Daily Brief Energy/Materials: China Shenhua Energy Co H, Indo Tambangraya Megah, Ecopro BM Co Ltd and more

In today’s briefing:

Hang Seng Index Rebalance – FOUR Names IN, None Out (The March to 80 Continues)
ITMG – Insights from the Q2 2022 Presentation
Overheated Short Selling Designation in Korea: Precise Definitions for the Confusing Terms

Hang Seng Index Rebalance – FOUR Names IN, None Out (The March to 80 Continues)

The Hang Seng Index Team announced four changes to the Hang Seng Index, bringing membership to 73 from 69, on its way to 80, but later than originally targeter mid-2022.
Additions are China Shenhua Energy Co H (1088 HK), Chow Tai Fook Jewellery (1929 HK), Hansoh Pharmaceutical (3692 HK), and Baidu (9888 HK).
Official placeholder turnover is about 3.8%. Small changes due to capping updates still to come. China Shenhua and possibly Chow Tai Fook look interesting as trades.

Indo Tambangraya Megah (ITMG IJ) reported strong Q2 2022, with profits of 247 mn USD up 225% YoY, and coal prices averaging 202 USD/ton for the quarter (inline).
The only disappointment was volumes which came in at 3.9 mn tons, down 20.5% YoY. The company guided sequential improvement in coal production for Q3 2022 to 4.6 mn tons.
Indo Tambangraya Megah (ITMG IJ) is 2.6x PE FY22e, with 28% of its market capitalization in cash and a dividend yield of 28% based on a 70% payout ratio.

The definitions of the terms used in this designation rule have not been clearly disclosed. Even the words used in the original Korean text make interpreting quite tricky.
What confuses investors the most is the Short Selling Proportion, basically the ratio of a stock’s short-selling to the market.
Amount Increase in Short Selling Transactions is also quite confusing. It is the ratio of a stock’s short selling to its 40-day average daily short selling volume.

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