Daily Brief Energy/Materials: Boral Ltd, Southern Copper, West China Cement, Orecorp Ltd, Anglo American , Secure Energy Services, Ocean Power Technologies, State Gas Ltd, Empire Energy and more

• Back on the 19 Feb, Seven Group Holdings (SVW AU) made a cash/scrip Offer for Boral Ltd (BLD AU) shares not owned, with certain tendering thresholds triggering more cash. 
• Boral has now recommended shareholders to reject the Offer after the independent expert (Grant Samuel) concluded the Offer is neither fair nor reasonable, supporting the view of Boral’s board.
• Grant Samuel backed out a price range of $6.50-$7.13/share, versus SGH’s Offer of $5.96-$6.19/share; and up to $6.39/share including the conditional payments. SGH’s terms were best & final.

• We have discussed for weeks that we will need to see the SPX and Nasdaq 100 close below their 20-day MAs for 2-3 consecutive days in order to get cautious.
• This still hasn’t happened (short-term trend remains bullish). If we get 2-3 closes below the 20-dayMAs, next support would be 4983-5050 on SPX, $425-$433 on QQQ (gap supports from 2/22/24)
• If some or all of these gaps remain unfilled, it is a sign that bulls remain in control. We are seeing a rotation into commodity Sectors, we highlight several buys

West China Cement’s (WCC) FY 2023 results were soft, but in line with expectations. The company’s profitability in Mainland China continued to weaken, albeit this was partly offset by rising sales volumes and ASP from its African operations. As a result, operating profit in Africa climbed above that for Mainland China for the first time, with the African segment accounting for 31% of total revenue and 74% of operating profit.

In our view, the key risk for investors is WCC’s seemingly relentless expansion in Africa, which is likely to further weaken its leverage. Moreover, we are concerned that further expansion in this region will fundamentally change WCC’s risk profile from a relatively stable infrastructure-led Chinese business to one that is highly exposed to event risks in frontier markets. The company’s African businesses could be exposed to higher geopolitical, regulatory and ESG risks, which are less well understood by investors.

• After Perseus (PRU AU) announced it had secured Tanzanian Fair Competition Commission  approval, Orecorp (ORR AU) continued to sit on its hands as, technically, Silvercorp (SVM CN) terms were superior. 
• PRU added 2% overnight bringing its stake to 22% vs SVM’s 21%. SVM said they won’t extend beyond the 22nd March. Something had to give. 
• This morning, PRU bumped its all-cash Offer to A$0.575/share (from A$0.55/share), with 15.6% of shares out intending to accept. SVM have five business days to counter. 

• JSE indices were rebalanced in the closing auction on Friday.
• Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).
• Turnover at the December rebalance was R60bn, where around half traded in the closing auction.

• Secure (SES CN) is recommended as a long investment with a price target of $19 in 2 years, offering a potential 125% return.
• The company has a market cap of $2.6 billion and is viewed as a high-quality company trading at a discounted valuation.
• Secure is transitioning from an energy service company to a waste management/infrastructure company, with an impending asset sale expected to generate $1.15 billion, leading to a substantial buyback and potential stock re-rating.

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.

• Ocean Power Technologies reported 3QFY24 revenue of $1.8 million, up 144% Y/Y from $0.7 million in 3QFY23, driven by sales of WAM-V autonomous vehicles and the contract with the Department of Energy.
• The company has an order book of $3.4 million YTD and growing, with backlogs standing at $3.3 million as of January 31, 2024.
• The company reported 3QFY24 gross profit of $0.8 million, compared with a profit of $0.1 million in 3QFY23.

• State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland.
• The Rolleston West CNG Project in the Bowen Basin is now in the final stage with mechanical completion and tie-in of the Rougemont-2/3 well anticipated within the next week to be followed by pre-commissioning activities.
• Importantly, first production and shipments are tantalisingly close and whilst the rate will initially be modest, up to 0.75TJd, the project has intrinsic growth potential (up to 1.7TJd) which could fund modest appraisal and evaluation works, particularly converting contingent gas to bankable reserves.

• Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
• EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
• The investment case is building further with the acquisition of the Rosalind Park Gas Plant to provide an immediate, low-capital and operating-cost processing option with nameplate capacity above the Carpentaria Stage I development model.