Energy & Materials Sector

• 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.   

• After the market close on 23 June, SK Innovation (096770 KS) announced that the company will conduct a rights offering worth 1.2 trillion won. 
• We have a positive view on SK Innovation’s rights offering of 1.2 trillion won. The expected rights offering price is 143,800 won which is 21% discount to current price. 
• Although we have a positive view of SK Innovation over the next 12 months, its share price could face some weakness in the near term due to this capital increase. 

• Almac IPO is likely to benefit from the change in IPO regulations in Korea, which could result in a spike in its share price in the first day of trading.
• Starting next week, the Korean IPO rules are changed so that the price limit on the newly listed companies will be expanded to 60-400% of the IPO price.
• We believe Almac’s shares could OVERSHOOT by more than 200-250% versus the IPO price on the first day of trading, which would be 150,000 won to 175,000 won per share.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the SE600 and EURSTX Indices for the September 2023 Rebalance.
• There could be one intra-review deletion for the SE600 index in July or August.
• I see 4 ADDs and 4 DELs for the SE600 index in the September 2023 Rebalance.

• The Company has completed 11 drill holes, totalling 3,569m.
• This morning, Omai Gold Mines Corp. (OMG:TSXV, OMGGF:OTC) announced additional outstanding drill results from the Omai gold project in Guyana.
• In 2023, a total of 3,569m have been completed in 11 holes with one hole being reported today.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
Sappi’s ESG is “Strong”, driven by its “Strong” Environmental and Governance scores. The Social score is “Adequate”. Controversies are “Immaterial” and Disclosure is “Strong”. 

Sappi is a constituent of the FTSE4Good Index. All of the company’s regions (Europe, North America and South Africa) received a Platinum rating from EcoVadis for corporate social responsibility in FY 2022. The Platinum rating recognises the Top 1% of companies evaluated by EcoVadis.

Lithium Power International (LPI) has entered into a binding agreement to sell its 100%-owned Australian lithium tenements to Albemarle. This is an all-cash transaction that will see LPI receive A$29m on completion, which is expected in early July 2023. The company will use the proceeds to further advance its flagship Maricunga lithium project in Chile. The deal is positive in our view in that it allows LPI to significantly extend its cash runway without further diluting its shareholders.

• Sibanye Stillwater Limited has experienced a few noteworthy developments of late.
• The stock is theoretically undervalued and possesses a non-cyclical dividend policy.
• Nevertheless, ever-rising risk premiums might send Sib Kanye’s valuation into the abyss.

• Funde Sino Life Insurance, a significant shareholder of Shougang Fushan Resources (639 HK), has sold down its stake in the company by 3.31% to  27.96% as per recent filings.
• Along with coking coal prices remaining weak, this creates a massive overhang clubbed with uncertainty on the share price in the short term. 
• It also creates an opportunity as the stock has almost 70% of its market capitalization in cash, a low-cost advantage, and a dividend yield of at least 12% for FY23e.

• Agnico Eagle Mines has outperformed the S&P 500 and gold on an absolute basis.
• Agnico’s business fundamentals remain strong, in spite of market-wide headwinds and more aggressive business expansion.
• Short-term volatility due to outside factors is to be expected, but AgnICO’s business fundamental remains strong.

Nanoco has announced its intention to return £33–40m of the funds won through the settlement with Samsung to shareholders, retaining £20m to execute its growth and intellectual property (IP) licensing strategy. Management expects to start this programme after it has received the second $75m tranche in February 2024 from the Samsung litigation. Operationally, multiple end-customer trials via Nanoco’s major partner are ongoing and it is seeing renewed interest from the display market. The group also intends to seek further value from its IP portfolio, having identified a number of other potentially infringing third parties.

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.

• ENN Natural Gas
• Vedanta Resources

• EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high. 
• Preceding my comments on EcoPro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Gold and silver prices have been drifting lower as investors have shifted their focus to riskier assets.
• Earlier this year, the rise in gold prices was driven by stable yields, anxiety from regional bank stress, and a preference for real or liquid assets as reliable investment options.
• However, the current robustness of nominal and real yields, equities, and credit has left precious metals vulnerable.

• Syngenta AG (SYNN SW) has passed the listing committee meeting to raise CNY 65bn (US$9.1bn) in a Main Board listing on the Shanghai Stock Exchange.
• We forecast Syngenta AG (SYNN SW) will be added to the SSE180 Index, SSE50 Index and the CSI 300 Index (SHSZ300 INDEX) indices at the December rebalance.
• Inclusion in the SSE A Share Index could take a year and that will hold up inclusion in Northbound Stock Connect and consequently in global indices.

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.

• Yankuang Energy Group

• El Nino is here (like we forecasted) S&P Global highlighted some facts regarding the effects of the weather phenomenon on crop yields.
• I found the following chart about soybean yields quite interesting and also important going forward.
• Makes one think how sustainable last week’s price surge in beans actually is!!! El Nino tends to be good for soybean yields in Argentina and Brazil but also in the US.

• Jericho’s O&G JV assets are harvesting record cash flow and growing production steadily. 
• JEV’s wholly owned Hydrogen Technologies has an innovative solution for clean hydrogen boilers.
• This business allows JEV to generate non-dilutive cash flow which can be re-invested in the high multiple hydrogen industry.

• The pandemic triggered a surge in e-commerce, prompting a scramble for innovative delivery solutions.
• Amongst this evolution, the need for sustainable packaging emerged as a priority for companies aiming to reduce industrial emissions.
• Ranpak Holdings, a provider of eco-friendly packaging, thrived amidst this landscape, capitalizing on pandemic-driven growth.

• Almac announced its IPO price of 50,000 won, which is 11% higher than the high end of the IPO price range. Demand ratio was very high at 1,697 to 1.
• A 98.7% of the IPO shares applied thought that the company’s value is more than 45,000 won
• Given the exceptional demand for IPO shares, it is likely that the IPO share price is likely to trade at higher end of the IPO range in our sensitivity analysis.

• ECVT has experienced a series of block trades over the past year after its largest shareholder decided to liquidate its position.
• The block sales overshadow the second quarter that is expected to show a rebound in ECVT’s ecoservices
• For second quarter 2023 we are raising our sales and adjusted EBITDA estimate

• Maersk exit completed. The Danish shipping company, which had a significant equity position in TMC’s early days as a public entity, has completed the sale of its stake, removing a major hurdle to TMC’s ability to sustain upward price momentum as positive developments continue to improve the story’s fundamentals.
• Strong selling pressure removed. Maersk’s stake in TMC was considered non-core as its services contract with TMC ended in 2021, and the company began selling its nearly 21 million share position late last year and has recently completed the liquidation process.
• The entirety of the final 4 million share position was purchased by TMC’s largest shareholder, ERAS Capital.

• The trigger for yesterday’s sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.
• There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.
• There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.