Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of ASX Stocks as of Jul 21st (reported today) which has an aggregated short interest worth USD16.3bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside Energy, Northern Star Re, Whitehaven Coal.</li>
</ul>


We analyzed the changes in short interest of ASX Stocks as of Jul 21st (reported today) which has an aggregated short interest worth USD16.3bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside Energy, Northern Star Re, Whitehaven Coal.


ASX Short Interest Weekly (Jul 21st): BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> released its June Quarterly. The company is in blackout (starting July 1st) till its release of annual results on August 24th, 2023.</li>
<li>June quarter OCF was 435 mn AUD ( Avg Coal Px 177 USD/ton), and net cash on the balance sheet was 2.65 bn AUD representing 45% of market capitalization.</li>
<li>To complete its buyback program, 147 million shares remain left to repurchase (current o/s shares 836 mn). 196 million shares have been repurchased so far since March 2022.</li>
</ul>



Whitehaven Coal (WHC AU) released its June Quarterly. The company is in blackout (starting July 1st) till its release of annual results on August 24th, 2023.
June quarter OCF was 435 mn AUD ( Avg Coal Px 177 USD/ton), and net cash on the balance sheet was 2.65 bn AUD representing 45% of market capitalization.
To complete its buyback program, 147 million shares remain left to repurchase (current o/s shares 836 mn). 196 million shares have been repurchased so far since March 2022.


Whitehaven Coal June Quarterly: 45% of Mkt Cap in Cash, >20% OCF Yield, Aggressive Buyback

<ul>
<li>
<a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> guided down production in an update released yesterday by 5-10% from a range of 19-20 mnt to 18-19 mnt for FY23.</li>
<li>Net cash increased 300 mn AUD QoQ from 2.5 bn to 2.7 bn AUD representing 44% of market capitalization with 1.2 bn AUD of operating cash flow alone in Q3!</li>
<li>We agree an OCF yield of 80% (1.2 bn*4 qtrs on a six bn mkt cap) is unsustainable; the capital allocation possible on this name is mind-boggling. </li>
</ul>



Whitehaven Coal (WHC AU) guided down production in an update released yesterday by 5-10% from a range of 19-20 mnt to 18-19 mnt for FY23.
Net cash increased 300 mn AUD QoQ from 2.5 bn to 2.7 bn AUD representing 44% of market capitalization with 1.2 bn AUD of operating cash flow alone in Q3!
We agree an OCF yield of 80% (1.2 bn*4 qtrs on a six bn mkt cap) is unsustainable; the capital allocation possible on this name is mind-boggling. 


Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/harvey-norman-holdings-ltd" target="_blank" data-smartkarma-citation="entities:645:1" rel="noopener">Harvey Norman Holdings (HVN AU)</a> will be deleted from the MVIS Australia Equal Weight Index at the close of trading on 17 March.</li>
<li>One way turnover is 3.9% resulting in a one-way trade of A$68m. Only <a href="https://www.smartkarma.com/entities/harvey-norman-holdings-ltd" target="_blank" data-smartkarma-citation="entities:645:1" rel="noopener">Harvey Norman Holdings (HVN AU)</a> has more than 1 day of ADV to sell from passive trackers.</li>
<li>
<a href="https://www.smartkarma.com/entities/harvey-norman-holdings-ltd" target="_blank" data-smartkarma-citation="entities:645:1" rel="noopener">Harvey Norman Holdings (HVN AU)</a> has underperformed <a href="https://www.smartkarma.com/entities/myer-holdings-ltd" target="_blank" data-smartkarma-citation="entities:577:1" rel="noopener">Myer Holdings (MYR AU)</a> significantly over the recent past and the index deletion could provide an entry point into a trade.</li>
</ul>



Harvey Norman Holdings (HVN AU) will be deleted from the MVIS Australia Equal Weight Index at the close of trading on 17 March.
One way turnover is 3.9% resulting in a one-way trade of A$68m. Only Harvey Norman Holdings (HVN AU) has more than 1 day of ADV to sell from passive trackers.

Harvey Norman Holdings (HVN AU) has underperformed Myer Holdings (MYR AU) significantly over the recent past and the index deletion could provide an entry point into a trade.


MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes

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

Australia

Whitehaven Coal Limited mines and sells metallurgical and thermal coals to the global steel, power generation, and metallurgical industries.

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Whitehaven Coal (WHC AU)

ASX Short Interest Weekly (Jul 21st): BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside

We analyzed ASX short interest report for the past week and highlight short interest changes in BHP, ANZ, Endeavour, South32, Mineral Resource,...

Ke Yan, CFA, FRM

Whitehaven Coal June Quarterly: 45% of Mkt Cap in Cash, >20% OCF Yield, Aggressive Buyback

Whitehaven Coal has net cash of 2.65 bn AUD representing 45% of market capitalization on its balance sheet and >20% OCF. Despite subdued coal...

Sameer Taneja

Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!

Whitehaven coal has accumulated 2.7 bn AUD of cash, representing 44% of its market capitalization. With a plan to buy back 25% of its outstanding...

Sameer Taneja

MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes

Harvey Norman will be deleted from the MVMVW Index at the close on 17 March. One way turnover is 3.9% resulting in a one-way trade of A$68m. The...

Brian Freitas

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

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