively large component of returns are generated by dividends and many stocks in the ASX 200 are dominant players in their markets or they operate in small markets making earnings more defendable under late cycle cost pressures. </li>
<li>
<strong>When looking at Australia as a late-cycle opportunity, earnings quality is an important screen to consider. </strong>Stocks with good earnings quality attract the highest PE multiples and the strongest Buy recommendations.  However, in this note, we screen the ASX 200 universe for both longer-term and short-term movements in earnings quality and analyse how these movements translate into returns. </li>
<li>
<strong>FMG, WTC, XRO, WHC, LYC, MQG, S32, NHC, SAR, WEB have the distinction of making the top 50 stocks with the strongest earnings quality improvement and the list of top 50 stocks with the largest outperformance during the past 3 years. </strong>In contrast, <strong>TAH, SDA, NCM, </strong>and<strong> NHF</strong> have all seen large declines in earnings quality and have underperformed during this period. </li>
<li>
<strong>During the most recent half-year results period, NHC, SOL, BXB, VOC, SAR, BVS, IRE, IPH, and QBE made the list of stocks with the largest improvement in earnings quality and the list of top 50 stocks with the best performance. AGL, BSL, </strong>and <strong>ASL</strong> saw the largest decline in earnings quality and this coupled with underperformance.  In contrast, <strong>STO</strong> performed well, despite having declining earnings quality suggesting some underperformance could be expected. </li>
<li>
<strong>QBE is unique in that it has seen not only a strong lift in earnings quality during the half, but it has also seen its EPS growth upgraded. LNK </strong>saw a large decline in earnings quality but saw a large number of upgrades that put it in the list of top 50 most upgraded stocks during the period. </li>
<li>
<strong>WTC and S32 are in our model portfolio in our recent shift to realign it towards Resources and Growth stocks after the Q4 18 sell-off. </strong>Our work quality shows they have been good earnings quality stocks and this supports our decision to include these stocks in our portfolio.</li>
</ul>



Despite relatively sluggish price performance, the ASX 200 has provided global investors with strong returns that have seen it outperform both Japan and Europe over the past few years. The market also performs well late in the global cycle when global volatility is rising because a relatively large component of returns are generated by dividends and many stocks in the ASX 200 are dominant players in their markets or they operate in small markets making earnings more defendable under late cycle cost pressures. 

When looking at Australia as a late-cycle opportunity, earnings quality is an important screen to consider. Stocks with good earnings quality attract the highest PE multiples and the strongest Buy recommendations.  However, in this note, we screen the ASX 200 universe for both longer-term and short-term movements in earnings quality and analyse how these movements translate into returns. 

FMG, WTC, XRO, WHC, LYC, MQG, S32, NHC, SAR, WEB have the distinction of making the top 50 stocks with the strongest earnings quality improvement and the list of top 50 stocks with the largest outperformance during the past 3 years. In contrast, TAH, SDA, NCM, and NHF have all seen large declines in earnings quality and have underperformed during this period. 

During the most recent half-year results period, NHC, SOL, BXB, VOC, SAR, BVS, IRE, IPH, and QBE made the list of stocks with the largest improvement in earnings quality and the list of top 50 stocks with the best performance. AGL, BSL, and ASL saw the largest decline in earnings quality and this coupled with underperformance.  In contrast, STO performed well, despite having declining earnings quality suggesting some underperformance could be expected. 

QBE is unique in that it has seen not only a strong lift in earnings quality during the half, but it has also seen its EPS growth upgraded. LNK saw a large decline in earnings quality but saw a large number of upgrades that put it in the list of top 50 most upgraded stocks during the period. 

WTC and S32 are in our model portfolio in our recent shift to realign it towards Resources and Growth stocks after the Q4 18 sell-off. Our work quality shows they have been good earnings quality stocks and this supports our decision to include these stocks in our portfolio.


Quality Counts: A Screen of ASX 200 Earnings Quality

Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Thematic (Sector/Industry)

<p>Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which partners with progressive farmers to provide capital solutions to fund productivity growth and innovation.</p><p>With drastic shortages of capital in Australian farming, CommStream leverages its industry expertise and relationships to bring farmers an overdue, innovative financing solution, which drives productivity growth and helps fund generational…</p>

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which partners with progressive farmers to provide capital solutions to fund productivity growth and innovation.With drastic shortages of capital in Australian farming, CommStream leverages its industry expertise and relationships to bring farmers an overdue, innovative financing solution, which drives productivity growth and helps fund generational…

CommStream Capital Limited Interview: Insight From Australia's First Agricultural Streaming Company

Australia

Perenti Global Limited operates as a diversified mining services company. The Company offers surface and underground mining solutions. Perenti Global serves customers worldwide.

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Perenti Global (PRN AU)

Perenti Recycling Cash with Big (Impactful) Buyback

Perenti Global - the combo of Ausdrill and Barminco - has been integrating Barminco, recycling capital, and growing its AMS business. Now it has...

Travis Lundy

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

We see 3 potential changes to the ASX200 at the Sep rebalance with CNI, PNI and SLK being included and NXL, NRW and GEM being deleted. Passive...

Brian Freitas

ASX200 Index Rebalance: A Lot of Pre-Positions Built Up

There are 2 sets of changes to the ASX200 with CHN, ORE and UWL replacing ASB, PRN and RSG. There are 5 trading days to implementation, significant...

Brian Freitas

Quality Counts: A Screen of ASX 200 Earnings Quality

Despite relatively sluggish price performance, the ASX 200 has provided global investors with strong returns that have seen it outperform both...

Shane Lee

CommStream Capital Limited Interview: Insight From Australia's First Agricultural Streaming Company

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which...

Nomadic Equity

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