Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On 12 May 2020, <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> released an <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/d8db546e-c273-45bb-91e7-7d27181f847b.pdf" target="_blank" rel="noopener">announcement</a> that a Delisting Proposal had been made to the Board by one member of the promoter group, <a href="https://www.smartkarma.com/entities/vedanta-resources-plc" target="_blank" data-smartkarma-citation="entities:22202:1" rel="noopener">Vedanta Resources (VED LN)</a>. The next day, the Board <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/b1d8e451-77f0-4a23-81aa-d61b7e934c11.pdf" target="_blank" rel="noopener">announced</a> that it had appointed a merchant banker to perform Due Diligence as the board of the target of a Delisting Offer proposal is required to do.On the 18th of May, the Board <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/e8d85371-ab1b-4213-8255-020c02cf8136.pdf" target="_blank" rel="noopener">announced</a> that it had considered the Delisting Proposal and the Due Diligence Report, which had been provided by SBI Capital Markets in the intervening four days (that was a VERY fast Due Diligence Report).<ul>
<li>The Board approved the Delisting Proposal</li>
<li>The Board approved a call for shareholder approval by special resolution through postal ballot and e-voting. </li>
</ul>That started the ball rolling. In recent Delisting Offer events, the postal ballot ends about 6-8 weeks after the Second Board Meeting, as shown in the guide to such offers, called <a href="https://www.smartkarma.com/insights/indian-delisting-exit-offers-know-your-process-and-the-games-played" target="_blank" data-smartkarma-citation="insights:39683" rel="noopener">Indian Delisting/Exit Offers - Know Your Process and The Games Played</a>. This time, yesterday, the company <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/32ac248c-3fda-49c1-9e43-86d4ed7f9cf6.pdf" target="_blank" rel="noopener">announced</a> (on a holiday no less), that e-voting would start the next day and end in one month. A business cartoon in the Business India magazine 15 years ago had a round-ish Anil Agarwal squeezing himself into an hourglass, saying “In India, you must have patience. Everything will come through.” This Delisting Proposal has been waiting for years, and is beyond opportunistic. Now it is being moved along quickly. As a speculative trade, this is a complete no-brainer. But it is not something one sits on.

On 12 May 2020, Vedanta Ltd (VEDL IN) released an announcement that a Delisting Proposal had been made to the Board by one member of the promoter group, Vedanta Resources (VED LN). The next day, the Board announced that it had appointed a merchant banker to perform Due Diligence as the board of the target of a Delisting Offer proposal is required to do.On the 18th of May, the Board announced that it had considered the Delisting Proposal and the Due Diligence Report, which had been provided by SBI Capital Markets in the intervening four days (that was a VERY fast Due Diligence Report).
The Board approved the Delisting Proposal
The Board approved a call for shareholder approval by special resolution through postal ballot and e-voting. 
That started the ball rolling. In recent Delisting Offer events, the postal ballot ends about 6-8 weeks after the Second Board Meeting, as shown in the guide to such offers, called Indian Delisting/Exit Offers - Know Your Process and The Games Played. This time, yesterday, the company announced (on a holiday no less), that e-voting would start the next day and end in one month. A business cartoon in the Business India magazine 15 years ago had a round-ish Anil Agarwal squeezing himself into an hourglass, saying “In India, you must have patience. Everything will come through.” This Delisting Proposal has been waiting for years, and is beyond opportunistic. Now it is being moved along quickly. As a speculative trade, this is a complete no-brainer. But it is not something one sits on.

Vedanta Delisting Offer - How It Goes From Here

Materials, IPO & Equity Analyst

Venkat Ramana Nandyal

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.

<a href="https://www.smartkarma.com/entities/anglo-american-plc" target="_blank" data-smartkarma-citation="entities:21798:1" rel="noopener">Anglo American (AAL LN)</a> has made a firm bid for <a href="https://www.smartkarma.com/entities/sirius-minerals-plc" target="_blank" data-smartkarma-citation="entities:23517:1" rel="noopener">Sirius Minerals (SXX LN)</a> offering GBp 5.5/share valuing <a href="https://www.smartkarma.com/entities/sirius-minerals-plc" target="_blank" data-smartkarma-citation="entities:23517:1" rel="noopener">Sirius Minerals (SXX LN)</a> at £386M (or US$505M). Anglo American has made a firm offer today as required under UK takeover rules. If approved the deal is expected to close by end of March 2020.  Sirius Minerals is still in the construction phase and requires significant funding to ramp up its Polyhalite production capacity to 13mtpa. Anglo American bid provides a lifeline for ramping up the project, reducing financing risk. Although the bid is a 33% premium to pre-offer close price, Sirius has lost ~85% of its value in 2019 after it pulled out of debt raise of US$500M in September 2019.We believe that this would be the best offer for current Sirius Minerals shareholders' given the current market conditions and cash flow situation of the company.

