Energy & Materials Sector

• Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition. 
• No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
• Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable. 

• In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
• According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion. 
• The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.  

• S&P 500 futures down 33 basis points, showing signs of exhaustion
• US dollar index up 67 basis points, driven by euro reversal
• China’s unexpected outperformance in equities may be linked to US stimulus actions and coordination

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• The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
• Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition. 
• Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.

• Brent oil futures trading in line with fair value, with bullish bias in options, as volume of bullish calls hit record high
• Ongoing conflict between Israel and Iran raising concerns about further escalation, with recent attacks and strikes indicating potential for heightened tensions
• Global oil inventories are significantly lower than in previous years, potentially impacting market dynamics and prices as demand and inventory levels play a key role

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• Godawari Power and Ispat (GODPI IN) is fully integrated steel manufacturer with a diverse portfolio encompassing iron ore mining, pellet production, sponge iron, steel billets, ferroalloys, and power generation.
• Net Cash Balance Sheet, Mining Expansion, and upcoming Integrated Steel Plant provide huge potential for the captive consumption.
• Execution of the capex plan within the stipulated timeframe is the key risk.

• Option prices are a valuable tool for studying market trends and risk premium
• Gold’s unique properties make it a valuable asset for portfolio diversification and defense against government chaos
• The oil VIX index, OVX, provides insights into market risk and volatility in the oil market, with potential implications for broader market trends

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• NR prices surge over 33% YoY during April-August 2024
• In FY 2024-25 Q1, operating margin of top five tire firms falls ~200 basis points to 14%
• NR prices in downward trend in Oct amid a surge in supply

• From time to time, RaaS Research produces non-commissioned research reports on industries and companies which we believe deserve attention.
• Josh Baker attended the Australian Gold Conference last week and found eight stocks he believes have clear catalysts for a re-rate.None of these companies are currently covered by RaaS.

• SGX Iron Ore futures surged by $5.64/ton last week, with prices peaking at $113.55/ton on 30 Sept amid China’s expanded stimulus measures.
• Short-Term moving averages signal a bullish trend, with the 9-day MA crossing the 100-day MA on 4 Oct, indicating further upward momentum.
• Overbought conditions, with RSI nearing 70, suggest caution, and a tight stop loss remains advisable as support at $105/ton remains weak.

• MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
• Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
• We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

• Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer 
• ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
• If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Capitol Health (CAJ AU). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Xingda International (1899 HK), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP). 

• With China’s slew of stimulus measures released last month, we are confident that copper prices will break 10,000 USD/ton soon. 
• The COMEX spread with LME has now started to build up to over 300 USD/ton, signaling that macro funds are getting bullish on copper.
• We continue to like the equity route to play copper with pure plays like Southern Copper (SCCO US) , Ivanhoe Mines (IVN CN), and Teck Resources (TECK US).

• Helix Energy Solutions has emerged as a prime candidate for strategic acquirers and financial sponsors exploring opportunities in the offshore oil and gas industry.
• The company, which provides specialized services such as well intervention, robotics, and production facilities, is exploring its strategic options, including a potential sale.
• Helix’s latest quarterly earnings call revealed a significant improvement in revenue and profitability, alongside strong operational performance across its key segments.

• A slew of policies announced by the Chinese government led to a short squeeze in the iron ore market, with prices moving up 20% from the lows to 108 USD/ton.
• Mill margins inflected into positive territory, and iron ore, after gapping below its band of 95-130 USD/ton for the last 3.5 years, is now back in its normalized range. 
• While the current move was unexpected, we expect the euphoria to last a while as more clarity on the stimulus emerges and ore prices tick up short-term.

• We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares. 
• Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc. 
• We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc. 

• Ovintiv has been making headlines recently as it is rumored to have been approached by Coterra Energy for a potential takeover.
• While this creates buzz, Ovintiv’s position in the market makes it a compelling acquisition target for strategic buyers like Coterra and others.
• The company’s operational execution has been solid, as evidenced by its recent earnings beat, with Ovintiv reporting strong production figures and significant free cash flow generation.

• Teck Resources Limited, a diversified resource company, has undergone significant transformation, particularly emphasized in its Q2 2024 earnings report.
• The sale of its steelmaking coal business has strategically repositioned Teck as a company with a pure focus on metals vital for global development and the transition to renewable energy.
• This report encapsulates both the financial and operational milestones reached during the quarter, alongside future prospects and challenges.

