Energy & Materials Sector

• De Grey Mining (DEG AU) entered a binding scheme with Northern Star Resources (NST AU) at 0.119 NST shares per DEG share, implying A$2.08, a 37.1% premium to the undisturbed price. 
• The scheme is conditional on DEG shareholder approval. Gold Road Resources (GOR AU), the largest shareholder, potentially holds a blocking stake and has not provided an irrevocable. 
• The offer is susceptible to a competing offer as it is all-scrip and unremarkable vs peer multiples. Barrick Gold (GOLD US) and Agnico Eagle Mines (AEM US) are potential suitors.

• The EGM for Korea Zinc (010130 KS) is expected to be held on 23 January 2025. Accordingly, the shareholder registry is expected to be closed around 19 – 23 December. 
• By better analyzing the timeline of the M&A of SM Entertainment, we may be able to get better clues to Korea Zinc’s price movement in the next several weeks. 
• Notice the double top share price formation of SM Entertainment in 2023 versus the potential double top formation of Korea Zinc in 2024. These trading formations look eerily similar.

• In this insight, we provide an early look at the potential additions and deletions to KOSPI200 rebalance in June 2025.
• These seven potential inclusion candidates are up on average 8.9% from end of Sept 2024 to 2 December 2024 versus KOSPI which is down 5.4% in the same period. 
• The potential additions include IPOs in 2024 such as HD Hyundai Marine Solution (443060 KS), Shift Up (462870 KS), and Sanil Electric (062040 KS). 

• The US oil and gas rig count fell by 1 to 582 for the week ending on 27/Nov, reporting a third consecutive weekly fall.
• For the week ending 22/Nov, US oil production rose to 13.49m bpd from 13.2m bpd the week prior. US output inched close to its all-time high of 13.5m bpd.
• The number of active US oil rigs fell by two to 477, the lowest since July. Conversely, the US gas rig count rose by one to 100.

• Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that, IMO, are worth monitoring closely.
• This way, you can act decisively when the moment comes, rather than spending weeks on initial research.
• These kinds of stocks would probably be a part of my portfolio if I were older, more diversified, or both.

• ADNOC International (XRG) secured a controlling 69.94% stake in Covestro after the initial acceptance period, surpassing the 50% plus one share threshold.
• Regulatory Approvals Pending: The transaction awaits merger control, foreign investment, and EU Foreign Subsidies Regulation clearances, with finalization expected in H2 2025 (usual timeline for deal in the chemical industry).
• Remaining shareholders can tender their shares during the additional acceptance period; squeeze-out is likely. Recommendation is tender.

• OCI N.V.’s expected mid-cycle EBITDA for the European Nitrogen business is clarified at $150m, affecting valuation calculations.
• Currency Exchange International announced a new 5% share buyback authorization, with previous buyback pace remaining slow.
• Grifols’ potential reverse arbitrage trade involves long Class A shares, short Class B shares, amid merger considerations.

• Goldman Thinks Commodities Will Outperform in 2025 Gold will rally to a record next year on central-bank buying and US interest rate cuts, according to Goldman Sachs – putting out a price target of $3.000 USD till end of 2025.
• The bank sees a sideways market in crude as its base case.
• The bank sees a sideways market in crude as its base case. “In our baseline forecast, we continue to see oil prices as range-bound, with Brent likely to stay in a $70-$85/bbl range. I

• Following the election of Donald Trump, gold and precious metals fell sharply alongside the mining equities.
• Despite the shock drop, the metals began a reassuring rebound in the back half of the month.
• Mining equities performed negatively with the GDX down 6.7%, GDXJ down 7.4%, SIL down 6.0%, and COPX down 2.4%.

