Daily Brief Energy/Materials: ABM Investama, Texas Pacific Land Trust, Ecovyst, Fosun International, Reliance Steel & Aluminum and more

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• TPL reported fourth quarter revenue impacted by a trifecta of events. The decline in energy prices led to reduced production levels causing water sales to also decline in a period
• TPL had been seeing production rebound in the summer of 2022. The volatility in energy prices in the Permian Basin pushed some producers to slow down their well development plans
• The lower production was the biggest culprit to the decline in revenue as producers were not incentivized to produce oil and natural gas.

• ECVT suffered damage from winter storm Elliot towards the end of the fourth quarter, but that was not enough to prevent it from issuing upside adjusted EBITDA guidance
• ECVT has experienced continued demand for its ecoservices and catalyst technologies
• The pass-through costs of sulfuric acid makes sales figures look volatile, but adjusted EBITDA is the true measure, which continues to trend higher

• We revise our recommendations for FOSUNI 6.75% Jul 2023, FOSUNI 5.5% Aug 2023, FOSUNI 6.85% Jul 2024 to Hold from Sell. FOSUNI 5.95% Oct 2025 and FOSUNI 5.05% Jan 2027 remain on Hold recommendations and Credit Direction remains Negative. 
• The new RMB12b credit line provides some liquidity relief and improves the likelihood of Fosun’s ability to meet its debt obligations in 2023.
• However, more offshore asset disposals or pledges for loans need to be done to cover the remaining offshore bond maturities during the year.

• Reliance Steel & Aluminum had a mixed financial performance in the last quarter of 2022 and missed out on meeting the revenue expectations of Wall Street given the ongoing volatility in metal prices and general economic uncertainty.
• Throughout the fourth quarter, prices fell for the majority of carbon steel, stainless steel, and aluminum products sold.
• We give Reliance Steel & Aluminum Co a ‘Hold’ rating with a revised target price.