Anglo American (AAL LN) has made a firm bid for Sirius Minerals (SXX LN) offering GBp 5.5/share valuing Sirius Minerals (SXX LN) at £386M (or US$505M). Anglo American has made a firm offer today as required under UK takeover rules. If approved the deal is expected to close by end of March 2020.  Sirius Minerals is still in the construction phase and requires significant funding to ramp up its Polyhalite production capacity to 13mtpa. Anglo American bid provides a lifeline for ramping up the project, reducing financing risk. Although the bid is a 33% premium to pre-offer close price, Sirius has lost ~85% of its value in 2019 after it pulled out of debt raise of US$500M in September 2019.We believe that this would be the best offer for current Sirius Minerals shareholders' given the current market conditions and cash flow situation of the company.

Anglo American Bid For Sirius: A Lifeline for Sirius Investors

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally. These ongoing improvements further cement our positive overall outlook, and we continue to believe that global equities (MSCI ACWI) are poised for additional strength moving forward. In our April International Strategy, we highlight various themes which lead to our overall positive outlook, along with areas within the world's markets where we see immediate opportunity.

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally. These ongoing improvements further cement our positive overall outlook, and we continue to believe that global equities (MSCI ACWI) are poised for additional strength moving forward. In our April International Strategy, we highlight various themes which lead to our overall positive outlook, along with areas within the world's markets where we see immediate opportunity.

Global Ex-U.S. Equity Strategy: Positive Outlook Intact; Remain Overweight China

Equity analyst UK & Europe, UK Long Short

Peter Toeman

Equity analyst UK & Europe

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted.
The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.
Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/949/original/Capture%201.PNG?1552520300" class="editor-image img-responsive" data-smartkarma-image-id="81949"></figure>
<div class="content-caption">S&amp;P Capital IQ</div>
</div>

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted.
The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.
Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  


S&amp;P Capital IQ


Credit Researcher - South Asia, Bondcritic

Shrey Bhandari

Credit Researcher - South Asia

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

<a href="https://www.smartkarma.com/entities/22202" target="_blank" data-smartkarma-citation="entities:22202:1">Vedanta Resources (VED LN)</a> (Vedanta)’s net debt of USD6.4bn for six months ended 30 September 2018 results in a net debt/EBITDA ratio of 3.2x compared to 2.4x a year earlier. We are worried about the company’s rising debt amidst new court orders in India barring it from reopening its subsidiary’s controversial copper plant in the southern state of Tamil Nadu. Vedanta’s subsidiary <a href="https://www.smartkarma.com/entities/514" target="_blank" data-smartkarma-citation="entities:514:1">Vedanta Ltd (VEDL IN)</a> (VL) has also witnessed a sharp decline in its stock price over the past three months due to uncertainty over the plant. Vedanta’s 1HFY19 revenues of USD7.1bn saw a 4% increase compared to the same period last year as a result of higher aluminium sales as well as rising commodity prices. Vedanta’s EBITDA for 1HFY19 stood at USD1.7bn, a 1% increase compared to the same period the year before, driven by the higher oil prices as well as better operating efficiencies. Average production metrics increased across the board, including higher production of oil, aluminium, and steel.
We reiterate our OVERWEIGHT recommendation for the VEDLN complex (21s, 23s and 24s) on its attractive yields versus Indian quasi-sovereign peers and the company’s consistent operating performance.

Vedanta Resources (VED LN) (Vedanta)’s net debt of USD6.4bn for six months ended 30 September 2018 results in a net debt/EBITDA ratio of 3.2x compared to 2.4x a year earlier. We are worried about the company’s rising debt amidst new court orders in India barring it from reopening its subsidiary’s controversial copper plant in the southern state of Tamil Nadu. Vedanta’s subsidiary Vedanta Ltd (VEDL IN) (VL) has also witnessed a sharp decline in its stock price over the past three months due to uncertainty over the plant. Vedanta’s 1HFY19 revenues of USD7.1bn saw a 4% increase compared to the same period last year as a result of higher aluminium sales as well as rising commodity prices. Vedanta’s EBITDA for 1HFY19 stood at USD1.7bn, a 1% increase compared to the same period the year before, driven by the higher oil prices as well as better operating efficiencies. Average production metrics increased across the board, including higher production of oil, aluminium, and steel.
We reiterate our OVERWEIGHT recommendation for the VEDLN complex (21s, 23s and 24s) on its attractive yields versus Indian quasi-sovereign peers and the company’s consistent operating performance.

Vedanta Resources PLC: Holding Firm Despite Rising Net Debt

United Kingdom

Antofagasta plc owns and operates copper mines in Chile and conducts exploration activities in Chile and Peru.  The Group also operates a rail network servicing the mining region of northern Chile, as well as operates a concession for the distribution of water in this region.

Centamin plc is a mid-tier gold producer with gold production from the Sukari gold mine in southern Egypt. The company owns exploration and development assets in Burkina Faso, Cote d'Ivoire and Ethiopia.

Hill & Smith Holdings PLC manufactures products for the infrastructure, galvanizing, building, and construction industries.  The Company produces traffic barriers, fencing, gantries, lighting columns, pipe supports, steel storage tanks, and variable message signs; plastic drainage pipe and pipe supports; powder coatings; and traffic counting data collection devices.

Hochschild Mining plc explores, mines, processes, and sells silver and gold.

