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

Equity Bottom-Up

Shougang Fushan Resources / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> is a play on strengthening coking coal prices with downside protection due to its net cash reserves of 1.1 bn USD (Vs. Mkt Cap 2.1).</li>
<li>At the lower end of the cost curve, its EBITDA margins have averaged 54% (last 16 years), with its lowest EBITDA number of 19% in FY15.</li>
<li>With an 80% payout, the company trades at a trailing yield of 9% (the average spot price assumed is 1900 RMB/ton).</li>
</ul>



Shougang Fushan Resources (639 HK) is a play on strengthening coking coal prices with downside protection due to its net cash reserves of 1.1 bn USD (Vs. Mkt Cap 2.1).
At the lower end of the cost curve, its EBITDA margins have averaged 54% (last 16 years), with its lowest EBITDA number of 19% in FY15.
With an 80% payout, the company trades at a trailing yield of 9% (the average spot price assumed is 1900 RMB/ton).


Fushan Energy (639 HK): Coking Coal Prices To Strengthen With Anglo Accident

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates. </li>
<li>Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing. </li>
<li>We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents  FY22: 43 cents).</li>
</ul>



Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates. 
Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing. 
We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents  FY22: 43 cents).


Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%

<ul>
<li>We preview <a href="https://www.smartkarma.com/entities/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> earnings for FY23. We expect revenue /profit growth of -15%/12% YoY with H2FY23 revenue/profit -1.7%/2.3% YoY due to lower coking coal prices.</li>
<li>We expect the company to pay an FY23 dividend of 36 HKD cents, implying an 11.3% yield. At the current spot price, the implied yield is 11.3%. </li>
<li>The company's balance sheet is rich in cash, with more than a billion USD (~50% of market capitalization). However, we are skeptical that the company will pay big special dividends. </li>
</ul>


We preview Shougang Fushan Resources (639 HK) earnings for FY23. We expect revenue /profit growth of -15%/12% YoY with H2FY23 revenue/profit -1.7%/2.3% YoY due to lower coking coal prices.
We expect the company to pay an FY23 dividend of 36 HKD cents, implying an 11.3% yield. At the current spot price, the implied yield is 11.3%. 
The company's balance sheet is rich in cash, with more than a billion USD (~50% of market capitalization). However, we are skeptical that the company will pay big special dividends. 


Shougang Fushan Resource (639 HK): FY23 Earnings, 11% Dividend Yield With ~50% of Mkt Cap in Cash

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shougang-fushan-resources-group-ltd" target="_blank" data-smartkarma-citation="entities:19494:1" rel="noopener">Shougang Fushan Resources (639 HK)</a> energy, a pure play on high coking coal prices, now trades at 5.7x FY24 PE (1.5x EV-EBITDA), assuming 2,200 RMB/ton prices (vs spot 2500). </li>
<li>The company has ~7.5 bn HKD of net cash (on H12023), representing 50% of the market cap despite conducting a recent buyback of 5% and paying all its outstanding dividends/taxes. </li>
<li>With an 80% payout, we can also expect a dividend yield of 14% for FY24 if prices average 2200 RMB/ton.  </li>
</ul>



Shougang Fushan Resources (639 HK) energy, a pure play on high coking coal prices, now trades at 5.7x FY24 PE (1.5x EV-EBITDA), assuming 2,200 RMB/ton prices (vs spot 2500). 
The company has ~7.5 bn HKD of net cash (on H12023), representing 50% of the market cap despite conducting a recent buyback of 5% and paying all its outstanding dividends/taxes. 
With an 80% payout, we can also expect a dividend yield of 14% for FY24 if prices average 2200 RMB/ton.  


Fushan Energy: Coking Coal Prices High and Dividend Yield >10% with ~50% of Mkt Cap in Cash

<ul>
<li>We listened to the <a href="https://whitehavencoal.com.au/wp-content/uploads/2023/10/Whitehaven-Investor_update.mp4" target="_blank" rel="noopener">conference call </a>held by <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> to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. </li>
<li>Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x</li>
<li>The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. </li>
</ul>


We listened to the conference call held by Whitehaven Coal (WHC AU) to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. 
Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x
The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. 


Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

Hong Kong

Honbridge Holdings Limited is an investment holding company. The Company, through its subsidiaries, primarily engages in mineral resources exploration and trading plus lithium battery production.

Tongguan Gold Group Limited operates as a gold mining company. The Company provides gold exploration, mining, processing, sales, and other services. Tongguan Gold Group markets its products throughout Hong Kong.

China Daye Non-Ferrous Metals Mining Ltd., through its subsidiaries, currently possesses various wolfram mines and a molybdenum mine in the Republic of Mongolia along with a number of silver and copper mines in Xinjiang Province, the PRC.