• Vaalco’s asset portfolio combines a mix of long- and short- cycle growth opportunities in every country in which it operates.
• Management sequences the capital investment cycles to ensure the company commits capital to projects that have been sufficiently derisked to avoid overcommitting and with an eye to shortening the time from investment to production.
• Its budgeting process is anchored by the goal of supporting a sustainable dividend

• De Grey Mining (DEG AU), which boasts one of Australia’s largest undeveloped gold projects, has announced a merger, by way of  Scheme, with Northern Star Resources (NST AU).
• Northern Star is offering 0.119 new shares for every De Grey share, and will hold ~80.1% of the combined entity, with De Grey shareholders the remaining ~19.9%. 
• Terms back out an implied price of A$2.08/share, or a ~37% premium to last close. This Offer  has the unanimous backing of both boards. 

• Northern Star Resources (NST AU) has agreed to acquire De Grey Mining (DEG AU) by way of a Scheme of Arrangement in an all-stock deal.
• De Grey Mining (DEG AU) shareholders will receive 0.119 Northern Star Resources (NST AU) shares for each De Grey share held. That implies a 37.1% premium to the last close.
• There will be passive buying in Northern Star Resources (NST AU) at the time of merger completion, though there could be selling from some existing De Grey Mining (DEG) shareholders.

• Q2 FY 2025 sees NR prices hitting all-time high of INR 247/kg
• Revenue of MRF, Apollo and CEAT goes up YoY; of JK Tyre dips
• Tire prices hiked to mitigate impact of NR price rises

• The Mosaic Company’s recent earnings for the third quarter of 2024 shed light on a period marked by both operational challenges and strategic transitions.
• The company, a key player in the fertilizer industry, faced disruptions due to hurricanes in the U.S., electrical issues at potash mines in Esterhazy and Colonsay, and was also affected by a broad Canadian rail strike.
• Despite these obstacles, The Mosaic Company managed to report revenues of $2.8 billion, with a net income of $122 million and adjusted EBITDA of $448 million.

• As part of our series of initiations on copper stocks, Lundin Mining (LUN CN) is another play with a cheaper multiple than Southern Copper (SCCO US) but an inferior ROCE.
• With its most recent acquisition of the Jose Maria copper project in a 50:50 JV with BHP, the mid-size copper-producing company is on its way to growth after 2027.
• Trading at 17x FY25e and 5.0x EV-EBITDA, this is another company in our stable worth exploring. 

• WA government announces $150 million package for lithium miners, including waiving government fees for two years
• Package also includes a $50 million loan facility for interest-free loans to sustain operations
• While the news did not significantly impact stock prices, it provides some relief and support for struggling lithium companies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Saatvik Energy Green Ltd (1637892D IN)  is planning to raise about US$136m through its upcoming IPO in India. The lead bookrunners for the deal are Dam Capital, Ambit, Motilal Oswal.
• Saatvik Green Energy Ltd (SEG) specializes in the manufacturing of solar photovoltaic (PV) modules and provides comprehensive engineering, procurement, and construction (EPC) services.
• As per Crisil report, since its inception, the company has supplied over 1.5 GW of high-efficiency solar PV modules to both domestic and international markets.

• Aramco’s Q3 operating revenue fell 1.8% YoY and missed estimates by 0.5%. Similarly, its net profit fell by 15.4% YoY and its EPS missed expectations by 1%.
• Aramco’s total hydrocarbon production fell 0.8% YoY but rose 3.3% QoQ in Q3. Its average crude oil price realisation dropped 11.2% YoY and 7.5% QoQ.
• Despite a decline in net profit, Aramco maintained its dividend, which led to a shift from net cash to a net debt position as dividend payouts exceeded free cash flow.

• 3Q24 production of 2,336 boe/d was in line with our expectations.
• Southern has monetized excess inventory for US$2 mm during 3Q24, resulting in net debt being reduced by US$1.4 mm.
• Southern estimates that further excess inventory could be sold for US$1-1.5 mm.

• Positive trajectory – Q2FY3/25 results continued to show signs of recovery in margins (2.4% Q2 FY3/24, 3.7% Q2 FY3/25), reflecting price hikes, volume expansion, and cost reduction.
• By segment, Films was the largest contributor to OP growth (+686.5% YoY), followed by Environmental and Functional Materials (+102.1%).
• Strong OP growth attributed to moderating cost pressures, and improving demand, which has led to unit price hikes without sacrificing volume. 

