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.

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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> trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield (based on an 80% payout ratio).</li>
<li>Since our call in FY21, close to 64 cents of the share price (25% of the current share price value) has been returned as dividends making it a dividend machine. </li>
<li>We forecast at least another 70 cents of dividend for H2 FY22 and FY23, bringing the dividend in 3.5 years to more than half the current share price. </li>
</ul>



Shougang Fushan Resources (639 HK) trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield (based on an 80% payout ratio).
Since our call in FY21, close to 64 cents of the share price (25% of the current share price value) has been returned as dividends making it a dividend machine. 
We forecast at least another 70 cents of dividend for H2 FY22 and FY23, bringing the dividend in 3.5 years to more than half the current share price. 


Fushan Energy: 50% of Mkt Cap in Cash / ~18% Dividend Yield / Great Returns Just in Dividends

<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 back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and a dividend yield of 17%. </li>
<li>With &gt;50% of the market capitalization in cash (accounting for the dividend liability), there is an excellent margin of safety in the name.</li>
<li>A further correction of coking coal prices by 20% from these levels to 1700-1800 RMB/ton would still have the stock trading at a &gt;10% dividend yield. </li>
</ul>



Shougang Fushan Resources (639 HK) is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and a dividend yield of 17%. 
With &gt;50% of the market capitalization in cash (accounting for the dividend liability), there is an excellent margin of safety in the name.
A further correction of coking coal prices by 20% from these levels to 1700-1800 RMB/ton would still have the stock trading at a &gt;10% dividend yield. 


Fushan Energy: Back to Interesting Levels

<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 in deep value territory with coking prices averaging over 2600 RMB/ton for the year ( Vs. last years average of 2000 RMB/ton)</li>
<li>The stock trades at 2.6x PE, 0.8x EV-EBITDA with a 22% dividend yield at current spot prices of 2950 RMB/ton, making this an extremely cheap value play. </li>
<li>Further buffer is provided by net cash of 6.7 bn HKD, representing 44% of the market capitalization. Fushan can trade up to 3.50 HKD (20% upside) in the near term.</li>
</ul>



Shougang Fushan Resources (639 HK) is in deep value territory with coking prices averaging over 2600 RMB/ton for the year ( Vs. last years average of 2000 RMB/ton)
The stock trades at 2.6x PE, 0.8x EV-EBITDA with a 22% dividend yield at current spot prices of 2950 RMB/ton, making this an extremely cheap value play. 
Further buffer is provided by net cash of 6.7 bn HKD, representing 44% of the market capitalization. Fushan can trade up to 3.50 HKD (20% upside) in the near term.


<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

Hong Kong

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,

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Shougang Fushan Resources (639 HK)

Fushan Energy: 50% of Mkt Cap in Cash / ~18% Dividend Yield / Great Returns Just in Dividends

Shougang Fushan Resources (639 HK) trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield...

Sameer Taneja

Fushan Energy: Back to Interesting Levels

Shougang Fushan Resources (639 HK) is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and...

Sameer Taneja

Fushan Resources: Swimming in Cash

Shougang Fushan at a 4.6x PE and 1.6x EV-EBITDA with a dividend yield of 17%, assuming a 2,500 RMB/ton coking coal price ( Vs. the current 2,950...

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

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