Energy & Materials Sector

• The rig contract in EG has been terminated by Trident Energy (the operator) on safety concerns with the Blow Out Preventers not working properly.
• We understand that there are suitable rig(s) available that are being considered as potential alternatives.
• The three well drilling campaign (followed by the drilling of the high impact Akeng Deep prospect) could restart during 2Q24 (subject to an alternative rig being secured).

• A couple of weeks ago I wrote here about noted activist Murakami-san and his new 5+% position in Pacific Metals (5541 JP). I warned it might be a rug pull. 
• It turns out, from subsequent filings, that it may have been a rug pull. This isn’t the first time. It isn’t even the first time on this stock. 
• That said, there are goings on here, and it pays to watch them. 

• As per the recent earnings of Nucor Corporation, the company reported robust financial results, marking 2023 as its third most profitable year, preceded by 2021 and 2022.
• The firm earned $3.16 earnings per share in the Q4 2023 and an annual EPS of $18, signifying a commendable performance.
• The net earnings over the past three years reportedly exceeded the cumulative net earnings of the previous 20 years.

• Alternus Clean Energy, a utility-scale transatlantic clean energy independent power producer (IPP), has formed a strategic alliance with Hover Energy (Hover).
• Based in Dallas, Hover specializes in developing and implementing wind-powered microgrid systems.
• The alliance allows Alternus to secure the rights to acquire operating projects in the future without paying for any development costs upfront

• Cleveland-Cliffs Inc.
• recently conducted an earnings conference call to report their 2023 full year and fourth quarter financial results alongside their M&A strategy and capital allocation priorities going forward.
• The company’s comments were predictive and constituted forward-looking statements that may be subject to certain risks and uncertainties.

Nanoco’s trading update confirms that H124 revenues and EBITDA are anticipated to be in line with company expectations. The main new information is that the company has commenced the build and fitout of a new 300m wafer device facility to accelerate product development and test cycles with both existing and new clients. This gives Nanoco scope to grow development revenues in the near term and reduce time to market of new production materials, while aligning the development platform with infrastructure used for high-volume semiconductor manufacture.

• Omai announced a substantial MRE, increasing its Wenot indicated and inferred resources by 10% and 45% respectively.
• Resource grades also increased significantly (10% indicated, 16% inferred).
• Today’s Resource Update highlights the Company’s ability to cost- effectively increase the resource while producing what we believe should be a much more economical open-pit resource (578 Koz Au was added to the open-pit resource in this update) 

• Hahn & Co hold 79.9% of Ssangyong Cement Industrial (003410 KS) and have made a tender offer to acquire the remaining 20.1% at KRW 7,000/share.
• Ssangyong Cement Industrial (003410 KS) should be deleted from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) once Hahn & Co acquire 90% of the company.
• Aekyung Chemical (161000 KS) is a potential addition to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) but inclusion is dependent on Hahn & Co reaching 90% of shares out.

• The Dow Inc.’s Q4 2023 results show the company’s commitment to fulfill its financial obligations amidst a challenging macroeconomic environment.
• The company reported net sales of $10.6 billion, a 10% decrease from the same period in the previous year.
• Sales in all operating segments declined due to lower feedstock and energy costs, resulting in a 1% decrease in sequential sales.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).

We assess Progroup’s ESG as “Adequate”, in line with its Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.

Progroup is a leading family-owned producer and supplier of containerboard and corrugated board in Central Europe.

• The investment thesis of Steel Dynamics is centered around the company’s strong operational performance and strategic differentials against its competitors.
• In the Q4 and FY2023 earnings call, Steel Dynamics highlighted a record safety year, with steel shipments amounting to 12.8 million tons, the highest yet.
• The company also boasted its second-best year for revenues at $18.8 billion and cash flow from operations at $3.5 billion.

Key points (machine generated)

• TTI has three main segments, including well completion operations, water & flowback services, and compression, which provide stable cash flow and a competitive advantage in the market.
• The water & flowback services segment has shown resilience during the industry downturn and is well-positioned to benefit from the increasing demand for water management solutions in the energy sector.
• TTI has several growth projects, including offshore deepwater projects, expansion of its completion fluids product line, and diversification into new markets such as carbon capture and storage, which have the potential to significantly increase the company’s revenue and profitability.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Aussie gold miners Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a “merger of equals” via a Scheme of Arrangement.
• Red is offering 3.434 new shares for every SLR share, and will hold ~51.7% of the merged entity, with SLR shareholders holding the remaining 48.3%.
• This has the unanimous backing of both boards. Yet SLR appears to be given short shrift on the merger ratio. Plus SLR holds ~11.9% of shares out in Red.

• Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
• The company has reported a 33% year-on-year increase in Q2 FY24 revenue to $0.808m, in what is seasonally the weakest quarter for the group.
• Search portal revenue grew 11% on the previous corresponding period (pcp) but, not unexpectedly, dropped 7% on Q1 due to seasonal factors. 

• EDG reported prospective soil sample results from the Olympic Claims of its Reliance Gold Project.
• The Company collected 19 rock grab samples of which five assayed greater than 5.5 g/t Au with the best results including 25.1 g/t Au and 22.3 g/t Au. 
• This release highlights to investors the significant exploration upside beyond the Royal Shear. 

• Overall 4Q23 financials were ahead of our expectations and, despite a small underlift position, YE23 cash was US$25.8 mm, above our forecasts of US$22.2 mm.
• Tethys expects to spend US$90-94 mm capex in 2024.
• This is above our forecasts of US$70 mm that incorporated only US$10 mm of exploration and appraisal capex on Block 56 and Block 58.

• We are updating our 4Q23 and FY24 estimates to reflect actual 4Q23 reference prices and lower estimated FY24 natural gas prices.
• Our 4Q23 NYMEX reference prices averaged $78.32/bbl for oil and $2.92/MMBtu for natural gas compared with our $85.00 and $3.00/MMBtu estimates.
• We have lowered our average FY24 natural gas price estimate to $2.66/MMBtu from $3.44/MMBtu. We are currently modeling average FY24 oil prices of $80/bbl.

• On 5 February, SK Innovation (096770 KS) announced a large-scale shares cancellation of 4.92 million shares, representing 4.9% of outstanding shares. 
• This is the first ever large scale shares cancellation for SK Innovation since it was first established in 2011.
• All in all, despite the company’s disappointing results in 2023, the large scale share cancellation should help to support SK Innovation’s share price in the coming weeks. 

• Today, 5 February, PE-outfit Hahn & Co commenced its Tender Offer for the 20.1% of shares not held in cement manufacturer Ssangyong C&E (003410 KS).
• The Tender Offer price is ₩7,000/share, a 9.2% premium to last close; although shares did gain ~12.2% just prior to the Offer.
• There is no minimum acceptance condition. Hahn & Co will purchase all shares tendered. Payment is the 8 March. This will trade tight. 

• Silver Lake Resources (SLR AU) and Red 5 Ltd (RED AU) will merge. SLR shareholders receive 3.434 RED shares per SLR share, implying A$1.133, a 10.4% discount to the undisturbed price. 
• The merger is strategically sensible as the combined entity should re-rate due to scale, diversification and better cash flow generation.
• The merger terms are more favourable for RED shareholders than SLR shareholders, posing a risk for the vote. The merger may draw out rival suitors.  

• On 5 February, Acerinox SA (ACX SM) announced a friendly $61/share all-cash offer to acquire Haynes International (HAYN US), implied equity value $798 million, implied EV $970 million and 8.7% premium.
• The offer represents 1.5x EV/24e Sales, 10.1x EV/24e EBITDA (5.8x including run-rate estimated synergies of c.$71 million, seemingly quite large). The acquisition amounts to approximately 33% of Acerinox’s market cap.
• Acerinox is paying higher multiples than those at which Acerinox itself is trading. The deal should close. The shares of Haynes are already up 2.7% pre-market after Q1 results. Long.

• Gold held flat in January following a big monthly gain of 13% and reaching all-time highs in December, while mining equities lagged.
• Besides gold, other precious metals, commodities, and battery metals had a mixed month, while uranium’s strong performance accelerated, up 16% in January and hitting its highest price in more than 16 years.
• We attended a busy Vancouver Resource Investment Conference in January.

• In FY 2023, Freeport-McMoRan reported solid operating results across its operations.
• A key highlight was its robust performance in Indonesia, where production levels improved for the fourth consecutive year and several new operating records were set.
• The company also reached several milestones, including achieving a target run rate for their leach production in the Americas and making significant progress on the Indonesian smelter project.