• Inventory lowest in 13th months
• Arbitrage widens for African and Indonesian rubber
• Frontloading resulted in spike in exports

• New Fortress Energy, a company involved in the development and operationalization of liquefied natural gas (LNG) projects, reported its third-quarter 2024 earnings.
• Overall, New Fortress Energy achieved an adjusted EBITDA of $176 million, aligning with prior forecasts.
• Operational highlights include the progress of the Fast LNG (FLNG) unit, which met and exceeded nameplate capacity in trials.

• 3Q24 production of 879 bbl/d was in line with expectations.
• The company’s cash position of C$6.1 mm at the end of September is high but reflects greater current payables.
• We note a further opex reduction from C$3.4 mm in 2Q24 to C$2.6 mm with flat production.

• There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
• Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
• FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.

• Lee Bok-hyun, head of the Financial Supervisory Service, unexpectedly voiced concerns about MBK winning Korea Zinc’s management battle, catching everyone off guard.
• The key question is how Michael ByungJu Kim will handle government pressure, with MBK possibly aligning with the opposition if the Democratic Party pushes for commercial law reform.
• Korea Zinc now becomes a proxy war over governance reform. Watch MBK’s political stance, as it could drive the stock higher, especially if Michael teams up with the opposition.

• The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
• In this insight, we take a look at our final expected ADDs/DELs for SET 50 during the index rebal event in December 2024.
• We see four ADDs/DELs in December 2024. While the expected DELs list remains unchanged since last month, there is a change in our expected ADDs list.

• Phillips Carbon Black (PHCB IN) PCBL is the largest producer of Carbon Black in the country and seventh largest player in the world. 
• Transitioning to specialty carbon black, acquiring companies non-carbon linked companies and entering into JV for sunrise sectors EV battery chemical companies. 
• Guiding for 2400Cr Capex for 1Mn capacity of Carbon black capacity, 600Cr capex for Aquafarm chemicals and 500Cr for battery chemicals in the upcoming years for growth. 

• William Companies $WMB believes more Republican control can resolve permitting issues, which would benefit the power industry and the energy infrastructure business.

• A favorable tax outcome will also be “a very huge positive to [its] guidance in the immediate term”. 

• Energy Transfer $ET said the Trump administration will bring “a breath of fresh air.” Nov 06: Q3’24

• Halliburton’s Q3 revenue fell by 1.8% YoY and missed estimates by 2.2% dragged down by an 8.5% YoY fall in revenue from North America.
• The Completion and Production division’s revenue dropped 5.4% YoY and 3% QoQ, while the Drilling and Evaluation division posted a 3.5% YoY increase but declined 1.4% QoQ.
• Operating cash flow declined 23.5% QoQ, while free cash flow dropped 31.5%. Earnings were impacted by lost revenue from the cybersecurity incident and Gulf storms.

• Packaging Corporation of America reported robust third-quarter 2024 results, showcasing notable growth in both revenue and profitability driven by increased volume and effective cost management.
• The company achieved a net income of $238 million, translating to $2.64 per share, and excluding special items, net income stood slightly higher at $239 million or $2.65 per share.
• This performance marked a significant improvement compared to the third quarter of 2023, where net income was $185 million or $2.05 per share.

• For the week ending 22/Nov, US crude inventories fell by 1.8m barrels, beating expectations of a 1.3m barrel decrease. However, gasoline and distillate stocks rose more than expected.
• US natural gas inventories fell by 2 Bcf for the week ending 22/Nov, missing analyst expectations of a 4 Bcf decline. Inventories are 7.2% above the 5-year seasonal average.
• Analysts raised their 12-month price targets on Chevron while trimming their targets for Exxon and Occidental. Both JP Morgan and Morgan Stanley reiterated their Overweight ratings on Reliance Industries.

