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

<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> is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and a dividend yield of 17%. </li>
<li>With &gt;50% of the market capitalization in cash (accounting for the dividend liability), there is an excellent margin of safety in the name.</li>
<li>A further correction of coking coal prices by 20% from these levels to 1700-1800 RMB/ton would still have the stock trading at a &gt;10% dividend yield. </li>
</ul>



Shougang Fushan Resources (639 HK) is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and a dividend yield of 17%. 
With &gt;50% of the market capitalization in cash (accounting for the dividend liability), there is an excellent margin of safety in the name.
A further correction of coking coal prices by 20% from these levels to 1700-1800 RMB/ton would still have the stock trading at a &gt;10% dividend yield. 


Fushan Energy: Back to Interesting Levels

<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>is in deep value territory with coking prices averaging over 2600 RMB/ton for the year ( Vs. last years average of 2000 RMB/ton)</li>
<li>The stock trades at 2.6x PE, 0.8x EV-EBITDA with a 22% dividend yield at current spot prices of 2950 RMB/ton, making this an extremely cheap value play. </li>
<li>Further buffer is provided by net cash of 6.7 bn HKD, representing 44% of the market capitalization. Fushan can trade up to 3.50 HKD (20% upside) in the near term.</li>
</ul>



Shougang Fushan Resources (639 HK) is in deep value territory with coking prices averaging over 2600 RMB/ton for the year ( Vs. last years average of 2000 RMB/ton)
The stock trades at 2.6x PE, 0.8x EV-EBITDA with a 22% dividend yield at current spot prices of 2950 RMB/ton, making this an extremely cheap value play. 
Further buffer is provided by net cash of 6.7 bn HKD, representing 44% of the market capitalization. Fushan can trade up to 3.50 HKD (20% upside) in the near term.


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/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.</li>
<li>The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.</li>
<li>If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%. </li>
</ul>



Shougang Fushan Resources (639 HK) shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.
The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.
If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%. 


Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional

<ul>
<li>Funde Sino Life Insurance, a significant shareholder of <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>has sold down its stake in the company by 3.31% to  27.96% as per recent filings.</li>
<li>Along with coking coal prices remaining weak, this creates a massive overhang clubbed with uncertainty on the share price in the short term. </li>
<li>It also creates an opportunity as the stock has almost 70% of its market capitalization in cash, a low-cost advantage, and a dividend yield of at least 12% for FY23e.</li>
</ul>


Funde Sino Life Insurance, a significant shareholder of Shougang Fushan Resources (639 HK), has sold down its stake in the company by 3.31% to  27.96% as per recent filings.
Along with coking coal prices remaining weak, this creates a massive overhang clubbed with uncertainty on the share price in the short term. 
It also creates an opportunity as the stock has almost 70% of its market capitalization in cash, a low-cost advantage, and a dividend yield of at least 12% for FY23e.


Fushan Energy Shareholder Selldown Implications

Hong Kong

Shougang Fushan Resources Group Ltd. produces and sells coking coal products and side products in China. The Company is principally engaged in mining of coking coal and production and sales of raw and clean coking coal,

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Shougang Fushan Resources (639 HK)

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

Fushan Energy: Back to Interesting Levels

Shougang Fushan Resources (639 HK) is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and...

Sameer Taneja

Fushan Resources: Swimming in Cash

Shougang Fushan at a 4.6x PE and 1.6x EV-EBITDA with a dividend yield of 17%, assuming a 2,500 RMB/ton coking coal price ( Vs. the current 2,950...

Sameer Taneja