Daily Brief Energy/Materials: China Shenhua Energy Co H, Wheaton Precious Metals, Fosun International, Meta Materials, Newmont Mining, Westrock Co and more

• China Shenhua Energy Co H (1088 HK) could replace Country Garden Holdings Co (2007 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance.
• Short interest on China Shenhua Energy Co H (1088 HK) is pretty small while the short interest on Country Garden Holdings Co (2007 HK) is large and possibly getting bigger.
• The change could result in a big increase in the fair value for the HSCEI 2023 dividend futures. Currently, we estimate an increase of up to 9 DIPS.

Wheaton Precious Metals (WPM) released its Q422/FY22 financial results in the context of known production and sales volumes. As a result, financial results were very close to our prior expectations for both Q422 and FY22. The main (positive) variances were in depletion (US$3.3m) and ‘other’ income (US$1.9m), to result in net earnings that were US$5.0m better than our prior forecasts for both periods (equating to a positive percentage variance of 5.1% for the quarter and 1.0% for the full year).

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Fosun International

• NPORE shown to be an ideal separator solution for both typical and high-temperature applications. 
• In a recently published white paper, the advantages of NPORE were validated through long-term discharge-rate and cycling testing by Japanese developer iElectrolyte Co., Ltd. using an ionic liquid-based lithium-ion battery (designed for extreme temperature applications).
• NPORE provides outstanding heat resistance compared with conventional polymer separators, which show significant shrinkage at elevated temperatures due to the melting of the polymer (see Figure 1).

Newmont’s Q4/FY22 results, released on 23 February, exhibited stronger production than we had anticipated, albeit accompanied by costs that failed to decline as much as we had hoped. Nevertheless, both production and costs for the full year met the company’s guidance to within its usual tolerance range of ±5%. In addition to its Q4/FY22 results, Newmont also provided updated medium-term guidance for production, costs and capex to FY27 to reflect recent inflationary pressures within the industry, and this note updates both our forecasts and valuation to reflect the company’s updated guidance. In the meantime, Newmont’s potential merger with Newcrest clearly remains alive, with the potential to transform the company if it is successfully brought to fruition.

• This is our first report on WestRock Company, one of the largest providers of fiber-based paper and packaging solutions in the world.
• Pension and foreign exchange rates also had a $57 million negative impact on its year-over-year consolidated adjusted EBITDA growth.
• But Corrugated Packaging improved quarter over quarter, with North American packaging shipments increasing 2% to 373 million square feet per day.