In today’s briefing:
- Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes
- CPMC (906 HK) Responds To Champion’s Offer
- Selected European HoldCos and DLC: July-Aug. 9 ’24 Report
- Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged
- US Rig Count Climbs on Oil Rig Gains
- Hurricanes More Likely to Disrupt Crude Supply and Lower Demand for Natural Gas
- TPL: Oily Water of Gold
- EOG Resources: What Is Their New Strategic Approach To Premium Drilling Locations? – Major Drivers
- Mushroom Material nets US$5M to convert agri waste into eco-friendly packaging | e27
- Celanese Corporation: Diversification and Stability of Portfolio Is Their Biggest Competitive Edge? – Major Drivers
Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes
- S&P DJI have started a market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover.
- There is US$281bn tracking the Select Sector Indices from the SPDR ETFs. The market consultation will have a larger impact on indices where there is a high degree of concentration.
- The largest inflows are expected in Apple, Conocophillips, Amazon.com and Netflix while the largest outflows will be from Microsoft, NVIDIA, Chevron, Procter & Gamble, Exxon Mobil, Costco Wholesale and Meta Platforms.
CPMC (906 HK) Responds To Champion’s Offer
- On the 30th July 2024, packaging play CPMC Holdings (906 HK) dispatched the Composite Document for the HK$6.87/share, in cash, Offer from SASAC/NCSSF-backed Champion.
- The Response Document, including the IFA opinion (with a fair & reasonable conclusion) has now been dispatched.
- However, the focus remains on ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer, which is currently negotiating the necessary regulatory approvals.
Selected European HoldCos and DLC: July-Aug. 9 ’24 Report
- Discounts to NAV of covered holdcos generally tightened during July and first week of August. Discounts to NAV: C.F.Alba, 45.3% (vs. 44.5% as of end of June);
- GBL, 42.2% (vs. 43.6%); Heineken Holding, 16% (vs. 18.4%); Industrivärden C, 2.2% (vs. 2.4%); Investor B, 7.5% (vs. 9.9%); Porsche Automobile Holding, 34.6% (vs. 35.8%), Porsche SE reports 13 August.
- Rio DLC spread tightened to 22.1% (vs. 20.7%). What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).
Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged
- Nippon Paint Holdings (4612 JP)‘s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
- Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
- China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company.
US Rig Count Climbs on Oil Rig Gains
- US oil and gas rig count increased by two to 588 for the week ending 09/Aug, following a decline the week prior.
- US oil rig count rose by three to 485, after remaining flat the previous week. Gas rigs decreased by one to 97, marking a third consecutive weekly decline.
- For the week ending 02/Aug, US crude oil production hit a record 13.4 mbpd, following four weeks of steady output at 13.3 mbpd.
Hurricanes More Likely to Disrupt Crude Supply and Lower Demand for Natural Gas
- Hurricane Debby caused 300,000 electricity customers to lose power in Florida and Georgia, reducing electricity demand, which led to natural gas prices declining.
- Since the 2006 shale boom, the share of US natural gas production from the offshore Gulf of Mexico has dropped from 15% to 1.8% by 2023.
- The Gulf of Mexico area accounted for 14.4% of US crude oil production in 2023. Although still a significant share, it has declined from 25.4% in 2006.
TPL: Oily Water of Gold
- TPL continues to use water as means to diversify from oil and gas. The low price of natural gas has put pressure on the BOE price TPL generates royalties from.
- TPL missed our total revenue estimate for the second quarter due to a decline in oil and gas royalties. However, TPL’s water business remains the bright spot of the business
- We continue to believe TPL’s revenue sourced outside of oil and gas royalties could draw greater investor attention and result in a higher valuation for TPL’s stock.
EOG Resources: What Is Their New Strategic Approach To Premium Drilling Locations? – Major Drivers
- EOG Resources, in its Second Quarter 2024 Earnings Results Conference Call, highlighted several key aspects of its performance and strategic direction.
- The company reported a substantial adjusted net income of $1.8 billion and generated $1.4 billion in free cash flow, indicating a robust financial position.
- Total liquids production forecast for the year was increased by 11,800 barrels per day, and operational efficiencies were projected to reduce per unit cash operating costs by $0.15, enhancing the forecasted free cash flow to an impressive $5.7 billion for the full year.
Mushroom Material nets US$5M to convert agri waste into eco-friendly packaging | e27
- Mushroom Material, a startup that converts agricultural waste into eco-friendly packaging, has secured over US$5 million in seed funding led by Wavemaker Partners and SEEDS Capital.
- Icehouse Ventures, K1W1, and Black Kite Capital participated.
- The investment is being used to establish a 1,300-sqm pilot plant in Auckland’s Mount Roskill in New Zealand.
Celanese Corporation: Diversification and Stability of Portfolio Is Their Biggest Competitive Edge? – Major Drivers
- Celanese Corporation, a global chemical and specialty materials company, reported its financial outcomes for the second quarter of 2024, revealing a mix of predictable challenges and strategic adjustments aimed at maintaining stable performance amidst varied market conditions.
- Positively, Celanese showcased resilience via strategic management of its engineered materials segment and its acetyls mix.
- The company noted a steady demand in automotive applications, benefiting partly from synergy realizations following its integration of DuPont’s mobility and materials unit.
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