• PPG, a global leader in the coatings industry, presented its third-quarter 2024 financial results, reflecting both achievements and challenges faced by the company.
• The earnings disclosed sales of $4.6 billion and highlighted a year-over-year segment margin improvement for the eighth consecutive quarter.
• Notably, adjusted earnings per diluted share reached a record high for a third quarter at $2.13, up 3%, despite complications such as an unfavorable tax rate.

• During the third quarter earnings of Schlumberger Limited (SLB), the Chief Executive Officer, Olivier Le Peuch, discussed a performance marked by strong margin expansion and robust free cash flow generation.
• While the company reported flat sequential revenue growth, it achieved a significant increase in adjusted EBITDA margin, demonstrating improved operational efficiency.
• Particularly noteworthy was the free cash flow figure, which stood at $1.81 billion for the quarter, highlighting the company’s strong cash-generating capability.

• Asian Paints (APNT IN) reported a 42.4% drop in Q2FY25 net profit and a 5.3% revenue decline.
• Intense competition, extended monsoons, weak urban demand, and margin pressures are impacting performance.
• Asian Paints’ resilience hinges on premiumization, sustainability, and industrial coatings to offset short-term challenges.

• The FSS’s correction deadline still starts from October 17, giving Kum Yang until January 16 next year to get everything in order.
• We should still be all over this, as the major shareholder likely won’t participate, flooding the market with stock rights and unsubscribed shares, creating a prime 25% discount opportunity.
• Kum Yang needs even this 200-300 billion KRW, so cancellation seems unlikely. With the FSS deadline on January 16, they’ll likely submit the revised report mid to late next month.

• INROAD project prompts Tripura to extend CM’s Rubber Mission
• Nagaland aims to cover 30,000 hectares with rubber by 2030
• Northeast starts getting saplings from its own nurseries

• SOC remains in limbo with the latest letter from “CalFire” creating further uncertainty as to when, if ever, SOC would be able to restart production at the Santa Ynez Unit.
• SOC was previously served with a cease and desist order from the California Coastal Commission that barred the Company from any permit work until February 2025. 
• The latest media report suggests CalFire sent a letter to the California Legislature about the agency not having authority to allow SOC to restart production.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Buenaventura’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental pillar is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.

• Two intervals in the Steinalm formation (1452.5 m-1463.5 m and 1474.5 m-1480 m MD) were tested at a stable rate (natural flow) of 240-290 bbl/d of drilling mud, likely contaminated formation water and some oil traces.
• Gas was initially observed at surface.
• While the achieved flow rate highlights the high permeability of the natural fractures, the absence of hydrocarbons is disappointing and surprising given the results of the logs, the inflow of gas while drilling, the analysis of the retrieved cores (with indication of hydrocarbons) and the fact that down hole oil samples were recovered from this interval.

• • Production at Jasmine has increased to 9,8mbbl/d over the last seven days following the drilling of five new infill wells.
• This is higher than we expected and represents an increase of >2 mbbl/d.
• • Corporate production in September and October was already at ~26.4 mbbl/d.

• In Oct-24, Ambuja Cements (ACEM IN) acquired 46.8% stake in Orient Cement (ORCMNT IN) at Rs. 396 per share.
• Now Orient cement is trading at 20% discount to open offer price.
• This process can take approx. 2 months and can generate ~10-15% risk adjusted return by Jan-25.

• Short term supply shortage 
• US and EU demand uncertain
• Shipping cost spike in short term ahead of Trump’s tariff drive

• Exxon Mobil’s Q3 revenue fell by 0.8% YoY and net profit decreased by 5.1%. Revenue missed estimates by 4.2% but EPS exceeded expectations by 2.3%.
• Exxon Mobil’s Q3 upstream production rose by 24% YoY to 4.6 mboepd, driven by strong output in Guyana and the Permian basin and the acquisition of Pioneer.
• Exxon attributed its better-than-expected earnings in bottom-of-cycle conditions to structural cost savings, reduced expenses, high-return investments, and selective divestments.

