Energy & Materials Sector

• All Pre-Conditions of Newjf’s Offer have been satisfied. Based on Offer Document, the latest date for posting of the Response Document is Jan.7, 2025. First Closing Date is Jan.21, 2025.
• Newjf will make every effort to complete the acquisition and regain the control of international business so as to protect shareholders’ interests.So, the logic behind the deal is very solid.
• Mengniu’s attitude could be positive. A higher management offer seems more out of reach because the management lacks sincerity. We advise investors not to walk away from Newjf’s Offer easily.

• Discounts to NAV of covered holdcos mainly tightened during 2024. Discounts to NAV: C.F.Alba, 11.8% (vs. 50.8% as of Y/E 2023); GBL, 40.9% (vs. 37.4%); Heineken Holding, 15.8% (vs. 16.7%);
• Industrivärden C, 5.5% (vs. 5.5%); Investor B, 4.5% (vs. 12.8%); Porsche Automobile Holding, 32.2% (vs. 36.6%). Rio DLC spread tightened to 23% (vs. 24.2%).
• What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• We expect copper demand to have ended FY24 at around 27.1 million tons (up 4% year over year). FY25 could be an interesting year in which copper demand outstrips supply. 
• We expect China to have about 15.3 million tons of demand (flattish year over year) in FY24. The stimulus will be crucial for growth in overall copper FY25 demand.
• We continue to expand our coverage of pure copper play names, with our favorites being Southern Copper (SCCO US) and Antofagasta PLC (ANTO LN) 

• We expect iron ore to remain rangebound between 90 and 110 USD/ton in FY25, which is in line with the band it has maintained over the past six months. 
• Iron ore players like Vale (VALE US) and Fortescue Metals (FMG AU) can maintain high single-digit dividend yields at USD 100/ton. We see short-term opportunities in these names.
• For small-cap specialists, check out our research on Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts. The company (trailing 5x PE) is poised to triple its production.

• The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the March 2025 index rebal event.
• Currently, we expect no deletions (but one is pretty close) and we estimate the one-way capping flow to be US$208mn.

• The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
• In this insight, we take a look at the potential ADDs and DELs for the March 2025 index rebal event.
• Currently, we see one change for T50 and one change for T100 but there are two more months to the base date and our expectations may change before then.

• Reliance bought 5,286 acres of prime industrial land in Navi Mumbai, which was sold for a surprisingly low INR 2,200 cr whose economic value is around INR 1 Lakh cr.
• This complex transaction done at a steep discount raises corporate governance issues for other shareholders like Jai Corp owing to valuations, disclosure lapses and minority shareholder rights.
• We delve into details of the deal structure and what it means for respective companies’s shareholders.

• NewMarket Corporation reported its financial results for the third quarter of 2024, presenting a mixed performance with noteworthy insights into its operations and strategic initiatives.
• In terms of financial performance, the company achieved a net income of $132 million, translating to $13.79 per share, compared to $111 million or $11.60 per share in the same period last year.
• This indicates an improvement in profitability on a year-over-year basis.

• For the week ending 27/Dec, U.S. crude inventories fell by 1.2m barrels, missing expectations of a 2.4m barrel decrease. Gasoline and distillate stockpiles rose more than expected.
• U.S. natural gas inventories fell by 116 Bcf for the week ending 27/Dec, missing analyst expectations of a 127 Bcf drawdown. Inventories are 4.7% above the 5-year seasonal average.
• JP Morgan lowered its 12-month PT for Halliburton and Schlumberger but maintained its “Overweight” ratings. Saudi Aramco revised fuel and natural gas prices for cement production starting from 01/Jan.

• Valvoline Inc. announced its fourth-quarter and full fiscal year 2024 earnings, underlining its solid market position in the retail services sector, yet facing specific growth challenges.
• For fiscal 2024, Valvoline reported a significant 12% increase in system-wide store sales reaching $3.1 billion, along with adjusted EBITDA growth of 17% to $443 million.
• However, there were concerns as net revenue and same-store sales growth landed just below expectations.