• MBK ditched the hard floor, eliminating cancellation risk. With a 15% GGT rate, there’s a 4% spread, so if you can secure volume, the deal looks solid.
• MBK’s tender offer has less volume than Choi’s buyback (18%), increasing proration risk, but Choi’s deal also faces legal headaches, leaving some cancellation risk.
• Tax implications differ: MBK’s offer incurs capital gains tax, while Choi’s buyback is subject to dividend tax. Foreign investors may prefer MBK’s 0% withholding tax, impacting participation.

• On 4 October, MBK Partners announced that it is raising its tender offer price of Korea Zinc from 750,000 won to 830,000 won, matching Choi family’s tender offer price. 
• As the price and conditions have changed, the tender offer period for Korea Zinc by MBK Partners and Young Poong will be extended by 10 days until 14 October.
• Unless the Choi family makes another counter offer, upping the tender offer price even further, MBK/Young Poong is in a better position to win this M&A war for Korea Zinc.

• An $271 million block trade of Pilbara minerals occurred, representing nearly 3% interest in the stock of the lithium miner
• The trade was part of a secondary share sale stemming from an equity collar transaction for China’s Ganfeng, which owns 5.7% of Pilbara
• Equity collars are a trading strategy using options to protect downside, with the block trade price at a 4% discount to the last close

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• Joins hands with Bosch to develop intelligent tire tech for safe driving
• Gets validation from SBTi on zero emission target by 2040
• Gets over 500 approvals for cutting-edge Elect technology

• BP’s revenue is expected to rise 7% QoQ but fall 5% YoY while EPS is anticipated to drop 7% QoQ and 19% YoY.
• Management projected lower upstream production for Q3 compared to Q2, including in high-margin regions. However, retail fuel sales are expected to increase on stronger seasonal demand.
• In 2023, BP allocated over 30% of its total expenditure to charging stations, biofuels, hydrogen fuels, and fuelling stations, a significant rise from just 3% in 2019.

• In the 2024 second-quarter earnings of Plains All American Pipeline, the company displayed a performance that surpassed expectations, revealing robust execution capabilities amidst changing market dynamics.
• The key financial highlight includes an adjusted EBITDA attributable to Plains All American of $674 million, exceeding projected values.
• This positive outcome has led to an upward adjustment of the full-year 2024 EBITDA guidance by $75 million, now ranging between $2.725 billion and $2.775 billion.

• Never a dull moment for Korea Zinc (010130 KS) (KZ).  After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
• KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
• MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms. 

• Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
• If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.  
• Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days

• Entree Resources (ETG CN) has been roaring over the past three weeks on the back of …no official news!
• As we highlighted in our prior insights we expected an arbitration ruling by late 3Q24, but there has been no news published by Entree or Rio Tinto Ltd (RIO AU) 
• Volume spike and price action remind us of Turquoise Hill buyout in 2022.

• Nanshan Aluminium International Holdings (NAI HK)  is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai International.
• Nanshan Aluminium International is a leading alumina manufacturer in Southeast Asia.
• The firm’s primary focus has been tapping into Indonesia’s abundant bauxite and coal reserves, utilizing the low-temperature Bayer process to produce metallurgical-grade alumina in sand form.

• Discounts to NAV of covered holdcos mainly widened during September. Discounts to NAV: C.F.Alba, 46.6% (vs. 46.2% as of August 30); GBL, 40.7% (vs. 41.1%);
• Heineken Holding, 14.9% (vs. 16.5%); Industrivärden C, 0.9% (vs. 1.7%); Investor B, 2.6% (vs. 1.9%); Porsche Automobile Holding, 35% (vs. 35.7%). Rio DLC spread widened to 26% (vs. 19.8%).
• What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• EU commission proposes longer phase-in time  
• Some tire makers are delaying EUDR rubber booking  
• EU’s faltering EV market is a concern  

• Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coals
• Despite recent success and a positive recommendation, the stock has lagged behind other coal companies
• With a current share price of $23.40, market cap of $2.9bn, and strong FCF yield of around 30%, Peabody presents a promising risk/reward opportunity in the current market environment

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.

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.

• Vedanta Resources

• Pulsar has signed a drilling contract to deepen the Jetstream #1 well later this quarter.
• A further 500 m will be drilled to intersect the full anticipated height of the reservoir.
• The prospective resources at Topaz are associated with these deeper horizons.

