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

China Boqi Environmental Hol / Event-Driven

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<li>
<a href="https://www.smartkarma.com/entities/china-boqi-environmental-hol" target="_blank" data-smartkarma-citation="entities:26771:1" rel="noopener">China Boqi Environmental Hol (2377 HK)</a>'s share buyback is for a minimum of 100.6m shares (10.00% of outstanding shares) and a maximum of 150.9m shares (15.00%) at HK$1.20 per share.</li>
<li>The offer is conditional on satisfying the minimum acceptance condition, approval by the requisite majority of shareholders, and approval of the whitewash waiver. </li>
<li>The offer is attractive compared to peer multiples but unattractive compared to historical trading ranges. The shareholder structure and irrevocable paves the way for the offer to be declared unconditional. </li>
</ul>



China Boqi Environmental Hol (2377 HK)'s share buyback is for a minimum of 100.6m shares (10.00% of outstanding shares) and a maximum of 150.9m shares (15.00%) at HK$1.20 per share.
The offer is conditional on satisfying the minimum acceptance condition, approval by the requisite majority of shareholders, and approval of the whitewash waiver. 
The offer is attractive compared to peer multiples but unattractive compared to historical trading ranges. The shareholder structure and irrevocable paves the way for the offer to be declared unconditional. 


Boqi Environmental (2377 HK): Conditional Share Buyback at HK$1.20

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

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<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> ended H1 FY24 with over 10.5 bn HKD of net cash and investments, compared to 12.7 bn HKD of market capitalization. </li>
<li>At 1600 RMB/ton coking coal prices (current spot price), the business will be able to generate 1.1 bn HKD of profits, with an 80% payout implying a 7% dividend yield. </li>
<li>The current spot prices are 16% below the average five-year price of 1900 RMB/ton ( yield 10%), and at these prices, the company still makes an EBITDA margin of 40-45%. </li>
</ul>



Shougang Fushan Resources (639 HK) ended H1 FY24 with over 10.5 bn HKD of net cash and investments, compared to 12.7 bn HKD of market capitalization. 
At 1600 RMB/ton coking coal prices (current spot price), the business will be able to generate 1.1 bn HKD of profits, with an 80% payout implying a 7% dividend yield. 
The current spot prices are 16% below the average five-year price of 1900 RMB/ton ( yield 10%), and at these prices, the company still makes an EBITDA margin of 40-45%. 


Shougang Fushan Resources (639 HK): Cash 83% of Market Cap, 11% Trailing Dividend Yield

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>ETF flows in the Asian region continued their positive momentum during August with Southbound Connect positive again for the week.</li>
<li>
<a href="https://www.smartkarma.com/entities/stella-international" target="_blank" data-smartkarma-citation="entities:7610:1" rel="noopener">Stella International (1836 HK)</a> will increase its dividends and buybacks after positive earnings surprise. <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> saw a surge in new policies from mainlanders in HK.
</li>
<li>
<a href="https://www.smartkarma.com/entities/lufax-holding-ltd-b751749a-8feb-4b4d-85a7-d99ac0308fe7" target="_blank" data-smartkarma-citation="entities:40067:1" rel="noopener">Lufax Holding (6623 HK)</a> reported an earnings miss with declining loan volume. <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> reported a decline of 57% in earnings which was below analysts' estimates.
</li>
</ul>


ETF flows in the Asian region continued their positive momentum during August with Southbound Connect positive again for the week.

Stella International (1836 HK) will increase its dividends and buybacks after positive earnings surprise. AIA Group Ltd (1299 HK) saw a surge in new policies from mainlanders in HK.


Lufax Holding (6623 HK) reported an earnings miss with declining loan volume. Yancoal Australia (3668 HK) reported a decline of 57% in earnings which was below analysts' estimates.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 26)

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<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 a play on strengthening coking coal prices with downside protection due to its net cash reserves of 1.1 bn USD (Vs. Mkt Cap 2.1).</li>
<li>At the lower end of the cost curve, its EBITDA margins have averaged 54% (last 16 years), with its lowest EBITDA number of 19% in FY15.</li>
<li>With an 80% payout, the company trades at a trailing yield of 9% (the average spot price assumed is 1900 RMB/ton).</li>
</ul>



Shougang Fushan Resources (639 HK) is a play on strengthening coking coal prices with downside protection due to its net cash reserves of 1.1 bn USD (Vs. Mkt Cap 2.1).
At the lower end of the cost curve, its EBITDA margins have averaged 54% (last 16 years), with its lowest EBITDA number of 19% in FY15.
With an 80% payout, the company trades at a trailing yield of 9% (the average spot price assumed is 1900 RMB/ton).


Fushan Energy (639 HK): Coking Coal Prices To Strengthen With Anglo Accident

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<li>We preview <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> earnings for FY23. We expect revenue /profit growth of -15%/12% YoY with H2FY23 revenue/profit -1.7%/2.3% YoY due to lower coking coal prices.</li>
<li>We expect the company to pay an FY23 dividend of 36 HKD cents, implying an 11.3% yield. At the current spot price, the implied yield is 11.3%. </li>
<li>The company's balance sheet is rich in cash, with more than a billion USD (~50% of market capitalization). However, we are skeptical that the company will pay big special dividends. </li>
</ul>


We preview Shougang Fushan Resources (639 HK) earnings for FY23. We expect revenue /profit growth of -15%/12% YoY with H2FY23 revenue/profit -1.7%/2.3% YoY due to lower coking coal prices.
We expect the company to pay an FY23 dividend of 36 HKD cents, implying an 11.3% yield. At the current spot price, the implied yield is 11.3%. 
The company's balance sheet is rich in cash, with more than a billion USD (~50% of market capitalization). However, we are skeptical that the company will pay big special dividends. 


Shougang Fushan Resource (639 HK): FY23 Earnings, 11% Dividend Yield With ~50% of Mkt Cap in Cash

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)