External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Yancoal achieved thermal coal ASP of A$430/t in 4Q22 (+121% YoY) which is higher than API5 price (the major benchmark of 5500kCal; +32% YoY).</li><li>This is the second quarter that Yancoal successfully beat the benchmark through effective coal sales strategy.</li><li>This strong ASP helped offset the weak attributable coal sales (-30% YoY) as a result of rain disruptions, taking the revenue up 41% YoY in 4Q, based on our calculation.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal achieved thermal coal ASP of A$430/t in 4Q22 (+121% YoY) which is higher than API5 price (the major benchmark of 5500kCal; +32% YoY).This is the second quarter that Yancoal successfully beat the benchmark through effective coal sales strategy.This strong ASP helped offset the weak attributable coal sales (-30% YoY) as a result of rain disruptions, taking the revenue up 41% YoY in 4Q, based on our calculation.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Thermal ASP in 4Q continued to beat benchmark

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

Event-Driven

Brilliance China Automotive / Event-Driven

<ul>
<li>We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.</li>
<li>We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. </li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

Thematic (Sector/Industry)

<ul><li>In our last report dated 17 October, we highlighted a list of 21 long ideas.</li><li>The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).</li><li>China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In our last report dated 17 October, we highlighted a list of 21 long ideas.The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CMBI Research Focus List (November Edition) – Our best high conviction stock ideas

<ul><li>We are surprised that Yancoal achieved thermal coal ASP growth of 226% YoY (39% QoQ) in 3Q22, which is way above the API5 price (the major benchmark of 5500kCal; 118% YoY; 6% QoQ).</li><li>This suggests good management execution. Yancoal maintains the full year saleable production guidance of 31-33mn tonnes and unit cash cost of A$84-89/t (excluding royalties).</li><li>While the volume target is challenging, we expect it will be more than offset by a strong coal price in 4Q22E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are surprised that Yancoal achieved thermal coal ASP growth of 226% YoY (39% QoQ) in 3Q22, which is way above the API5 price (the major benchmark of 5500kCal; 118% YoY; 6% QoQ).This suggests good management execution. Yancoal maintains the full year saleable production guidance of 31-33mn tonnes and unit cash cost of A$84-89/t (excluding royalties).While the volume target is challenging, we expect it will be more than offset by a strong coal price in 4Q22E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – 3Q Thermal Coal ASP Way Above Benchmark

<ul><li>We are encouraged by Yancoal’s decision to repay US$1bn (~A$1.56bn) of debt in advance. We estimate the interest cost savings will increase net profit in 2022E/23E/24E by 0.3%/1%/1%.</li><li>Most importantly, it will significantly reduce the potential risk arising from the strong US$ and interest rate hike.</li><li>We estimate the prepayment will not hinder Yancoal from achieving 50% dividend payout ratio this year, given the strong free cash flow (~A$4bn based on our estimate).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are encouraged by Yancoal’s decision to repay US$1bn (~A$1.56bn) of debt in advance. We estimate the interest cost savings will increase net profit in 2022E/23E/24E by 0.3%/1%/1%.Most importantly, it will significantly reduce the potential risk arising from the strong US$ and interest rate hike.We estimate the prepayment will not hinder Yancoal from achieving 50% dividend payout ratio this year, given the strong free cash flow (~A$4bn based on our estimate).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Further risk reduction after prepayment of US$1bn debts

Australia

Yancoal Australia Limited provides coal mining services. The Company mines, processes, and sells pure-coal, metallurgical coal, and more. Yancoal Australia also exports its products.

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Yancoal Australia (3668 HK)