Daily Brief Energy/Materials: Beijing Capital Grand, Kum Yang , Korea Zinc, Pilbara Minerals, Shell PLC, TotalEnergies, Hawkins Inc, SGX Rubber Future TSR20 and more

• Beijing Capital Grand (1329 HK) (BCG), a commercial property developer in China, is currently suspended pursuant to the Takeovers Code. 
• Beijing Capital Land Ltd H (2868 HK) (BCL) holds a 65.72% stake, having secured majority control in Juda International, as BCG was then known, in November 2013. 
• BCG has been a forgettable stock since 4Q16. Expect a forthcoming Scheme from BCL, perhaps at ~HK$0.75/share.

• Personally, the key trading angle is Kum Yang’s exit, which could slash entry costs for the capital raise, with the review announcement dropping as stock rights trading starts.
• Along with the usual hit to the pricing from index trackers unloading for rebalancing, there’s a strong chance their sell orders might also include stock rights.
• From an entry cost perspective, this November review could trigger a sharp, short-term drop in costs due to stock rights dumping, similar to what we saw with CJ CGV.

• Devil is in the legal loophole. Issuing treasury shares to employees as bonuses is an exception that is not bound by the condition of ‘6 months after treasury shares acquisition.
• It would be nearly impossible for Korea Zinc to sell 2.4% of its treasury stock to an external friendly force and transform it into a friendly stake by February 2025.
• Although MBK/Young Poong Alliance has the advantage right now in this M&A battle for Korea Zinc, it is by no means over.

• Pilbara Minerals announced the establishment of a $1 billion debt facility with a banking syndicate.
• The company plans to use the facility to repay existing concessional debt and potentially make acquisitions.
• The new facility offers more flexibility in terms of leverage ratios compared to existing debt agreements.

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• Shell expects Q3 refining margins to drop 28.6% QoQ to USD 5.5/bbl, driven by a sharp decline in oil prices. However, improved chemical margins are anticipated to offer some relief.
• Between 2023 and 2025, Shell plans to invest USD 10 billion to USD 15 billion in low-carbon solutions globally, with a strategic emphasis on LNG.
• Shell projects LNG to account for 26% of energy sales by 2030, up from 22% in 2023, while oil products will decrease from 48% to 39%.

• TotalEnergies’ revenue is expected to fall 9.1% QoQ and 17.8% YoY in Q3, while its EPS is expected to rise 6.6% QoQ but fall 19.8% YoY. 
• TotalEnergies anticipates a decline in downstream profitability due to a 65.7% QoQ drop in European refining margins, though increased gas prices are expected to partially offset lower oil prices.
• TotalEnergies raised its annual oil and gas output growth forecast to 3% through 2030. Targets natural gas to comprise 50% of its total sales mix by 2030.

• HWKN has grown its water treatment business through acquisition leading to the segment becoming larger than the industrial business. The water treatment segment should become the largest sales generator.
• We believe this growth through inorganic means has resulted in HWKN’s stock trading at a premium to the market and to HWKN’s historic levels. 
• The seasonality the water treatment segment experiences should result in HWKN’s overall gross margin declining in the second half of fiscal 2025. 

• Short-term 20-day MA remained elevated through September to mid-October 2024  
• SIR20 traded at a discount to futures  
• Processors in Thailand and Indonesia faced more margin pressure due to high raw material costs  
• The forward curve shows October 2024 prices at their highest for the year