• Frontline plc’s latest earnings report for the second quarter of 2024 presents a mixed bag of results influenced both by geopolitical complexities and market-specific challenges, as well as strategic decisions executed by the company.
• Delving into the current performance and potential future scenarios gives us a balanced understanding of where Frontline stands in the volatile tanker market.
• For the second quarter of 2024, Frontline reported daily earnings that, while showing robust figures, slightly tread under the first quarter with VLCCs making around $49,600, Suezmax at $45,600, and LR2/Aframax tanks earning about $53,100 per day.

• Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
• If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
• Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.

• The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
• Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
• If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.

• Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
• The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.   
• Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management. 

• Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake. 
• Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
• Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.

• Price surge to continue until 2025
• 13% higher precipitation in Thailand in Jan-Aug 2024 vs 2023

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.

• Nickel Industries
• Tata Motors ADR

• In a filing released last evening after the market, Mongolian Mining (975 HK) announced it had redeemed the entire outstanding principal amount of the perpetual securities and their distribution.
• The announcement is significant as it prepares the company to distribute dividends for FY24 in the March results. 
• The stock trades at 5.2x FY24 PE and 2.5x EV-EBITDA, and we expect the company to have massive net cash by the end of the year.

• Veren has demonstrated robust financial and operational performance in the second quarter of 2024, marked by strategic advancements in both its asset base optimization and financial structure.
• The company reported significant operational efficiency with stable production levels, having produced 192,500 barrels of oil equivalent per day (BOE/d), of which 65% comprised oil and liquids.
• This production performance is consistent with the company’s strategic focus on high-margin liquids-rich plays in the Western Canadian Sedimentary Basin, particularly in the Alberta Montney and Kaybob Duvernay areas.

• • The B6 well on the Bittern field is now in production at a stable gross rate of ~8 mboe/d.
• Net to Serica, this represents ~5.2 mboe/d.
• This is well above our expectations of ~3 mboe/d (net).

• The WTR Sustainable Index was up 3.5% W/W versus the S&P 500 Index (up 0.6%), the Russell 2000 Index (down 0.1%) and the Nasdaq Index (up 1.1%).
• Energy Technology (13.5% of the index) was up 3.3%, while Industrial Climate and Ag Technology (46.3% of the index) was up 1.1%, ClimateTech Mining was up 4.2%, and Advanced Transportation Solutions (21.0% of index) was up 8.4%.
• Top 10 Performers: VIHD, NNOMF, WAVE, EGT, NVVE, CPWHF, VLI, XPEV, MP, DNMR

• Recent policy changes in China have sparked a surge in commodity prices and stock markets
• China’s focus on stimulating the real economy over asset prices sets them apart from Western policies
• Chinese government has implemented measures such as interest rate cuts and lower bank reserve requirements to boost liquidity and investment

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• At last, Covestro signed an Investment Agreement with ADNOC for an all-cash €62.00/share offer (same as June proposal), 54% premium to June 2023, €11.7 billion implied equity value.. 
• The offer represents 9.1x EV/Fwd NTM EBITDA (vs. peers at 8.3x), 7.4x 26e EBITDA and 1.8x P/BVPS. The share price implies 6.4% gross spread and 66% probability of deal completion.
• The agreement is well-crafted and now has a strong likelihood of reaching a successful completion, although there is a lengthy period before completion and likely political opposition. Long.

• In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
• Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
• Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 

• Coterra Energy held its 2024 Earnings Call, reporting robust results for the second quarter.
• The company highlighted strong financial performance alongside diligent execution of operational strategies, despite facing a 42% drop in realized natural gas prices between Q1 and Q2 2024.
• Ensuing from this price drop, revenue only saw a modest 12% decline, illustrating Coterra Energy’s resilience and strong market positioning.

• Civitas Resources provided a detailed overview of its operations and financial results during the second quarter of 2024 earnings.
• The company, having undergone significant structural transformations, particularly with its strategic entry into the Permian Basin, demonstrated notable advancements in operational efficiencies and financial performance.
• Civitas Resources has demonstrated robust operational success, particularly in integrating and optimizing its Permian assets, which are now producing over 185,000 barrels of oil equivalent per day.

• Sailfish Royalty is a precious metals royalty and streaming company focusing on assets in the Americas.
• The Company has a strong respect for shareholder capital, currently offering a 5.0% dividend yield and actively repurchasing shares.
• FISH has a 3% NSR on the Spring Valley project in Nevada that is expected to begin production in 2028 and scale to 349Koz Au per year.

• SM Energy Company delivered a mixed set of results for the second quarter of 2024, showcasing both strengths and some areas that invite caution.
• Below is a holistic investment thesis and summary based on the company’s recent earnings call.
• Starting with the positives, SM Energy posted significant production growth, particularly in the Permian region.

