Daily Briefs

• UPL Ltd (UPLL IN)‘s Q4 FY23 results show a significant improvement in margins to 13% after a drastic fall to 1% in December 2023, despite a 15% YoY revenue decline.
• Revenue drops were driven by lower prices and high-cost inventory liquidation, yet margin recovery signals operational improvements and potential future stability.
• Planning to reduce the debt by raising capital via right issue as well as IPO of Advanta.

• According to Maekyung Business Daily, SK Innovation maybe planning to sell its controlling interest in SK IE Technology (SK IET) which produces separators for rechargeable batteries.
• SK On is experiencing financial difficulties due to the sluggish demand for EVs. SK Innovation’s 61.2% stake in SK IET is worth 2.5 trillion won. 
• SK IE Technology had an earnings shock in 1Q 2024. It had sales of 46.2 billion won (67.8% lower than consensus) and operating loss of 67.4 billion won 1Q 2024.

• Marathon Petroleum Corporation (MPC) exhibits strong financial health and is investing in growth.
• MPC added two new independent directors to its board demonstrating positive signs of expansion and diversification.
• Additionally, the company maintains an optimistic view of the macro refining environment, with a forecasted increase in oil demand driven predominantly by the growing need for transportation fuels.

UPL Limited’s Q4/23-24 results appear to be better than in the past three quarters, with lower declines registered for revenues and EBITDA. That said, we note that this was against a low comparison base, with Q4/22-23 marking the beginning of the downturn. The company has been severely affected by post-patent competition and cheap supply from China, with these not likely to improve much in the near term. The financial risk profile deteriorated significantly, and is now not consistent with the Ba1/BB/BB+ rating. While liquidity appears to be adequate, we expect it to weaken during the year as the company takes on working-capital debt. We highlight that while leverage and the liquidity profile tend to be better at financial year-end, they typically deteriorate significantly during the year. However, the USD 500 mn right issuance should shore up the balance sheet significantly.

• EcoPro Materials (450080 KS) raised around US$320m in its Korean IPO, after pricing the deal at KRW36,200/share. Its six-month IPO lockup will expire on 17th May 2024.
• Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Devon Energy’s Q1 2024 results exceeded operational and financial targets, setting a strong foundation for continued progress throughout the year.
• The company delivered results that surpassed its targets by a significant margin, including a production output 4% higher than expected, averaging 664,000 BOE per day.
• This output increase was driven by three principal factors: excellent well productivity, improved cycle times across drilling and completion operations, and easing infrastructure constraints across Devon’s Delaware Basin assets.

• Albemarle Corporation’s first quarter earnings of 2024 revealed a net sales of $1.4 billion and adjusted EBITDA of $291 million.
• Despite the decline of 47% year-over-year, which was caused largely by reduced prices, the firm experienced volumetric growth led by the energy storage segment.
• The firm also confirmed its ability to navigate the market dynamism and confirmed delivery of over $9 million in productivity and restructuring cost savings, as part of efforts geared towards aligning costs with the current market situation.

• The first quarter of 2024 was marked by operational disruptions and lower production for CF Industries Holdings Inc., a leading global manufacturer of hydrogen and nitrogen products.
• Unplanned downtime and plant outages caused by severe cold in January resulted in a significant loss of production, which affected the company’s earnings.
• The company reported an adjusted EBITDA of $460 million for the quarter.

• The Mosaic Company’s first quarter 2024 earnings results showed a positive revenue growth and promising expansion initiatives.
• The company generated adjusted EBITDA of $576 million on revenues of $2.7 billion.
• However, Mosaic’s financial performance also included some challenges which the executive team plans to address moving forward.

• The Hibiscus South exploration well on the Dussafu permit has encountered 25 m of pay in an overall hydrocarbon column of 35 m in the Gamba formation.
• This discovery could add ~5-6 mmbbl gross recoverable reserves (~1 mmbbl net to Panoro).
• The Hibiscus South structure is a separate accumulation with a deeper oil-water contact than the nearby Hibiscus Field.