Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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.

Equity Capital Markets

<ul>
<li>Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.</li>
<li>TL was the largest producer of mined lithium globally in terms of output and ranked third in terms of revenue generated from lithium in 2020, according to Wood Mackenzie .</li>
<li>In this note, we take a closer look at valuations and where peers are trading in terms of A/H premium.</li>
</ul>


Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
TL was the largest producer of mined lithium globally in terms of output and ranked third in terms of revenue generated from lithium in 2020, according to Wood Mackenzie .
In this note, we take a closer look at valuations and where peers are trading in terms of A/H premium.


Tianqi Lithium A/H Listing - PHIP Updates and a Closer Look at Valuations

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>After a decade long decline in Chilean allocations that stretched the entire twenty-tens, investment levels in Chile have started to reverse course.</li>
<li>The shift in ownership among active managers confirms how a favorable and stable political environment can directly feed through to increased investment in a region.</li>
<li>Active GEM managers have been buying Soc Quimica Y Minera Chile-B, Cencosud SA (CENCOSUD CI) and Empresas Copec Sa.</li>
</ul>


After a decade long decline in Chilean allocations that stretched the entire twenty-tens, investment levels in Chile have started to reverse course.
The shift in ownership among active managers confirms how a favorable and stable political environment can directly feed through to increased investment in a region.
Active GEM managers have been buying Soc Quimica Y Minera Chile-B, Cencosud SA (CENCOSUD CI) and Empresas Copec Sa.


Chile: Political Change Spurs Investor Return

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Technology Select Sector SPDR / Technical Analysis

<ul>
<li>Our outlook remains bearish at the index level considering we have yet to see any developments that suggest a bottom is in. </li>
<li>The S&amp;P 500, Nasdaq 100 (QQQ), Russell 2000 (IWM), and Russell Micro Cap (IWC) indexes remain in downtrends.</li>
<li>In today’s report we highlight attractive Groups and stocks within Materials, Manufacturing,  Services, and Utilities: MA-14 Fertilizer, MF-15 Railroad Equipment &amp; Products, SV-13 Construction &amp; Engineering, Large-Cap, UT-04 Electric, Mid-Atlantic</li>
</ul>


Our outlook remains bearish at the index level considering we have yet to see any developments that suggest a bottom is in. 
The S&amp;P 500, Nasdaq 100 (QQQ), Russell 2000 (IWM), and Russell Micro Cap (IWC) indexes remain in downtrends.
In today’s report we highlight attractive Groups and stocks within Materials, Manufacturing,  Services, and Utilities: MA-14 Fertilizer, MF-15 Railroad Equipment &amp; Products, SV-13 Construction &amp; Engineering, Large-Cap, UT-04 Electric, Mid-Atlantic


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.
<ul style="list-style-type: circle;">
<li>February last year, <a href="https://www.smartkarma.com/entities/wesfarmers-ltd" target="_blank" data-smartkarma-citation="entities:1104:1" rel="noopener">Wesfarmers Ltd (WES AU)</a> <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02342610-6A1020764?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with <a href="https://www.smartkarma.com/entities/soc-quimica-y-minera-chile-b" target="_blank" data-smartkarma-citation="entities:24555:1" rel="noopener">Soc Quimica Y Minera Chile-B (SQM/B CI)</a>. Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was <a href="https://www.wesfarmers.com.au/util/news-media/article/2021/04/15/green-light-for-lithium-project" target="_blank" rel="noopener">announced</a> in February this year. </li>
<li>In <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02320079-6A1011583?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">December</a> last year, <a href="https://www.smartkarma.com/entities/igo-ltd" target="_blank" data-smartkarma-citation="entities:462:1" rel="noopener">IGO Ltd (IGO AU)</a> formed a JV with China’s <a href="https://www.smartkarma.com/entities/sichuan-tianqi-lithium-industries-inc" target="_blank" data-smartkarma-citation="entities:5698:1" rel="noopener">Tianqi Lithium Corporation  (002466 CH)</a>, paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.
<ul style="list-style-type: circle;">
<li>This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.</li>
<li>The transaction was completed on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390039-6A1038822?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">30 June</a>. Around two months earlier, IGO <a href="https://www.australianmining.com.au/news/igo-sells-tropicana-stake-for-903m/" target="_blank" rel="noopener">sold</a> its 30% stake in the Tropicana gold mine joint venture for A$903mn.</li>
<li>Separately, IGO withdrew its takeover offer to <a href="https://www.smartkarma.com/entities/panoramic-resources-ltd" target="_blank" data-smartkarma-citation="entities:15960:1" rel="noopener">Panoramic Resources (PAN AU)</a> in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02190245-6A961368?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">January</a> last year, citing a breach of conditions.</li>
</ul>
</li>
<li>
<a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> acquired <a href="https://www.smartkarma.com/entities/altura-mining-ltd" target="_blank" data-smartkarma-citation="entities:13385:1" rel="noopener">Altura Mining (AJM AU)</a> late last year after the latter entered receivership in November.</li>
<li>
<div>
After circling each other for a couple of years, <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> and <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02364542-2A1293132?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">binding agreement</a> on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in <a href="https://skr.ma/W2guR" target="_blank" rel="noopener">Orocobre/Galaxy Resources: On A Charge</a>.
</div>
</li>
</ul>
Nickel miner <a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a> has now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02408950-6A1046238?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> media reports it is in preliminary discussions with IGO in relation to a change of control proposal. 
No price is mentioned, and due diligence has yet to be afforded.
More below the fold.