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

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• For the month of September 2024, 15 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$23bn. 
• The average premium for the new transactions announced (or first discussed) in September was ~43%. The average premium YTD is ~44%
• This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

• Did China Just Trigger Commodity Markets?
• China’s central bank last week announced a new stimulus package to the economy to curb the growth decline that is still going on.
• Chinese stocks jumped and also “Chinese-linked commodity prices” like soy, copper and steel gained momentum as Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden.

• US rig count declined by one to 587 for the week ending 27/Sep, marking the sixth drop in seven weeks. Despite this, the rig count increased by six in Q3.
• The US oil rig count fell by four to 484 after staying flat last week. Gas rigs rose by three to 99, marking its second increase in six weeks.
• For the week ending 27/Sep, US energy producers added one rig in Texas and cut two in New Mexico and one in Louisiana.  

• Harbour Energy plans to acquire Wintershall Dea’s non-Russian upstream assets, which will triple its 2p resources, increase production, lower operating costs, and boost free cash flow
• This move will reduce HBR’s reliance on the UK Continental Shelf and diversify its resource base
• Despite concerns about the future of UK oil and gas producers, HBR’s stock presents a potential upside of over 100% within the next 12-18 months, making it an attractive investment opportunity.

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.

• This flash note is an update for our readers on the indicative probability of default for Energy Absolute Public Company Limited (EA).
• We plotted EA’s probability of default, using Criat’s iRAP Global Plus PD Toolkit (iRap), against its peers, and we believe the chart indicated a high probability of default still.
• Given a lack of reliable bond quotes in the THB bond market, we continue to issue our report on EA without a recommendation.

• US natural gas prices jumped 19.2% for the week ending 27/Sept, marking the largest weekly increase since November 2023, driven by strong demand and concerns over supply cuts.
• Henry Hub Put/Call volume ratio fell to 1.03 (27/Sep) from 1.69 the previous week as put volumes fell by 45.5% WoW, while call volumes declined by 10.1%.
• Put OI increased for contracts expiring in October and November, while call OI rose for expiries in December, January, February, and March.

• We are initiating coverage on PEMEX with an Outperform recommendation.
• We think the potential reclassification to a public company will lead to an improved credit profile, resulting in spread compression due to the increased linkage with the sovereign.
• We prefer the PEMEX (B3/BBB/B+) 5.950% 2031, PEMEX 6.625% 2038, and PEMEX 7.690% 2050 bonds, as they are trading wide to the overall PEMEX curve.

• NOV Inc. has reported a strong performance in the second quarter of 2024, with revenues reaching $2.22 billion, indicating a 6% increase compared to the same period in 2023.
• Notably, international markets demonstrated double-digit growth, and the offshore sector grew by 6%, contrasting with a slight 1% decline in North American sales.
• The company achieved a net income of $226 million or $0.57 per fully diluted share, an improvement from the previous year.

• SGX Iron Ore futures surged by $10.24/ton to $102.09/ton last week, hitting the highest level since July, driven by China’s stimulus announcement.
• A bullish technical signal emerged as the 9-day moving average crossed over the 21-day, yet RSI overbought levels (72.35) suggest a potential correction.
• Trading volume spiked mid-week but thinned near $105/ton, indicating waning volume above $100/ton and setting up volatility for a short-term price drop.

• On September 26, Nippon Steel’s president affirmed the company’s commitment to completing the United States Steel (X US) acquisition by year-end, despite the CFIUS review being extended until December.
• U.S. Steel, with an expected value of $45.19/share offers 27% upside potential. This discount, driven by acquisition/fundamental value, supports a buy recommendation thus, I would be long U.S. Steel.
• If the deal were to succeed, the likelihood of it closing before the end of 2024 is low, primarily due to the complexities surrounding the American presidential elections.

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.

• Medco Energi

• Kumyang’s major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
• Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
• Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang’s stock futures have solid liquidity, making it a prime arb trading setup.

• Kum Yang announced a rights offering capital raise of 450 billion won which will be used for facility investments and debt repayment. 
• The estimated rights offering price is 38,950 won, which is 31% lower than current price (56,500 won). 
• We remain negative on Kum Yang. Despite the sharply lower rights offering price relative to current price, we would avoid the rights offering. 

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

In 2023, Trivium received EcoVadis’ Platinum rating for the third consecutive year, and earned an A rating from CDP for Climate.