• Project quickly shut down by company, but still moving forward
• Concerns about Chinese buying in Australia
• Waiting on cost release for project, anticipating higher costs due to increase in uranium price

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Chevron’s Q3 revenue declined 6.3% YoY, while its net profit dropped 31.2%. Yet it beat its revenue and EPS estimates by 3.7% and 3.6%, respectively.  
• Chevron achieved a record Q3 output of 3.36 mboepd, up 7% YoY, driven by Permian growth. Full-year production growth is expected near the top of its 4-7% guidance.
• Chevron returned USD 4.7 billion in buybacks and USD 2.9 billion in dividends. Q4 is expected to see USD 1 billion in dividends and USD 4–4.75 billion in buybacks.

• EA’s Q3 results on 14-November was disappointing as expected on the declining EBITDA.
• Criat’s iRAP Global Plus PD Toolkit (iRap) still indicates the implied international credit rating of “B+” which gives us relative comfort for the credit.
• EA’s story rests on the usage of its network to extend debt maturity and sell assets, and not so much on cashflow which may be generated in the near term. 

• Goliath Resources provides investors exposure to gold-silver-copper resource exploration and leverage to an increasing in-ground inventory with discovery upside during a gold price market that reached new all-time highs.
• Downside limited by expected significant positive news flow into 2025.
• The Company’s 2024 exploration program was expanded to 38,125 m based on strong financial support.

• Cold Front in the US dominates Natgas Prices During next week another cold front will arrive in the upper part of the US.
• The temperature anomaly is quite negative – accordingly, natgas prices are currently on the rise.
• As seasonally remain bearish and these temperature anomalies occur often during the winter months, we’ll keep our eye on short opportunities in the market.

• Copper is central to global infrastructure and the transition to renewable energy.
• Zambia, a key player in the Central African Copperbelt, holds immense promise for copper investors, boasting some of the world’s richest geological assets.
• This white paper explores Zambia’s copper mining landscape, highlighting the interplay of global demand, supply challenges, and Zambia’s evolving mining ecosystem.

• The first compressor at Triton has been repaired and the platform is expected to be back online this week.
• This represents a few weeks’ delay but the restart will boost production materially.
• With the recent addition of the B6 well (>5 mboe/d net), total production was already over 50 mboe/d on 2 October.

• The 5% voting gap between Choi and MBK leaves NPS and sideline minority players as key swing factors, with NPS’s stake potentially closing the gap for Choi.
• If NPS sold half its stake in the tenders, it’s down to 4%, not enough to close the gap, likely giving MBK the win and triggering a post-meeting price drop.
• The key to our outright short is NPS’s January 10 disclosure, with market chatter suggesting NPS has likely sold about half its holdings in the two tenders.

• With 4 days left to review cutoff, there is 1 close add and 3 potential deletions for the MV Australia Equal Weight Index at the December rebalance.
• Even if there are no constituent changes, capping changes will lead to one-way turnover of 4.6% and a round-trip trade of A$243m.
• The final list of inclusions/exclusions will depend on price movements till Friday and whether the index provider makes any significant changes to the free float of stocks in the universe.

• Deep Industries (DEEPI IN) targeting 800 Cr worth of revenue by FY26, with 35% CAGR in next 2 years.
• India is opening more oil & gas wells, needs services of company like Deep who can provide one stop shop for all Oil & Gas Needs.
• Key Triggers- Prabha Barge(60% Operating Margins) and Dolphin Offshore(for diversifying into offshore services) will further margin accretive.

• Trump’s energy policy focused on increasing domestic production and exerting pressure on oil exports to bring down prices
• Forecast for 2025 and 2026 predicts global commodities market growth and potential oil price fluctuations
• OPEC members plan to increase capacity in 2025, leading to a large surplus in the oil market and potentially lower prices in 2026

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• In this Insight, we share our channel inputs that might be relevant for SRF Ltd (SRF IN), Navin Fluorine International (NFIL IN), and Gujarat Fluorochemicals (FLUOROCH IN).
• Weak demand and operational conditions in China have forced companies to focus on clearing inventory rather than maintaining prices, which has negatively impacted India’s export-oriented companies.
• Industry-Wide product cycles, especially in Specialty Chemicals, are shortening, which is a potential threat to leaders like SRF Ltd (SRF IN).

