Energy & Materials Sector

• Musgrave Minerals (MGV AU) has recommended a cash and scrip off-market takeover offer from Ramelius Resources (RMS AU) at 1 RMS share for every 4.21 MGV shares + A$0.04 cash.
• RMS’ offer is attractive compared to adjusted exchange ratios and peer multiples. The offer, which has a 50.1% minimum acceptance condition, has secured commitments from shareholders representing 12.13% of shares.
• At the last close, RMS’ offer is 14.9% higher than Westgold Resources (WGX AU)’s rival scrip off-market takeover offer of 1 WGX share for every 5.37 MGV shares.

• Since its spin-off from Siemens Group’s former Gas and Power division three years ago, momentum for the new formed Company has been picking up
• Siemens Energy is experiencing a rise in demand for green transition technologies as governments worldwide move away from fossil fuels.
• Siemens Gamesa has recently announced a profit warning. We feel that the market over-reacted as the shares plunged over 37% on the day, erasing €7bn in Siemens Energy’s market value.

• Amman Mineral Internasional (1416286D IJ) raised around US$714m in its Indonesian IPO.
• Amman Mineral International (AMI) carries out exploration, development, mining, processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
• In this note, we will talk about the trading dynamics and valuation.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Tryt Inc (9164 JP), Amman Mineral Internasional (1416286D IJ), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH) IPOs.
• Event-Driven developments – JSR Corp (4185 JP), Dali Foods Group (3799 HK), Nws Holdings (659 HK), Poly Culture Group Corp H (3636 HK), Yitai Coal, DDH1 (DDH AU). 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Tata Motors ADR
• Vedanta Resources

• There are 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Five new deals this week: DDH1 (DDH AU), NWS Holdings (659 HK), Poly Culture Group Corp H (3636 HK), Mandala Multifinance (MFIN IJ), and JSR Corp (4185 JP).
• Key updates took place forSilk Laser Australia (SLA AU) and Challenger Technologies (CHLG SP).

• The JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted (capped) market-value-weighted index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to be announced in early August 2023 based on trading data as of end-June 2023.

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:

1. Central China Real Estate
2. Sino-Ocean Group
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
• The NIFTY Next 50 methodology was supposed to change in June 2023 but this has been kept on hold for now. This change could still take place before September 2023.
• The HDFC/HDFC Bank Merger is expected to complete in the next few weeks and that could trigger intra-review index changes.

• Cannindah Resources Ltd (ASX:CAE) is developing three copper-gold prospects in central Queensland including the Mt Cannindah project which has an existing JORC estimate currently being extended with the company’s drilling programme.
• The company has a long history with the Mt Cannindah project, having previously held it as Planet Metals on a farm- in arrangement with Drummond Gold before taking full control of the project in 2014.
• Since then, the company has added to its asset base with the Piccadilly and Percy Marlow prospects near Charters Towers. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Bharat Petroleum Corp
• Meituan
• Pertamina Geothermal Energy

• Hot Chili Limited (ASX:HCH) is a copper explorer with an advanced portfolio of low altitude, porphyry copper-gold projects in the Costa Fuego district of northern Chile.
• The company listed in 2010 on the ASX and has spent the past 12 years acquiring, developing and proving up the resources at its Productora, San Antonio, Cortadera and Valentina projects in Costa Fuego as well as securing access to water, power and mining infrastructure surface rights which will hasten the development approvals process.
• In that time, Hot Chili has increased its indicated resource by 1,500% to 3.41Mt Cu Eq. The company has announced its preliminary economic assessment (PEA) which estimates a post-tax Net Present Value (NPV) of US$1.1bn using a copper price of US$3.85/lb and a gold price of US$1,750/oz. 

• Yesterday and today, there have been observed cases in Korea that are suspected to be caused by a sudden drop in stock prices due to CFD liquidation trading.
• Yesterday it was Celltrion with its two siblings, and today it is Posco DX. I have found candidates that may have similar stock price movements.
• These candidates experienced a notable increase in their stock prices from late March to mid-April, and they have a relatively high margin transaction ratio.

• Trigon was granted seven large silver and lead prospecting licenses encompassing 112km2 in the Addana Mountains of Southern Morocco.
• This morning, Trigon Metals Inc. (TM:TSXV), announced that it has been granted seven exclusive prospecting licenses encompassing 112km2 in the Addana Mountains of Southern Morocco, called the Addana Project (Figure 1).
• The Addana permit area is 14x the size of the Silver Hill target and currently, the historical workings appear far more pervasive despite the lack of modern data.

• We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation’s SSF is highly liquid, being traded at nearly 0.5x spot.
• The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
• The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.

• Jericho’s portfolio company, H2U announced a successful demonstration of its non-iridium PEM electrolyzer for commercial hydrogen production.
• PEM electrolyzers currently rely on iridium catalysts, which poses scarcity and supply-chain threats to the green hydrogen industry.
• The demonstration provides additional datapoints that can help further validate the durability and performance of novel non-iridium catalysts at commercial scale.

• An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
• Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
• The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.

• Demand for green hydrogen – or hydrogen that is generated by renewable energy – is expected to climb in the coming years as governments push for a cleaner future.
• Newtrace, a climate tech firm based in India, is developing a new type of electrolyzer, which is used to create green hydrogen from renewable electricity.
• The company says its electrolyzers have lower costs and higher efficiency than what is commonly used in the market.

• Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.  
• That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate. 
• Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.

• In Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket at the start of June I proposed a basket. 
• We are getting to the end of June. Time to unwind that short basket. The named ticker was -26%. The 70-name basket underperformed ASX200 by 4.4%.
• One can now go long the basket into end-June as historically it outperforms S&P-ASX200 over two months. If one did not short, one can still go long. Basket below.

• JSR Corp (4185 JP) has recommended JIC’s pre-conditional tender offer of JPY4,350 per share, a 34.5% and 10.6% premium to the undisturbed price and last close, respectively.
• The pre-conditions relate to various country approvals. China’s approval should be challenging due to Japan’s recent curbs on Chinese exports of chipmaking equipment.
• The offer is long-dated and opens in late December. The offer price is attractive compared to peer multiples and just a touch below the all-time share price high.

• Specialty mining driller DDH1 (DDH AU) has announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
• Under the proposed terms, DDH1 shareholders will receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium. 
• Directors and shareholders with a combined 38% of DDH1 shares have indicated an intention to vote in favour of the transaction. Scheme implementation is expected in early October 2023.

• DDH1 (DDH AU) has entered a SID with Perenti Global (PRN AU) at A$0.1238 cash plus 0.7111 PRN shares for each DDH share, a 17.4% premium to DDH’s 5-day VWAP.
• The key conditions are shareholder scheme approval and ACCC clearance. Shareholders representing 38.0% of outstanding shares will vote in favour of the scheme.
• The offer is attractive compared to peer multiples, and the net exchange ratio is fair on a 1-year basis. A critical risk is volatility risk around PRN shares.  

• 2,100m of the 15,000m 2023 program have been completed to-date.
• This morning, Endurance Gold Corporation (EDG:TSXV) provided an update on the ongoing exploration program at its Reliance Gold Project and assay results for three drill holes completed at the Imperial and Diplomat target areas.
• Eight holes have been completed over 2,100m of the ongoing 15,000m program which commenced in May.

• The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
• JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
• Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.

• Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
• JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
• Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.