After a downturn in the price of the battery commodities and a reduction in tonnes exported, mining consolidations are back in vogue as miners take big bets on electric vehicles, as demand and prices increase for battery minerals.

February last year, Wesfarmers Ltd (WES AU) said it would proceed with the development of a new lithium mine and processing hub in WA. The Mt Holland lithium project is a JV with Soc Quimica Y Minera Chile-B (SQM/B CI). Wesfarmers expects to lay out ~$950mn developing the mine, concentrator, and refinery (in Kwinana). A final investment decision was announced in February this year. 
In December last year, IGO Ltd (IGO AU) formed a JV with China’s Tianqi Lithium Corporation  (002466 CH), paying $US1.4bn to acquire a 24.99% stake in the Greenbushes lithium mine in Western Australia. The mine produces ~2% of the world's spodumene concentrate from a hard rock lithium mine. The JV also includes a 49% stake in the downstream lithium hydroxide plant in Kwinana near Perth. The JV was formed after Tianqi faced an increasing debt obligation after the decline in lithium prices. Tianqi maintained a 26% stake in Greenbushes and a 51% stake in the hydroxide plant.

This was a large bet, transforming IGO into a battery mineral and renewable energy play, away from its copper and gold heritage.  The deal was funded by debt and an A$766mn equity raise including a $446mn fully underwritten placement at $4.60, and a $320mn 1-for-8.5 pro-rata entitlement offer. The offer price represented a 9.7% discount to IGO’s last traded price.
The transaction was completed on the 30 June. Around two months earlier, IGO sold its 30% stake in the Tropicana gold mine joint venture for A$903mn.
Separately, IGO withdrew its takeover offer to Panoramic Resources (PAN AU) in January last year, citing a breach of conditions.



Pilbara Minerals (PLS AU) acquired Altura Mining (AJM AU) late last year after the latter entered receivership in November.


After circling each other for a couple of years, Galaxy Resources (GXY AU) and Orocobre Ltd (ORE AU) entered into a binding agreement on the 19 April 2021, under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy. The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets. This deal was discussed in Orocobre/Galaxy Resources: On A Charge.



Nickel miner Western Areas (WSA AU) has now confirmed media reports it is in preliminary discussions with IGO in relation to a change of control proposal. 
No price is mentioned, and due diligence has yet to be afforded.
More below the fold. 

