In today’s briefing:
- China National Building Material (3323 HK): H Share Buyback Short Changes Minorities
- China National Building Materials (3323 HK): Buying Back 9.98% of H-Shares
- Graphic Packaging Breaking Boundaries With Value-Based Pricing That Transforms Industry Standards! – Major Drivers
- Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts
- Iron Ore Tracker (9-Dec-2024): Stuck In A 95-110 USD/Ton Band, Restock On The Cards?
- Valaris Ltd.: Continued Fleet Utilization & Strategic Warm Stacking Driving Our ‘Outperform’ Rating!
- Copper Tracker 9th Dec 2024: All Eyes On the China Economic Work Conference (CEWC)
- Crown Holdings Inc.: Why Its Adaptation to Market Dynamics Is Driving Our Optimism! – Major Drivers
China National Building Material (3323 HK): H Share Buyback Short Changes Minorities
- China National Building Material (3323 HK) has launched a conditional share buyback to acquire a maximum of 841.7 million H Shares (18.47% of H Shares) at HK$4.03.
- The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts.
- The buyback is unattractive and will leave minorities short-changed, weakening a stretched balance sheet. Nevertheless, while potentially tricky, the votes should pass.
China National Building Materials (3323 HK): Buying Back 9.98% of H-Shares
- We view China National Building Material (3323 HK)‘s proposal to buy back 9.98% of H-shares as a good opportunity for the shareholders to cash out in their position.
- Without further significant government stimulus, CNBM will find it difficult to return to the HK$4.03 offer price. Potential weak FY24 results also mean downside risks.
- Other companies with high gearing and low P/B may follow CNBM’s move. We single out the infrastructure construction companies as the likely candidates.
Graphic Packaging Breaking Boundaries With Value-Based Pricing That Transforms Industry Standards! – Major Drivers
- The latest financial report from Graphic Packaging Holding Company (GPK) offers a range of insights into both the achievements and challenges experienced by the company during the third quarter of 2024.
- The company, a global leader in sustainable consumer packaging, has shown resilience in a volatile market environment but also faces certain headwinds.
- In terms of performance, Graphic Packaging reported third-quarter sales of $2.2 billion, with an adjusted EBITDA of $433 million, reflecting a solid EBITDA margin of 19.5%.
Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts
- This is a follow-up to our initiation, Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside. The flagship mine added another 5 years to the existing 3-year mine life.
- At a 60 AUD/ton operating margin for 1.4 million tons/Yr (assuming 100 USD/ton iron ore price), this is an additional 60-65 mn AUD of cash profit for 5 years.
- The company has commenced production in the Shine iron ore mine (1.2 mtpa) and will shortly begin production in the Beebyn-W11 mine (1.5 mtpa) in early 2025 after obtaining permits.
Iron Ore Tracker (9-Dec-2024): Stuck In A 95-110 USD/Ton Band, Restock On The Cards?
- In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the iron ore market remains range-bound, expecting further clarity on the economic stimulus.
- Stocks like Vale (VALE US) and Fortescue Metals (FMG AU) continue to trade at double-digit dividend yields (9-10%), assuming 100 USD/ton.
- With China’s PMI improving, despite high inventories, there is an expectation of a restock for iron ore in the short term. We remain skeptical and continue to see range-bound activity.
Valaris Ltd.: Continued Fleet Utilization & Strategic Warm Stacking Driving Our ‘Outperform’ Rating!
- Valaris Ltd.’s third-quarter results reflect a focused and disciplined approach to navigating the volatile offshore drilling market.
- The company’s revenue for the quarter was $643 million, up from $610 million in the previous quarter.
- This led to an improvement in adjusted EBITDA, which rose to $150 million from $139 million.
Copper Tracker 9th Dec 2024: All Eyes On the China Economic Work Conference (CEWC)
- In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the copper market remains range-bound, expecting further clarity on the economic stimulus.
- The market has looked through the PMI uptick due to the seasonal uplift and order inflows in anticipation of Trump tariffs, although equities seem a little more positive.
- We prefer Southern Copper (SCCO US) in the copper space for its high ROIC and future growth. Check out our recent initiation, Lundin Mining (LUN CN): Cheap Play on Copper.
Crown Holdings Inc.: Why Its Adaptation to Market Dynamics Is Driving Our Optimism! – Major Drivers
- Crown Holdings Inc. reported third-quarter 2024 results demonstrating a mixed performance across its operations.
- The company managed a flat net sales figure of $3.1 billion year-over-year, showing strength in specific sectors but also facing challenges in others.
- The firm observed increases in global beverage can and North American food can volumes, while other business segments saw declines.
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