• Sonoco Products reported a solid financial performance for the third quarter of 2024, showcasing a resilient operational model amidst challenging external conditions, such as the disruptions caused by Hurricanes Helene and Milton.
• The company achieved adjusted EBITDA of $281 million, representing a 16.8% margin, and adjusted earnings per share (EPS) of $1.49.
• Operating cash flow reached $162 million during this period.

• In this insight, we discuss the increasing importance of Palantir Technologies (PLTR US) on influencing the political rallies in Korea. 
• In addition, we discuss how HD Hyundai’s 34% ownership of Palantir Korea is likely to improve the positive sentiment on HD Hyundai. 
• Our sum-of-the-parts valuation analysis of HD Hyundai suggests implied market cap of 11 trillion won or target price of 139,845 won per share (63% upside from current levels).

• Alpha Metallurgical Resources reported its third quarter 2024 financial results, indicating a challenging period due to decreased coal pricing and unfavorable market conditions.
• The company posted an adjusted EBITDA of $49 million and shipped 4.1 million tons of coal during the quarter.
• These figures were negatively influenced by lower coal prices, soft market demand, and certain operational challenges such as difficult geology and weather conditions.

• ADD on NBR imports from Japan, South Korea extended to five years
• Chinese companies beef up domestic carbon black production
• ZC Rubber unveils US$259 million and Longxing US$405 million projects

• Report contains disclaimer and disclosure information regarding expressed opinions
• Opinions are not investment advice and should not be taken as such
• Author and/or employer may benefit from changes in valuation of discussed companies, securities, or commodities

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Kinross Gold’s third-quarter 2024 performance demonstrated notable progress in both operational and financial aspects.
• The company produced 564,000 ounces of gold with a cost of sales under $1,000 per ounce, maintaining a strong momentum seen earlier in the year.
• Noteworthy is the company’s ability to capitalize on rising gold prices, resulting in a 14% increase in operating margins compared to a 6% increase in gold prices, thereby generating a record quarterly free cash flow of $450 million.

• ICL Group, a multinational company involved in the manufacturing of fertilizers, specialty chemicals, and functional food ingredients, released its third-quarter results for 2024.
• The company reported sales of $1.753 billion, marking the third consecutive quarter of sales growth.
• Adjusted EBITDA was $383 million, up 11% year-over-year.

Edison Investment Research is terminating coverage on VolitionRx (VNRX), Murray Income Trust (MUT) and NioCorp Developments (NB). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

• Trump’s pro-oil stance is expected to weigh on prices by boosting U.S. output in an oversupplied market. Like in his first term, he aims to expand drilling in federal lands.
• During Trump’s first term, federal land leases averaged 1.62 million acres annually, a stark contrast to Biden’s 138,000 acres, implying a dramatic 91% decline.
• Rising U.S. oil production has reduced OPEC+ share to 48% from 55% in 2016. OPEC+ fears further U.S. output growth under Trump could weaken its ability to sustain prices.

• Nickel market focusing on developments in Indonesia, China, and US policies
• Impact of policy changes on nickel demand in the battery sector
• Potential diversification in ownership of Indonesian nickel projects due to concerns over Chinese stakeholding.

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

• WTI futures rose 1.6% for the week ending 27/Dec, led by China’s planned stimulus initiative and declining U.S. crude oil stockpiles.  
• WTI options Put/Call volume ratio rose to 0.97 from 0.95 (20/Dec) last week, as call volume grew by 22.3% WoW while put volume increased by 25.2%.  
• WTI OI PCR rose to 0.89 from 0.87 last week. Call OI inched up by 1.8% WoW, while put OI rose by 3.6%.

• US natural gas prices fell by 9.7% for the week ending 27/Dec, as volatile weather forecasts and a smaller-than-expected drawdown in natural gas inventories offset rising LNG exports.
• Henry Hub Put/Call volume ratio jumped to 1.05 from 0.60 (20/Dec) the previous week as call volumes dropped by 73.1% WoW, while put volumes fell by 52.4%. 
• Henry Hub OI PCR inched up to 0.85 from 0.84 compared to last week. Call OI fell by 17.1% WoW, while put OI decreased by 16.5%.

