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

Commodities

<ul>
<li>We like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. </li>
<li>The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. </li>
<li>The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). </li>
</ul>


We like Vale (VALE US) for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. 
The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. 
The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). 


VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

Equity Bottom-Up

<ul>
<li>The pivot in capital allocation plans of <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> by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. </li>
<li>We think the increase in capex spending in a frothy pricing environment and focus on M&amp;A for spending the 2.6 bn of cash is a coin toss on capital allocation. </li>
<li>We prefer names that keep their capital allocation plans consistent, e.g., <a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a>, and would take money off the table here.</li>
</ul>


The pivot in capital allocation plans of Whitehaven Coal (WHC AU) by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. 
We think the increase in capex spending in a frothy pricing environment and focus on M&amp;A for spending the 2.6 bn of cash is a coin toss on capital allocation. 
We prefer names that keep their capital allocation plans consistent, e.g., Indo Tambangraya Megah (ITMG IJ), and would take money off the table here.


Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>Solactive has announced the constituent changes for the Global Uranium &amp; Nuclear Components Index. There are 8 adds and 1 delete with implementation at the close on 4 February.</li>
<li>Prior to the rebalance, <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">BHP Billiton (BLT LN)</a> will be deleted at the close on 28 January following Unification with <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a>.</li>
<li>The flows on the stocks are small, but there is a big impact on the inclusions in Australia. <a href="https://www.smartkarma.com/entities/global-x-uranium-etf" target="_blank" data-smartkarma-citation="entities:32107:1" rel="noopener">Global X Uranium ETF (URA US)</a> will buy around 5.5% of float.</li>
</ul>


Solactive has announced the constituent changes for the Global Uranium &amp; Nuclear Components Index. There are 8 adds and 1 delete with implementation at the close on 4 February.
Prior to the rebalance, BHP Billiton (BLT LN) will be deleted at the close on 28 January following Unification with BHP Group (BHP AU).
The flows on the stocks are small, but there is a big impact on the inclusions in Australia. Global X Uranium ETF (URA US) will buy around 5.5% of float.


Solactive Global Uranium & Nuclear Components Index Rebalance: Most Adds in Oz

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The pre-conditional Scheme from its founders and CVC for <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer (1337 HK)</a> at $2.82/share, is a 55.8% premium to the undisturbed price, but below the 2017 IPO price of $3.88.</li>
<li>
<a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a>'s implied stub and the simple ratio (CKH/ <a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a>) are currently at an all-time low.</li>
<li>The local government is now getting practically involved in the resolution of the financial problems of <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande (3333 HK)</a>and <a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">Evergrande Auto (708 HK)</a>. </li>
</ul>


The pre-conditional Scheme from its founders and CVC for Razer (1337 HK) at $2.82/share, is a 55.8% premium to the undisturbed price, but below the 2017 IPO price of $3.88.

CK Hutchison Holdings (1 HK)'s implied stub and the simple ratio (CKH/ CK Infrastructure Holdings (1038 HK)) are currently at an all-time low.
The local government is now getting practically involved in the resolution of the financial problems of Evergrande (3333 HK)and Evergrande Auto (708 HK). 


Last Week in Event SPACE: Razer Inc, Evergrande Land/Auto, CK Hutchison, Grab SPAC

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of ASX Stocks as of Nov 1st (reported today) which has an aggregated short interest worth USD24.5bn.</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 Aristocrat Leisure, Woolworths, Brambles, Xero.</li>
</ul>


We analyzed the changes in short interest of ASX Stocks as of Nov 1st (reported today) which has an aggregated short interest worth USD24.5bn.
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 Aristocrat Leisure, Woolworths, Brambles, Xero.


ASX Short Interest Weekly (Nov 1st): Aristocrat Leisure, Woolworths, Brambles, Xero

Australia

BHP Billiton Limited is an international resources company.  The Company's principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.  Dually-listed company with BLT LN.

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BHP Group Ltd (BHP US)

VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

We initiate coverage on VALE US, one of the world's biggest iron ore producers, with high-grade iron ore and low-cost production. The stock trades...

Sameer Taneja

Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition

We provide a rationale for why we do not like Whitehaven Coal's suspension of its buy back program despite the strong coal price environment and...

Sameer Taneja

Solactive Global Uranium & Nuclear Components Index Rebalance: Most Adds in Oz

There are 8 adds and 1 delete for the Solactive Global Uranium & Nuclear Components Index to be implemented at the close on 4 February. There isn't...

Brian Freitas

Last Week in Event SPACE: Razer Inc, Evergrande Land/Auto, CK Hutchison, Grab SPAC

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

ASX Short Interest Weekly (Nov 1st): Aristocrat Leisure, Woolworths, Brambles, Xero

We analyzed ASX short interest report for the past week and highlight short interest changes in Aristocrat Leisure, Woolworths, Brambles, Xero.

Ke Yan, CFA, FRM

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