In a cyclical and volatile commodity sector, such as lithium, profitability is key during lean times.
Brisbane-based <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and Perth-based <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> are in effect, the poster children for Aussie-listed lithium producers.  Orocobre extracts the commodity from Argentinian brine ponds, and Galaxy from Western Australian rock. Two different lithium products in two different jurisdictions.
Amid a downturn in the price of the battery commodity and a reduction in tonnes exported, both Galaxy and Orocobre splashed red ink in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02205130-6A969035?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY19</a> (Dec-end) and <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02273544-2A1246100?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY20</a> (June-end) respectively.
The downturn resulted in <a href="https://www.smartkarma.com/entities/alita-resources-ltd" target="_blank" data-smartkarma-citation="entities:16331:1" rel="noopener">Alita Resources (AMS SP)</a> - in which Galaxy is a shareholder - going into administration, a situation that is still working its way through the <a href="https://www.miningweekly.com/article/galaxy-joins-the-fight-for-bald-hill-2021-02-12" target="_blank" rel="noopener">sale of asset process</a>. In addition, <a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> acquired <a href="https://www.smartkarma.com/entities/altura-mining-ltd" target="_blank" data-smartkarma-citation="entities:13385:1" rel="noopener">Altura Mining (AJM AU)</a> late last year after the latter entered receivership in November as the raw battery materials market nose-dived.
A reversal of fortunes has seen increased demand, and price, for Galaxy's spodumene concentrate, and Orocobre's Argentinian lithium bicarbonate. In its quarterly update on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02362944-2A1292351?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">13 April</a>, Orocobre said pricing was up more than 50% since the Dec-20 quarter, and nearly 90% in the last six months. 
<h3>The NEW News</h3>
After circling each other for a couple of years, Galaxy and Orocobre entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02364542-2A1293132?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">binding agreement</a> earlier this week under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy.
Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share. Upon implementation, Orocobre shareholders will own 54.2% of the enlarged entity, and Galaxy shareholders will own the remaining 45.8%.
The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets.
The two companies classify this as a merger of equals, and in many respects it is. Each company will appoint four directors to the new nine-person board, and the chairman and deputy chairman’s jobs for the coming 12 months will be split down the middle until replacements are found.
This is an intelligent merger. Not only does it establish a foothold in South American brines and Western Australian/North American spodumene, something the world’s largest lithium producers seek to achieve, the new entity will be better positioned to weather a material correction in lithium prices.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/201/665/original/image_29076439221618885833728.png?1618885835" class="editor-image img-responsive" data-smartkarma-image-id="201665"></figure>

In a cyclical and volatile commodity sector, such as lithium, profitability is key during lean times.
Brisbane-based Orocobre Ltd (ORE AU) and Perth-based Galaxy Resources (GXY AU) are in effect, the poster children for Aussie-listed lithium producers.  Orocobre extracts the commodity from Argentinian brine ponds, and Galaxy from Western Australian rock. Two different lithium products in two different jurisdictions.
Amid a downturn in the price of the battery commodity and a reduction in tonnes exported, both Galaxy and Orocobre splashed red ink in FY19 (Dec-end) and FY20 (June-end) respectively.
The downturn resulted in Alita Resources (AMS SP) - in which Galaxy is a shareholder - going into administration, a situation that is still working its way through the sale of asset process. In addition, Pilbara Minerals (PLS AU) acquired Altura Mining (AJM AU) late last year after the latter entered receivership in November as the raw battery materials market nose-dived.
A reversal of fortunes has seen increased demand, and price, for Galaxy's spodumene concentrate, and Orocobre's Argentinian lithium bicarbonate. In its quarterly update on the 13 April, Orocobre said pricing was up more than 50% since the Dec-20 quarter, and nearly 90% in the last six months. 
The NEW News
After circling each other for a couple of years, Galaxy and Orocobre entered into a binding agreement earlier this week under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy.
Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share. Upon implementation, Orocobre shareholders will own 54.2% of the enlarged entity, and Galaxy shareholders will own the remaining 45.8%.
The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets.
The two companies classify this as a merger of equals, and in many respects it is. Each company will appoint four directors to the new nine-person board, and the chairman and deputy chairman’s jobs for the coming 12 months will be split down the middle until replacements are found.
This is an intelligent merger. Not only does it establish a foothold in South American brines and Western Australian/North American spodumene, something the world’s largest lithium producers seek to achieve, the new entity will be better positioned to weather a material correction in lithium prices.


Chile

Sociedad Quimica y Minera de Chile SA produces and markets specialty fertilizers including potassium nitrate, sodium nitrate, and potassium sulfate for the agricultural industry.  The Company also produces industrial chemicals, iodine and lithium.  SQM markets its products in over 100 countries.

Sociedad Quimica y Minera de C (SQM/B CI)

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Sociedad Quimica y Minera de C (SQM/B CI)

Tianqi Lithium A/H Listing - PHIP Updates and a Closer Look at Valuations

Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. In this note, we look at A/H valuations.

Sumeet Singh

Chile: Political Change Spurs Investor Return

After a decade long decline in Chilean allocations that stretched the entire twenty-tens, investment levels in Chile have started to reverse course.

Steven Holden

Downgrading Technology To Underweight

Downgrading Technology to underweight. Attractive and actionable stocks highlighted: Fertilizer, Railroad Equipment & Products, Construction &...

Vermilion Research

IGO/Western Areas: Battery Mineral Grab

Western Areas has generally underperformed peers over the past year. It is clearly in place. and if not from IGO, there's no reason another suitor...

David Blennerhassett

Orocobre/Galaxy Resources: On A Charge

The merged entity will capture a greater market share of the lithium supply in coming years, and capitalise on mining synergies. Plus afford the...

David Blennerhassett

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