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.

Event-Driven

<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 <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>'s proposal by <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> 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

Xiamen International Port H / Event-Driven

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.</li>
<li>This week, the highest spreads are <a href="https://www.smartkarma.com/entities/xiamen-international-port-h" target="_blank" data-smartkarma-citation="entities:5390:1" rel="noopener">Xiamen International Port H (3378 HK)</a>, <a href="https://www.smartkarma.com/entities/sezzle-inc" target="_blank" data-smartkarma-citation="entities:30969:1" rel="noopener">Sezzle Inc (SZL AU)</a>, <a href="https://www.smartkarma.com/entities/21-vianet-group-inc-adr" target="_blank" data-smartkarma-citation="entities:8489:1" rel="noopener">21Vianet Group (VNET US)</a>, <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration Holdings (LNK AU)</a>, <a href="https://www.smartkarma.com/entities/alliance-aviation-services-ltd" target="_blank" data-smartkarma-citation="entities:20401:1" rel="noopener">Alliance Aviation Services (AQZ AU)</a>
</li>
<li>Lowest gross spreads are <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>, <a href="https://www.smartkarma.com/entities/hwa-hong-corp-ltd" target="_blank" data-smartkarma-citation="entities:6648:1" rel="noopener">Hwa Hong Corp (HWAH SP)</a>, <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a>, <a href="https://www.smartkarma.com/entities/irongate-group" target="_blank" data-smartkarma-citation="entities:30897:1" rel="noopener">Irongate Group (IAP AU)</a>, <a href="https://www.smartkarma.com/entities/uniti-group-ltd" target="_blank" data-smartkarma-citation="entities:29042:1" rel="noopener">Uniti Group Ltd (UWL AU)</a>, <a href="https://www.smartkarma.com/entities/akm-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:7206:1" rel="noopener">AKM Industrial (1639 HK)</a>. </li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
This week, the highest spreads are Xiamen International Port H (3378 HK), Sezzle Inc (SZL AU), 21Vianet Group (VNET US), Link Administration Holdings (LNK AU), Alliance Aviation Services (AQZ AU)

Lowest gross spreads are Yancoal Australia (YAL AU), Hwa Hong Corp (HWAH SP), Virtus Health (VRT AU), Irongate Group (IAP AU), Uniti Group Ltd (UWL AU), AKM Industrial (1639 HK). 


Merger Arb Mondays (6 Jun) - Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.In this Insight:<ol><li><a href='/entities/china-evergrande-group' target='_blank' rel='noopener'>Evergrande</a></li><li><a href='/entities/logan-property-holdings-co-ltd' target='_blank' rel='noopener'>Logan Property Holdings</a></li><li><a href='/entities/times-china-holdings-ltd' target='_blank' rel='noopener'>Times China</a></li><li><a href='/entities/ronshine-china-holdings-ltd' target='_blank' rel='noopener'>Ronshine China Holdings</a></li><li><a href='/entities/china-jinmao-holdings-group' target='_blank' rel='noopener'>China Jinmao Holdings</a></li></ol>and more...

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.In this Insight:EvergrandeLogan Property HoldingsTimes ChinaRonshine China HoldingsChina Jinmao Holdingsand more...

<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

China

Yankuang Energy Group Company Limited operates coal businesses. The Company produces fine coal, blown coal, power coal, and coal chemical products. Yankuang Energy Group also conducts power generation, railway transport, machinery manufacturing, and heating businesses.

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Yankuang Energy Group (1171 HK)

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

Merger Arb Mondays (6 Jun) - Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office

This week, the highest gross spreads are Xiamen Port (56.9%), Sezzle (54.8%), VNET (49.0%), Link (26.7%), Alliance Aviation (17.3%), Cocoaland...

Arun George

Weekly Wrap - 03 Jun 2022

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and...

Lucror Analytics

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

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