APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

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.

Event-Driven

<ul>
<li>Glencore is looking to raise US$293m (A$422m) from selling its stake in <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a>. This would be a clean up sale.</li>
<li>Glencore has been sitting on its stake for a while now, and the two have a JV in the Hunter Valley Operations, the latter which commenced in Jul 2017.</li>
<li>The deal, while a large one to process at 135.6 days of three month ADV, represents just 5.6% of Yancoal Australia’s current mcap.</li>
</ul>


Glencore is looking to raise US$293m (A$422m) from selling its stake in Yancoal Australia (YAL AU). This would be a clean up sale.
Glencore has been sitting on its stake for a while now, and the two have a JV in the Hunter Valley Operations, the latter which commenced in Jul 2017.
The deal, while a large one to process at 135.6 days of three month ADV, represents just 5.6% of Yancoal Australia’s current mcap.


Yancoal Australia Placement - Cleanup Sale by Glencore Now the Ball Is in Yankuang Court

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a>’s independent board committee unanimously concluded that <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy Group (1171 HK)</a>’s H-Share CBs offer is not in the best interests of Yancoal’s minority shareholders. </li>
<li>Yankuang is open to continuing its discussions with <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> but maintains that the offer was based on long-term factors including expectations of future coal prices.</li>
<li>Overall, the wording of Yankuang’s response suggests that it is more inclined to bide its time rather than return with a better offer. Required FIRB approval remains an overhang.</li>
</ul>



Yancoal Australia (YAL AU)’s independent board committee unanimously concluded that Yankuang Energy Group (1171 HK)’s H-Share CBs offer is not in the best interests of Yancoal’s minority shareholders. 
Yankuang is open to continuing its discussions with Yancoal Australia (3668 HK) but maintains that the offer was based on long-term factors including expectations of future coal prices.
Overall, the wording of Yankuang’s response suggests that it is more inclined to bide its time rather than return with a better offer. Required FIRB approval remains an overhang.


Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0607/2022060700001.pdf" target="_blank" rel="noopener">rejection</a> of <strong><a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy (1171 HK)</a></strong>'s proposal by <strong><a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a></strong> independent board was always on the cards.</li>
<li>Yet the bigger question remains - why was this unorthodox structure, involving the issuance of H-Share convertible bonds, tabled in the first place?</li>
<li>Back in Yankuang's court. Revise terms? Walk away? To note, Yancoal has not, to date, received any formal offer or proposal from Yankuang.</li>
</ul>


The rejection of Yankuang Energy (1171 HK)'s proposal by Yancoal Australia (3668 HK) independent board was always on the cards.
Yet the bigger question remains - why was this unorthodox structure, involving the issuance of H-Share convertible bonds, tabled in the first place?
Back in Yankuang's court. Revise terms? Walk away? To note, Yancoal has not, to date, received any formal offer or proposal from Yankuang.


Yancoal, Not Surprisingly, Rejects Yankuang's Proposal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a> is likely to reject <a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yanzhou Coal Mining Company Limited H (1171 HK)</a>’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> share, <a href="https://www.reuters.com/markets/europe/glencore-reject-offer-yancoal-australia-stake-too-low-sources-2022-06-02/" target="_blank" rel="noopener">according to Reuters</a>.</li>
<li>If the privatisation succeeds, we estimate that Yankuang’s additional claim on <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a>’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.</li>
<li>The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. </li>
</ul>



Glencore Plc (GLEN LN) is likely to reject Yanzhou Coal Mining Company Limited H (1171 HK)’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per Yancoal Australia (YAL AU) share, according to Reuters.
If the privatisation succeeds, we estimate that Yankuang’s additional claim on Yancoal Australia (3668 HK)’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.
The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. 