• CEAT buys Off-Highway Tires (OHT) business and Camso brand for US$225 million
• CEAT to access 40 global OEMs and a vast network of OHT distributors
• Michelin expands Chennai TBR tire plant, spending US$66 million

• The acquisition of O2 Power brings with it a robust portfolio of 4,696 MW of renewable energy assets, wherein JSWE’s Current operational capacity stands at 7740 MW
• JSW Energy’s total locked-in generation capacity will reach nearly 24,708 MW by June 2027, marking a substantial increase of 23% from its previous capacity of 20,012 MW
• JSW Energy can leverage its in-house EPC and O&M capabilities to unlock further value from the 4.7 GW portfolio.

• Element Solutions Inc. reported its financial results for the third quarter of 2024, showcasing notable growth and strategic initiatives that both bolster and challenge the company’s outlook.
• On the positive side, the company demonstrated a consistent strategic execution by targeting high value segments within the electronics supply chain.
• This focus has allowed it to benefit from trends like advanced packaging and power electronics, especially in sectors like high-performance computing, electric vehicles (EVs), and semiconductor assembly.

• In the UK, once a Bidder is named in a possible offer announcement, the Bidder has 28 days to either announce a firm Offer intention or walk away. 
• This is known as a ‘put up or shut up’ or ‘PUSU’ deadline. Hong Kong’s takeover rules has no such provision.
• It’s ~21 weeks since co-founders Jeff Bi and Gang Hong tabled a non-binding Offer. With no firm Offer in sight, AND contesting a SAMR ruling, they should fold their tent.

• The US oil and gas rig count remained unchanged for the third straight week at 589 for the week ending on 27/Dec.
• For the week ending 20/Dec, US oil production moderately fell to 13.59m bpd from 13.6m bpd the week prior.
• The number of active US oil and gas rigs remained steady at 483 and 102, respectively. US producers added one rig in North Dakota and cut one in Texas.

• CLW sells tissue business to Sofidel America for $1.06 billion, expected to close in late 2024
• Proceeds will be used to reduce debt and invest in other SBS grades, despite slightly weaker Q2 performance
• Despite stock price surge to $55, currently trading at $30, CLW remains #2 Paperboard producer of SBS grades in US, recently acquired paperboard mill from Graphic Packaging for $700 million

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Mercer International is a US-listed company with segments in Pulp and Solid Wood
• Recent supply closures in the softwood pulp industry have created a positive catalyst for the company, potentially improving price levels
• Despite concerns over poor recent results and high financial leverage, the stock and bonds offer asymmetric risk/reward with potential for significant returns

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• According to Graph 1, during the period October 28th, 2024 – November 25th, 2024, a bearish trend was reflected in the price of silver futures.
• During this timeframe, there was a significant decrease in the price of the commodity from above $34 to below $31.
• The MA-10 line was recorded to perform remarkably higher than MA-20 line in the beginning of the period under consideration, until November 8th when it crossed below it, indicating a downward momentum.

• For the week ending 20/Dec, U.S. crude inventories fell by 4.2m barrels, beating expectations of a 0.7m barrel decrease. Distillate stocks fell more than expected, while gasoline inventories unexpectedly rose.
• U.S. natural gas inventories fell by 93 Bcf for the week ending 20/Dec, missing analyst expectations of a 98 Bcf drawdown. Inventories are 4.9% above the 5-year seasonal average.
• Chevron signed a 20-year deal with Energy Transfer for 2 million tonnes of LNG annually. Stifel lowered Schlumberger’s 12-month price target while maintaining a Buy rating.

• Possibility of short peak can result in short-lived shortage  
• Declining Chinese TSR inventory can lend demand support  
• Uncertainty around policies weighs upon the market confidence

• Helix Energy Solutions Group delivered solid third-quarter 2024 financial results marked by a combination of robust performance in key segments and some challenges.
• The company’s revenue for the quarter was $342 million, with a gross profit of $66 million and net income of $29.5 million.
• The adjusted EBITDA was reported at $88 million, and they generated a free cash flow of $53 million, indicative of strong cash management with available liquidity at $399 million.