Key points (machine generated)

• The EPA will be implementing regulations to reduce levels of PFAS chemicals in municipalities, due to the health risks associated with them.
• Major retailers like Amazon, Lowe’s, and McDonald’s are adopting policies to eliminate and prohibit the use of PFAS chemicals in their products.
• 3M, a major supplier of PFAS, agreed to a $10 billion settlement in June 2023.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Last week the World Gold Council published its figures for the fourth quarter of 2023.

• Gold demand for technology, electronics and other industrial use cases continued to improve in nominal and YoY terms – pointing to an economic rebound.

• “Technology demand proved another surprising element in 2023, churning out stellar growth in Q4, albeit from a low base.

• W&T Offshore closed an acquisition of six operated oil & gas fields in the Gulf of Mexico on January 22, 2024, for $72 million.
• The acquisition, which was funded with cash on hand, fits management’s philosophy of investing capital in short- cycle opportunities capable of generating free cash flow.
• The acquired assets include 100% working interests (82% net revenue interests) in six producing fields adjacent to W&T’s existing asset footprint.

Key points (machine generated)

• US-based operations of Lithium Americas are separate from potential trade disputes.
• Lithium Americas (Argentina) Corp has an attractive valuation, strong cash flows, and a favorable mining jurisdiction in Argentina.
• The author believes the stock has the potential to double within 12 months, with a price target of $12.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• JSR Corp (4185 JP)  announced 2 February on its website that the Research Foundation for the State University of New York (“RF SUNY”) filed suit against JSR subsidiary Inpria 25 January.
• JSR claims no wrongdoing. A court order from the US District Court for the Northern District of New York denied RF SUNY’s request for a hearing by 5 February.
• This may put a short-term damper on sentiment in the name, and I expect the JICC people have been working on this for a week. 

• The Research Foundation of the State University of New York (SUNY RF) has filed a patent infringement lawsuit against JSR Corp (4185 JP) and its subsidiary, Inpria.
• SUNY RF claims the “planned tender offer will irreparably harm SUNY RF absent preliminary relief” and filed a motion for a preliminary injunction to stop JSR licensing patents to JIC.
• JSR has yet to file a response, making it hard to judge the lawsuit’s merits. The best case is the PI is not granted, delaying the tender by a month.  

• On 4 February, the local media reported that Hahn & Co private equity firm is launching a tender offer on the remaining shares of Ssangyong Cement Industrial (003410 KS) (Ssangyong C&E).
• Tender offer price is 7,000 won (9.2% higher than the closing price on 2 February) and the tender offer amount is 702 billion won. 
• We believe Ssangyong C&E’s shares are likely close to the tender offer price today. We believe there is higher probability of Hahn & Co successfully completing this tender offer. 

• Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a Merger of Equals that would create a mid-tier gold company.
• Red 5 will acquire 100% of the shares in Silver Lake Resources and Silver Lake shareholders will receive 3.434 RED5 shares for each Silver Lake share held.
• The swap ratio is near the bottom of the historical price range of the stocks and it is no wonder that Silver Lake Resources (SLR AU) is being sold today.

• Baker Hughes Company’s Q4 2023 financial performance reveals an overall strong growth and a positive outlook for 2024.
• The company made substantial progress and saw records broken for all primary financial metrics like orders, revenue, EBITDA, EPS, and free cash flow.
• This growth trend shows a successful financial strategy and beneficial operational improvements.

• Halliburton Company in its fourth quarter 2023 earnings call reported a strong year with both its divisions, completion and production, and drilling and evaluation achieving their highest operating margins in over a decade.
• The company generated full-year total company revenue of $23 billion, a 13% increase year-over-year, and operating income of $4.1 billion, an increase of 33% compared to 2022 adjusted operating income.
• International business grew robustly with revenue up 17% year on-year despite the company’s exit from Russia in August of 2022.

• Prime Minister Modi unveils the Pradhanmantri Suryoday Yojana, a groundbreaking initiative aiming to install rooftop solar panels on one crore households, aligning with India’s renewable energy targets.
• The Suryodaya Yojana addresses challenges in the rooftop solar landscape, focusing on household installations, affordability, income generation, and energy self-reliance.
• Despite challenges in implementation, the scheme, led by REC, holds the potential to significantly boost rooftop solar capacity, supporting India’s commitment to cleaner energy and a sustainable future.