Glencore and Yankuang’s Disparate Valuations of Yancoal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yanzhou Coal Mining Company Limited H (1171 HK)</a>/Yankuang, a 62.26% shareholder, aims to offer H Share convertible bonds for US$3.60 (HK$28.26 or A$5.07) per <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> share.</li>
<li>Yankuang’s implied offer price is -16.6% and -14.5% below the last close price on the ASX and HKEx, respectively. At first glance, the offer seems to be a non-starter.  </li>
<li>Yankuang’s end game is likely to provide large shareholders with a liquidity event to hit the 90% compulsory acquisition threshold. This ploy could work subject to FIRB approval. </li>
</ul>



Yanzhou Coal Mining Company Limited H (1171 HK)/Yankuang, a 62.26% shareholder, aims to offer H Share convertible bonds for US$3.60 (HK$28.26 or A$5.07) per Yancoal Australia (YAL AU) share.
Yankuang’s implied offer price is -16.6% and -14.5% below the last close price on the ASX and HKEx, respectively. At first glance, the offer seems to be a non-starter.  
Yankuang’s end game is likely to provide large shareholders with a liquidity event to hit the 90% compulsory acquisition threshold. This ploy could work subject to FIRB approval. 


Yancoal’s Unusual Low Bid from Yankuang Energy

Switzerland

Schmolz + Bickenbach AG through its subsidiaries, manufacture, processes, and distribute long steel products. The Company produces high-grade steels, bright and special steels, as well as stainless, acid and heat-resistant steels. Schmolz + Bickenbach operate internationally.

Ems-Chemie Holding AG manufactures and markets performance polymers, high-grade chemical intermediates, fine chemicals, and protective bonding, coating and sealing products.  The Company supplies its products to the automotive, transportation, and textile industries.

Sika AG manufactures construction materials. The Company produces concrete and mixtures, mortar, sealants and adhesives, tooling resins, anti-static industrial flooring, and acoustic materials. Sika serves customers worldwide.

Givaudan SA manufactures and markets fragrances and flavors from natural and synthetic ingredients. The Company sells its products to manufacturers of perfumes, beverages, prepared foods, and consumer goods. Givaudan operates worldwide.

Clariant AG is a global specialty chemicals company. The Company's products and services are grouped into four business areas: Care Chemicals, Catalysis & Energy, Natural Resources and Plastics & Coatings. Clariant develops, produces, markets and sells specialty chemical products for various end markets.

Evolva Holding SA is a biotech firm. The Company's mission is to discover and provide innovative, sustainable ingredients for health, nutrition and wellness. Evolva uses biosynthetic and evolutionary technologies to create and optimise small molecule compounds and their production routes.

Rio Tinto Limited is an international mining company.  The Company has interests in mining for aluminum, borax, coal, copper, gold, iron ore, lead, silver, tin, uranium, zinc, titanium dioxide feedstock, diamonds, talc and zircon. Dually-listed company with RIO LN.

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

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.

Glencore Plc is a diversified natural resources company. The Company operates in three groups: Metals and Minerals, Energy Products, and Agricultural Products. Glencore Plc offers its products and services around the world.

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Glencore Plc (GLEN LN)

Yancoal Australia Placement - Cleanup Sale by Glencore Now the Ball Is in Yankuang Court

Glencore is looking to raise US$293m (A$422m) from selling its stake in Yancoal Australia (YAL AU). This would be a clean up sale.

Clarence Chu

Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal

Yancoal unsurprisingly batted away Yankuang's low-ball offer. The wording in Yankuang's response suggests that it is unlikely to offer improved...

Arun George

Yancoal, Not Surprisingly, Rejects Yankuang's Proposal

There is no firm Offer. It's not at all certain one will be pitched, and one that is considered representative - and less quirky. For now, a bet...

David Blennerhassett

Glencore and Yankuang’s Disparate Valuations of Yancoal

Glencore is likely to reject Yankuang’s offer, according to Reuters. While Glencore is said to be a willing seller, we think that Yankuang will...

Arun George

Yancoal’s Unusual Low Bid from Yankuang Energy

Yankuang’s implied offer price is materially below the last close price on both the ASX and HKEx. The strategy is likely to secure large...

Arun George

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