Pan African Resources PLC engages in the exploration and mining of gold and platinum-group element (PGE) properties in South Africa. The company operates through five segments: Barberton Mines, Evander Mines, Phoenix Platinum, Corporate and Growth Projects, and Funding Company. Its PGE properties comprise platinum, palladium, rhodium, iridium, and ruthenium deposits. The company?s assets include Barberton Mines comprising three gold mines and the Barberton Tailings Retreatment Plant, as well as Evander Mines consisting of a gold mine and the Evander Tailings Treatment Plant in Mpumalanga; and Phoenix Platinum, a Chrome Tailing Retreatment Plant located in Rustenburg, South Africa. It also provides funding services. The company was incorporated in 2000 and is based in Johannesburg, South Africa.

Central Asia Metals plc, through its subsidiaries, processes and produces copper cathodes from secondary mining techniques. The company is also involved in the identification, acquisition, and development of base and precious metals deposits. It owns 75% interest in the Copper Bay tailings project located in Chile. The company was founded in 2005 and is headquartered in London, the United Kingdom.

Griffin Mining Limited is a Bermudian mining company, based in London. The Group has a number of interests in mining exploration and development projects throughout the world, the principal of which is a zinc-gold project in China.

Ecora Resources PLC is a royalty company focused on supporting the supply of commodities. Mining operations located in Australia, Canada, and South America.

Metals Exploration plc engages in the acquisition, exploration, and development of mining properties in the western Pacific Rim region. The company?s principal asset is its 100% owned Runruno Gold-Molybdenum project, which is located north of the Philippines. It also explores for zinc, copper, and nickel deposits. Metals Exploration plc was founded in 2004 and is based in London, the United Kingdom.

Mondi PLC is an international packaging and paper group, with key operations in central Europe, Russia and South Africa. The Company is integrated across the paper and packaging process and is principally involved in the manufacture of packaging paper, converted packaging products and uncoated fine paper. Dually-listed company with MND SJ.

Fortescue Metals Group Ltd. explores for and produces iron ore. The Company conducts business worldwide.

United States Steel Corporation operates as an integrated steel producer. The Company manufactures flat-rolled and tubular products with production operations in North America and Europe. United States Steel serves the automotive, appliance, container, industrial machinery, construction, and oil and gas industries.

POSCO Holdings Inc. manufactures and distributes steel products. The Company produces crude steel, hot rolled steel, cold rolled steel, stainless steel, steel plates, wire rods, galvanized steel, electrical steel, and other related products. POSCO Holdings markets its products worldwide.

JFE Holdings, Inc. is a holding company which was established through the merger of NKK Corp and Kawasaki Steel Corp.  The Company manages and conducts its subsidiaries' business, which is steel production and integrated engineering services.

Vedanta Limited mines, produces, and exports base metals. The Company mines and distributes metals such as zinc, iron ore, copper, silver, and aluminium, as well as operates power plants. Vedanta markets its products worldwide.

Newcrest Mining Limited is a gold mining, exploration and production company. The Company is geographically focused in Australia, the Pacific region and Asia. Newcrest Mining operates projects within six provinces in four countries, focusing on the Cadia East and Lihir MOPU expansion projects and the Wafi Golpu and Namosi greenfield projects.

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

China Steel Corporation manufactures and markets a variety of steel products. The main products are hot rolled coils and sheets, cold rolled coils and sheets, wire rods, steel plates, and steel bars.

China Hongqiao Group Ltd. manufactures aluminum products. The Company's aluminum products consist of molten aluminum alloy, aluminum alloy ingots and aluminum busbars.

Baoshan Iron & Steel Co., Ltd. manufactures and markets a variety of iron and steel products including cold rolled plates and coils, hot rolled plates and coils, seamless steel tubes, high-speed wire rods, and steel billets.  The company also operates in related energy production businesses.

Anglo American PLC is a global mining company. The Company's mining portfolio includes bulk commodities including iron ore, manganese and metallurgical coal, base metals including copper and nickel and precious metals and minerals including platinum and diamonds.  Anglo American PLC has mining operations in Africa, Europe, North and South America, Asia and Australia.

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Anglo American (AAL LN)

Vedanta Delisting Offer - How It Goes From Here

On 12 May 2020, Vedanta Ltd (VEDL IN) released an announcement that a Delisting Proposal had been made to the Board by one member of the promoter...

Travis Lundy

Anglo American Bid For Sirius: A Lifeline for Sirius Investors

Anglo American (AAL LN) has made a firm bid for Sirius Minerals (SXX LN) offering GBp 5.5/share valuing Sirius Minerals (SXX LN) at £386M (or...

Venkat Ramana Nandyal

Global Ex-U.S. Equity Strategy: Positive Outlook Intact; Remain Overweight China

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally....

Vermilion Research

FTSE 100 Long/Short: Beginner's Luck

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be...

Boost Research

Vedanta Resources PLC: Holding Firm Despite Rising Net Debt

Vedanta Resources (VED LN) (Vedanta)’s net debt of USD6.4bn for six months ended 30 September 2018 results in a net debt/EBITDA ratio of 3.2x...

Bondcritic

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