• Amid chaos in Korean politics (including impeachment of the Acting President Han Duck Soo), the FSC announced that the change in the procedure for quarterly dividends was passed into law.
• The main change that has been made is that the the investors will know in advance how much they will receive in quarterly dividends. 
• Amid market turmoil, numerous high dividend paying stocks such as Hankook & Company, HD Hyundai, and KT Corp have been outperforming the market this year. 

• ChampionX Corporation delivered a mixed set of results in the fourth quarter and full year 2023, revealing both strengths and challenges in its financial performance and market position.
• The company reported fourth-quarter revenue of $944 million, which was slightly up sequentially but 4% lower year-over-year, reflecting the impacts of softer U.S. land drilling and completions activity.
• However, the company’s adjusted EBITDA remained flat from the previous quarter at $198 million, marking a 10% increase over the prior year, driven by higher volumes, productivity, and cost management.

• Magnolia Oil & Gas Corporation’s third-quarter 2024 earnings report reveals several notable strengths and challenges that potential investors should consider when evaluating the company’s investment profile.
• On the positive side, Magnolia achieved consistent financial and operational performance.
• The company generated total net income of $106 million and adjusted EBITDAX of $244 million, maintaining capital discipline by spending merely 42% of its adjusted EBITDAX on drilling and completing wells.

• Plains All American Pipeline, L.P. (PAGP) provided insights into its financial and operational performance in the third quarter of 2024.
• The company reported a robust operational quarter, with expectations to hit the upper range of its adjusted EBITDA guidance for the year, between $2.725 billion and $2.775 billion.
• This positive outlook is fueled by strong performance across several key areas.

• CPMC Holdings (906 HK)’s offer from ORG Technology Co., Ltd. A (002701 CH) is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.  
• CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.
• The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.

• In FY08/24, revenue was JPY82.1bn (-3.0% YoY), operating profit was JPY1.5bn (+172.2% YoY), recurring profit was JPY1.0bn (+355.9% YoY), and net income attributable to owners of the parent was JPY533mn (+212.8% YoY). The initial company forecast at the beginning of the fiscal year was revenue of JPY72.9bn, operating profit of JPY634mn, recurring profit of JPY454mn, and net income attributable to owners of the parent of JPY320mn. The initial assumptions were an exchange rate of JPY135/USD and an LME copper price of USD8,500/ton.
• The USD remained above JPY150 until end-Q3 and LME copper prices exceeded USD9,000/ton since April 2024. The company thus revised its performance forecast upward at its Q3 results briefing to revenue of JPY82.1bn, operating profit of JPY2.3bn, recurring profit of JPY1.9bn, and net income attributable to owners of the parent of JPY1.1bn.
• However, due to a decline in LME copper prices in Q4, the actual results for FY08/24 fell below the revised forecast.

• Allegheny Technologies Incorporated (ATI) recently reported mixed results for its third quarter of 2024.
• The company’s performance recognized some bright spots but ultimately fell short of its financial guidance due to both external market dynamics and internal operational challenges.
• Starting with the positives, ATI’s segment-adjusted EBITDA margins met or exceeded expectations, with notable sequential improvement in its High-Performance Materials and Components (HPMC) segment margins, which edged closer to the mid-20s percent range.

• Chemours is a chemical producer with a diverse portfolio in three segments
• Stock value decline due to poor TiO2 trends and weak refrigerant performance
• Expected earnings improvement in the second half of the year driven by growth in refrigerants, duopoly in next generation refrigerants, and long-term growth potential in data center cooling technology

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Gloves main exports of rubber-based products at RM1.5 billion
• A total of 7,652 paid employees recorded in Oct, down 23.6% YoY
• Malaysian Sustainable Natural Rubber (MSNR) initiative launched

• Vale Indonesia has released the first guidance for its new projects with nickel matte to shift from 100% of revenue to 49% by 2029E, with nickel ore rising to 48%
• S&P has upgraded the company’s credit rating to BB+ from BB, placing it ahead of Indonesia’s BB- country rating and below the BBB rating of parent company Vale   
• We expect a weak nickel price will weigh on the shares in early 2025, although there could be considerable long-term upside from new projects and multiples remain low