• Latex export revenue posts 18% growth YoY during Jan-Sept
• Tire industry can consume 200,000 tons of latex a year at present
• Govt placing a lot of attention on research, downstream foray

• The US oil and gas rig count fell by 1 to 583 for the week ending on 22/Nov, reporting a second consecutive weekly fall.
• For the week ending 15/Nov, US oil production fell to 13.2m bpd from 13.4m bpd. Output was at a record high of 13.5m bpd between 11/Oct through 01/Nov.
• US energy producers added two rigs in Texas and one each in Wyoming and Oklahoma. They cut three rigs in Louisiana and one each in California and Colorado.

• SGX IO Futures closed USD 3.83/ton higher for the week ending on 22/Nov. It traded in a range of USD 6.90/ton, which was smaller than the prior week.
• Chinese portside inventories increased by 350k tons WoW to 148.86 MT as of 22/Nov. Steel mill inventories rose 13.8% to 15.6 MT in mid-November compared to early November.
• Iron ore prices remain well supported in the near term despite high stockpiles at Chinese ports due to strong consumption and robust steel production ahead of the Lunar New Year.

• Disappointing September/October China lending data with TSF down 9%/24% YoY to 3.7/1.4 trillion RMB Vs. (analysts expectations of 4/1.5 trillion RMB) has led to skepticism about China’s recovery story.
• Copper prices have dropped below 9000 USD/ton and stayed there despite the fall of exchange inventories. 
• We like the LT copper story and see long-term benefits for stocks like Southern Copper (SCCO US), Ivanhoe Mines (IVN CN), and Teck Resources (TECK US). 

• ADNOC offers €62/share (54% premium), valuing Covestro at €11.7 billion, with high likelihood of completion despite regulatory and market conditions, closing expected in H2 2025.
• Potential additional offer period will run until December 16. ADNOC partnership offers access to cheaper resources, and supports future growth amid sector challenges and consolidation opportunities in Europe.
• The ADNOC acquisition offers a strong value realization opportunity for shareholders amidst market uncertainty. Gross spread is 6.7%. Long and accept offer.

• Iron ore prices were rangebound and maintained at over 100 USD/ton. In the last four years, they have been in a 95-130 USD/ton range. 
• China TSF (Total Social Financing) disappointed the street with 1.4 trillion RMB (-24% YoY), compared to the street estimates of >1.5 trillion RMB.
• We believe that more significant lending numbers would catalyze the iron ore price, but till then, iron prices will remain stagnant at the 100 USD/ton level. 

• I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Six new deals this week: Amcor (AMC AU)takes out Berry Global (BERY US);Sayona (SYA AU)and Piedmont (PLL AU) merge; and Integrated Design & Engineering  (9161 JP)‘s TOB. 
• Key updates/news took place on: Arcadium Lithium (LTM AU), Pacific Smiles (PSQ AU), Hotel Property Investments (HPI AU), HKBN (1310 HK), Xingda International (1899 HK), and Malaysia Airports Holdings (MAHB MK).

Sayona Mining is a lithium producer and explorer with projects in Canada, Western Australia and soon in the US and Ghana. A proposed merger of equals with Piedmont Lithium will create a c A$1bn mid-tier lithium player with streamlined asset ownership and significant growth optionality. Sayona and Piedmont’s Canadian and US projects comprise one of the largest advanced hard rock lithium resources in North America and are strategically positioned to supply the region’s growing lithium demand. Following the proposed equity raises, the company will be well capitalised to execute on its growth plans. As a producer, Sayona should also benefit strongly from inevitable recovery in lithium prices, with additional upside coming from the potential downstream expansion.