Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

Shougang Fushan Resources / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield (based on an 80% payout ratio).</li>
<li>Since our call in FY21, close to 64 cents of the share price (25% of the current share price value) has been returned as dividends making it a dividend machine. </li>
<li>We forecast at least another 70 cents of dividend for H2 FY22 and FY23, bringing the dividend in 3.5 years to more than half the current share price. </li>
</ul>



Shougang Fushan Resources (639 HK) trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield (based on an 80% payout ratio).
Since our call in FY21, close to 64 cents of the share price (25% of the current share price value) has been returned as dividends making it a dividend machine. 
We forecast at least another 70 cents of dividend for H2 FY22 and FY23, bringing the dividend in 3.5 years to more than half the current share price. 


Fushan Energy: 50% of Mkt Cap in Cash / ~18% Dividend Yield / Great Returns Just in Dividends

GrafTech International Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/graftech-international-ltd" target="_blank" data-smartkarma-citation="entities:27124:1" rel="noopener">GrafTech International Ltd (EAF US)</a> results for Q4 2022 were worse than expected, and guidance for volumes down 50% in H1 2023e was shocking.</li>
<li>In summary, our intrinsic value was too aggressive, and there was a low margin of safety on the investment. Constant execution issues in a favorable environment didn't help our cause.</li>
<li>The stock isn't as cheap when trading at 11.1x/9.5x FY23e/FY24e. The deleveraging story now gets pushed out to the end of FY25. The investment is dead money for two years.</li>
</ul>



GrafTech International Ltd (EAF US) results for Q4 2022 were worse than expected, and guidance for volumes down 50% in H1 2023e was shocking.
In summary, our intrinsic value was too aggressive, and there was a low margin of safety on the investment. Constant execution issues in a favorable environment didn't help our cause.
The stock isn't as cheap when trading at 11.1x/9.5x FY23e/FY24e. The deleveraging story now gets pushed out to the end of FY25. The investment is dead money for two years.


Graftech: Deleveraging Story Moves Out Even Further / Dead Money

Indo Tambangraya Megah / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a> dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%).  </li>
<li>Investors staying over FY22/FY23e will get 45-48% of the share price returned in dividends assuming a 70% payout ratio, and the company's cash pile will be &gt;1.5 bn USD.</li>
<li>Coal prices have been softer recently, but the recent mining incident threatens a slower rebound in coal production from China. The company looks cheap at 3-3.5x PE FY23e.</li>
</ul>



Indo Tambangraya Megah (ITMG IJ) dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%).  
Investors staying over FY22/FY23e will get 45-48% of the share price returned in dividends assuming a 70% payout ratio, and the company's cash pile will be &gt;1.5 bn USD.
Coal prices have been softer recently, but the recent mining incident threatens a slower rebound in coal production from China. The company looks cheap at 3-3.5x PE FY23e.


ITMG: Coal Softer, Cash ~50% of Mkt Cap, Yield to Remain >20% in 2023

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Alamtri Resources Indonesia / Event-Driven

<ul>
<li>Yesterday, Indonesia's second largest coal mining business <a href="https://www.smartkarma.com/entities/adaro-energy-tbk-pt" target="_blank" data-smartkarma-citation="entities:6061:1" rel="noopener">Adaro Energy (ADRO IJ)</a> announced a buyback. This follows another buyback which ended in December 2022.</li>
<li>The Sep21-Dec22 buyback bought back 1bn shares, but did not spend all the money allocated to the buyback. This new one might buy back a similar quantity.</li>
<li>Looking at Real World Float is the right frame of reference. And the stock was at a recent low vs a Peer Basket. </li>
</ul>


Yesterday, Indonesia's second largest coal mining business Adaro Energy (ADRO IJ) announced a buyback. This follows another buyback which ended in December 2022.
The Sep21-Dec22 buyback bought back 1bn shares, but did not spend all the money allocated to the buyback. This new one might buy back a similar quantity.
Looking at Real World Float is the right frame of reference. And the stock was at a recent low vs a Peer Basket. 


Adaro Energy (ADRO IJ) Buyback - A Decent Chunk of 1 Year ADV

<ul>
<li>We expect a 10,000-12,000 Rph dividend for FY22 (div yield 28%-33%) from <a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a> as earnings are set to improve &gt;70% HoH (H1 dividend - 4128 Rph/share).</li>
<li>With coal prices remaining elevated, if volumes remain flat YoY, we could see &gt;50% of the stock price returned in dividends throughout FY22e/23e.</li>
<li>There is an excellent margin of safety, with almost 40% of the market capitalization in net cash. With a &gt;65% payout ratio, we will see cash levels build further. </li>
</ul>


We expect a 10,000-12,000 Rph dividend for FY22 (div yield 28%-33%) from Indo Tambangraya Megah (ITMG IJ) as earnings are set to improve &gt;70% HoH (H1 dividend - 4128 Rph/share).
With coal prices remaining elevated, if volumes remain flat YoY, we could see &gt;50% of the stock price returned in dividends throughout FY22e/23e.
There is an excellent margin of safety, with almost 40% of the market capitalization in net cash. With a &gt;65% payout ratio, we will see cash levels build further. 


ITMG - Div Yield >28%, Net Cash 40% of Mkt Cap, Deep Value with High Coal Price

Indonesia

Indo Tambangraya Megah engages in coal mining and energy activities, producing thermal coal for power plants. The company is also involved in coal trading, fuel trading, energy marketing, electricity generation, mining contractor services, and solar rooftop installations. It was founded in 1987 and is headquartered in South Jakarta, Indonesia.

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Indo Tambangraya Megah (ITMG IJ)

Fushan Energy: 50% of Mkt Cap in Cash / ~18% Dividend Yield / Great Returns Just in Dividends

Shougang Fushan Resources (639 HK) trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield...

Sameer Taneja

Graftech: Deleveraging Story Moves Out Even Further / Dead Money

Graftech stock isn't as cheap when trading at 11.1x/9.5x FY23e/FY24e. The deleveraging story with the Monterrey incident gets pushed out to the end...

Sameer Taneja

ITMG: Coal Softer, Cash ~50% of Mkt Cap, Yield to Remain >20% in 2023

Indo Tambangraya Megah (ITMG IJ) dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%)...

Sameer Taneja

Adaro Energy (ADRO IJ) Buyback - A Decent Chunk of 1 Year ADV

Adaro Energy (ADRO IJ) just announced another buyback. This should have some decent impact, and the stock is a bit cheap to similar-sized peers.

Travis Lundy

ITMG - Div Yield >28%, Net Cash 40% of Mkt Cap, Deep Value with High Coal Price

We expect a 10,000-12,000 Rph dividend for FY22 (div yield 28%-33%) from Indo Tambangraya Megah (ITMG IJ) as earnings are set to improve >70% HoH...

Sameer Taneja

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