Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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Thematic (Sector/Industry)

<ul>
<li>China implements coal import caps specifically targeting Australian producers</li>
<li>Unclear as to how widespread these restrictions will eventually be</li>
<li>Thermal and metallurgical coal exports affected</li>
<li>Impacting ~A$8.4Bn of metallurgical coal exports; or 4.4% of national income</li>
<li>Thermal coal exports affected worth ~A$3.8Bn; or an additional 2% of national income</li>
<li>Collectively, thermal and metallurgical exports equate to ~0.9% of Australian annual GDP </li>
<li>Actions appear to be a response to blocking Huawei bidding for the 5G network</li>
<li>Recent Chinese cyber-attacks harden Australian Government's resolve</li>
<li>Expect similar Chinese measures (in time) to be applied to other commodities and industries</li>
</ul>


China implements coal import caps specifically targeting Australian producers
Unclear as to how widespread these restrictions will eventually be
Thermal and metallurgical coal exports affected
Impacting ~A$8.4Bn of metallurgical coal exports; or 4.4% of national income
Thermal coal exports affected worth ~A$3.8Bn; or an additional 2% of national income
Collectively, thermal and metallurgical exports equate to ~0.9% of Australian annual GDP 
Actions appear to be a response to blocking Huawei bidding for the 5G network
Recent Chinese cyber-attacks harden Australian Government's resolve
Expect similar Chinese measures (in time) to be applied to other commodities and industries


Confluence of Politics - China Bans Australian Coal Imports (Flash Note)

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.

Commodities

The coal sector has seen some interest in recent months with new IPO’s (like <a href="https://www.smartkarma.com/entities/27473" target="_blank" data-smartkarma-citation="entities:27473:1">Coronado Global Resources Inc (CRN AU)</a>, <a href="https://www.smartkarma.com/entities/4145" target="_blank" data-smartkarma-citation="entities:4145:1">Yancoal Australia (YAL AU)</a> and few smaller ones) and acquisitions in the industry. In this note, we review the fundamentals of the coal industry and its prospects.

The coal sector has seen some interest in recent months with new IPO’s (like Coronado Global Resources Inc (CRN AU), Yancoal Australia (YAL AU) and few smaller ones) and acquisitions in the industry. In this note, we review the fundamentals of the coal industry and its prospects.     

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Equity Bottom-Up

INVESTMENT VIEW:  We believe <a href="https://www.smartkarma.com/entities/13" target="_blank" data-smartkarma-citation="entities:13:1">Rio Tinto Ltd (RIO AU)</a> shares are oversold versus <a href="https://www.smartkarma.com/entities/147" target="_blank" data-smartkarma-citation="entities:147:1">Bhp Billiton (BHP AU)</a> and recommend a pair trade: long Rio; short BHP.  Our analysis of each company’s earnings sensitivities to recent commodity price changes reveals much less contention to their earnings outlook than their share price changes since mid-June implies.  We look for Rio’s shares to regain 16% on a relative basis versus BHP into the next earning cycle.

INVESTMENT VIEW:   We believe Rio Tinto Ltd (RIO AU) shares are oversold versus Bhp Billiton (BHP AU) and recommend a pair trade: long Rio; short BHP.  Our analysis of each company’s earnings sensitivities to recent commodity price changes reveals much less contention to their earnings outlook than their share price changes since mid-June implies.  We look for Rio’s shares to regain 16% on a relative basis versus BHP into the next earning cycle. 

US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP

Aluminum Corporation Of China / Equity Bottom-Up

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average <a href="https://www.smartkarma.com/entities/22876" target="_blank" data-smartkarma-citation="entities:22876:1">Coal (COAL COMDTY)</a> price forecasts by 10% after strong price gains of 12% in May.  China's anti-pollution campaigns have curbed coal production and resulted in regional shortages. However, looking beyond these recent bottlenecks we remain bearish on the outlook for growth in China's coal consumption and pricing due to Beijing's long-stated aim at reducing air pollution.Additionally, we cut our annual average <a href="https://www.smartkarma.com/entities/22870" target="_blank" data-smartkarma-citation="entities:22870:1">Gold</a>…

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains of 12% in May.  China's anti-pollution campaigns have curbed coal production and resulted in regional shortages. However, looking beyond these recent bottlenecks we remain bearish on the outlook for growth in China's coal consumption and pricing due to Beijing's long-stated aim at reducing air pollution.Additionally, we cut our annual average Gold…

Energy Drives Commodity Price Gains in May

Commodities Trading - Credit Risk

Alan Chong

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.

When it comes to thermal coal, two questions come to mind. What is the future for coal demand given the changing mix of fuel options for electricity generators? Also, is the end of coal in sight considering the environmentalist campaign to phase out this least loved and dirtiest natural resource? We, at Bondcritic, reckon that thermal coal is here to stay for decades to come whether you like it or not and there is good amount of money to be made from companies that remain invested in the business.

When it comes to thermal coal, two questions come to mind. What is the future for coal demand given the changing mix of fuel options for electricity generators? Also, is the end of coal in sight considering the environmentalist campaign to phase out this least loved and dirtiest natural resource? We, at Bondcritic, reckon that thermal coal is here to stay for decades to come whether you like it or not and there is good amount of money to be made from companies that remain invested in the business.

Australia

Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure. Coal is composed primarily of carbon along with variable quantities of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. A fossil fuel, coal forms when dead plant matter is converted into peat, which in turn is converted into lignite, then sub-bituminous coal, after that bituminous coal, and lastly anthracite. This involves biological and geological processes that take place over a long period.

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Coal (COAL COMDTY)

Confluence of Politics - China Bans Australian Coal Imports (Flash Note)

China implements coal import caps specifically targeting Australian producers Unclear as to how widespread these restrictions will eventually...

Boost Research

Coal Mining: A Tale of Two Commodities

The coal sector has seen some interest in recent months with new IPO’s (like Coronado Global Resources Inc (CRN AU), Yancoal Australia (YAL AU) and...

Venkat Ramana Nandyal

Energy Drives Commodity Price Gains in May

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains...

Charles Spencer

Coal Is Here to Stay

When it comes to thermal coal, two questions come to mind. What is the future for coal demand given the changing mix of fuel options for...

Bondcritic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Confluence of Politics - China Bans Australian Coal Imports (Flash Note)

China implements coal import caps specifically targeting Australian producers Unclear as to how widespread these restrictions will eventually...

Boost Research

Coal Mining: A Tale of Two Commodities

The coal sector has seen some interest in recent months with new IPO’s (like Coronado Global Resources Inc (CRN AU), Yancoal Australia (YAL AU) and...

Venkat Ramana Nandyal

US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP

INVESTMENT VIEW: We believe Rio Tinto Ltd (RIO AU) shares are oversold versus Bhp Billiton (BHP AU) and recommend a pair trade: long Rio; short...

Charles Spencer

Energy Drives Commodity Price Gains in May

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains...

Charles Spencer

Coal Is Here to Stay

When it comes to thermal coal, two questions come to mind. What is the future for coal demand given the changing mix of fuel options for...

Bondcritic