• Shareholders have approved Costa Group Holdings (CGC AU)‘s acquisition by Paine Schwartz Partners and the stock is expected to stop trading after the close on 8 February.
• Costa Group Holdings (CGC AU) will be replaced by Strike Energy (STX AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
• There will be positioning in Strike Energy (STX AU) but we do not expect it to be excessively large and there could be some outperformance over the next week.

• The discounts to NAV of covered holdcos have mainly tightened during January. Discounts to NAV: C.F.Alba, 47.5% (vs. 49.1%); GBL, 37.1% (vs. 36.6%); Heineken Holding, 16.6% (vs. 16.7%); 
• Industrivärden C, 3.8% (vs. 5.4%); Investor B, 7.9% (vs. 13.5%); Porsche Automobile Holding, 42% (vs. 37.1%). The spread of Rio DLC widened to 25.2% (vs. 24.2%).
• What seems interesting: in holding trades, GBL/vs. listed assets, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.

• Metals Acquisition (MTAL US) is looking to raise up to A$300m (US$197m) through its ASX secondary listing.  
• The proceeds will be used to repay Glencore’s deferred consideration facility for the MTAL’s acquisition of its CSA copper mine, amongst other uses.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• Hawkins (HWKN) reported fiscal third quarter (December) results benefiting from higher mix of water treatment sales as the industrial segment dealt with its seasonal soft period
• HWKN has grown its water treatment segment through acquisitions including several made towards the beginning of the December segment
• Water treatment sales were approximately $9 million less than expected due to the timing of acquisitions closing and their sales contribution during a seasonally soft quarter for the segment

• The contract environment is proving advantageous for Seadrill (SDRL) with the Company announcing two more contracts
• We estimate one of the contracts has a day rate of $500,000 and should result in other bidding activity to reach and eventually exceed this level in 2024
• The day rates SDRL has announced for the latest contracts, along with the two contracts in December 2023, demonstrate there is demand to pay the higher day rates 

• Revenue decreased by 12.3% in 9M 2023 standing at EUR 602.22M (vs 686.46M in 9M 2022), resulting from a combined drop in the fuel prices and volume sold.
• Cost of revenue decreased by a similar rate resulting in only a slight reduction of Gross Profit by 2.7%
• However, EBITDA decreased by 11.1% to EUR 9.08M (vs 10.22M in 9M 2022), EBT fell by 57.6% at 2.23M (vs 5.28M in 9M 2022), and Net Income by 57% at 1.79M (vs EUR 4.16M in 9M 2022).

• LVG’s strategic partnerships & recent acquisitions have set the Company up for a transformational 2024.
• The Company has substantial upside through its partnership with Barrick Gold as well as other exploration potential.
• Lake Victoria Gold (LVG:TSXV) is a Canadian exploration and development company focused on the growth and consolidation of the Lake Victoria Goldfield in Tanzania.

Hellenic Republic Asset Development Fund (HRADF) and Paneuropean Oil & Industrial Holdings (POIH) have announced that they have sold 33.6m shares in HELLENiQ ENERGY, representing 11% of the existing ordinary shares. These were sold via an international private placement at a price of €7.00 per share. Although this is a third-party transaction, this will benefit the liquidity of HELLENiQ ENERGY’s shares.

• We discuss the end of the mandatory lock-up periods for 53 stocks in Korea in February 2024, among which 3 are in KOSPI and 50 are in KOSDAQ.
• These 53 stocks on average could be subject to further selling pressures in February and could underperform relative to the market.
• The top five market cap stocks including those with 1% or higher A/B ratio include the following: Sam A Aluminum, Jeio, HLB Therapeutics,  Polaris Office, and Mirae Asset Venture Investment. 

• A change of pace from the usual Asia-Pac stubs: Delek US (DK US), a deep value downstream refining and logistic (via 78.7% held Delek Logistics Partners (DKL US)) play
• Preceding my comments on Delek are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• • 4Q23 production was 218 boe/d as Anshof did not contribute to production during the quarter (in line with previous indications).
• Commercial production at Anshof is expected to restart in March after the commissioning of a permanent production facility. • Drilling at the high impact Welchau-1 well targeting between 365 bcf and 1,128 bcf gross prospective resources is expected to commence in early February.

• • Etana Energy (49% held by Chariot) has signed a PPA with Growthpoint Properties to supply 195 GWh per year of renewable energy.
• Etana will wheel electricity to their commercial property buildings located in several jurisdictions in South Africa. • The electricity that will be wheeled by Etana includes 30GWh per annum of hydroelectric power from Serengeti Energy.