China Daye Non Ferrous Metals Mining (661 HK)

Huili Resources (Group) Limited is a mineral exploration company. The Company is a nickel-oriented diversified mining company principally engaged in mining and ore processing of nickel and copper in Hami, Xinjiang.

IRC Limited is a mineral exploration and production company. The Company is focused on exploring for, developing and operating industrial commodity projects in the Russian Far East and the north-eastern region of China.

Grand T G Gold Holdings Limited is a mining company. The Company focuses on gold exploration, mining and mineral processing in the Peoples Republic of China. Grand T G Gold Holdings current principal gold project-Taizhou Mining is located in Tongguan County, Shaanxi Province along the Xiao Qinlin Mineralized Belt.

Chiho Environmental Group Limited is a mixed scrap recycler.  The Company is an importer of Mixed Metal Scrap used for recycling, reuse, and processing.  Chiho-Tiande Group Ltd breaks down, demolishes, and separates Mixed Metal Scrap such as motor scrap, electric wire, and cable scrap.

Chiho Environmental Group Limited  (976 HK)

Shougang Concord Century Holdings Limited, through its subsidiaries, manufactures steel cords, and processes and trades copper and brass products. The Company also develops and invests in properties.

Shougang Concord Century Holdings Ltd (103 HK)

Golik Holdings Limited, through its subsidiaries, trades and manufactures metal and steel products as well as construction materials.

Greentech Technology International Limited manufactures tin products. The Company produces tin, tin concentrates, and other products. Greentech Technology International also produces insulation materials, heat resistance materials, and other products.

Angang Steel Company Limited produces steel products which include cold rolled sheets, steel rail, pipe billets, wire rods, thick plates, and other steel products.

Maanshan Iron and Steel Company Limited manufactures and markets iron and steel products which can be divided into four categories, wire rods, steel section, medium or thick steel plates, and train wheels and tires.  The production process mainly comprises coking, sintering, iron smelting, steel smelting, and steel rolling.

Kaiser Aluminum Corporation is a producer of fabricated aluminum products for aerospace/high strength, general engineering, automotive and custom industrial applications. The Company's product lines includes sheet, plate, billet, redraw rod, extrusions, forgings, and tube products for a wide array of applications.

Bellevue Gold Limited operates as a mining company. The Company engages in the exploration and development of gold mines. Bellevue Gold serves customers in Australia.

Tung Ho Steel Enterprise Corporation manufactures and markets steel rods, H-shaped steel frames, steel plates, and reinforcements.

Jai Balaji Industries Ltd. manufactures and distributes steel and allied products. The Company markets sponge and pig iron, alloy carbon, mild steel billets, wire rods, and other steel products. Jai Balaji Industries serves customers throughout India.

Shandong Humon Smelting Co., Ltd. is mainly engaged in mining, concentration and smelting of gold, and the manufacture of chemical industry.

Genesis Minerals Limited is an Australian-based mineral exploration company. The Company acquires commercially significant mineral deposits that can be brought into production.

Shandong Iron and Steel Company Ltd. manufactures and markets steel materials. The Company produces pig iron, steel billets, cast iron, and related products.

Godawari Power and Ispat Ltd. manufactures steel.  The Company produces steel billets.

Shougang Fushan Resources Group Ltd. produces and sells coking coal products and side products in China. The Company is principally engaged in mining of coking coal and production and sales of raw and clean coking coal,

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Shougang Fushan Resources (639 HK)

Fushan Energy (639 HK): Coking Coal Prices To Strengthen With Anglo Accident

We highlight Fushan Energy (639 HK) as a way to play the recent Anglo-American coking coal mine disaster. Fushan is a pure play on coking coal,...

Sameer Taneja

Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%

Shougang Fushan Resources (639 HK) is a cheap stock. It trades at 6x PE and 1.4x EV-EBITDA with a potentially 13% yield for FY23e. We review its H1...

Sameer Taneja

Shougang Fushan Resource (639 HK): FY23 Earnings, 11% Dividend Yield With ~50% of Mkt Cap in Cash

We summarize our expectations for 639 HK ( Shougang Fushan Resources ). The stock trades at an 11.3% dividend yield on our estimated FY23 earnings...

Sameer Taneja

Fushan Energy: Coking Coal Prices High and Dividend Yield >10% with ~50% of Mkt Cap in Cash

Shougang Fushan Resources (639 HK) energy, a pure play on high coking coal prices, now trades at 5.7x FY24 PE (1.5x EV-EBITDA), assuming 2,200 RMB...

Sameer Taneja

Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

We provide our take on the recent acquisition of the coal assets of BHP by Whitehaven Coal. By consuming all its cash and taking on debt, the...

Sameer Taneja

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)