Daily Brief Energy/Materials: Copper, Covestro AG, Young Poong, Coterra Energy , Civitas Resources , Sailfish Royalty , Sm Energy Co and more

• Recent policy changes in China have sparked a surge in commodity prices and stock markets
• China’s focus on stimulating the real economy over asset prices sets them apart from Western policies
• Chinese government has implemented measures such as interest rate cuts and lower bank reserve requirements to boost liquidity and investment

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• At last, Covestro signed an Investment Agreement with ADNOC for an all-cash €62.00/share offer (same as June proposal), 54% premium to June 2023, €11.7 billion implied equity value.. 
• The offer represents 9.1x EV/Fwd NTM EBITDA (vs. peers at 8.3x), 7.4x 26e EBITDA and 1.8x P/BVPS. The share price implies 6.4% gross spread and 66% probability of deal completion.
• The agreement is well-crafted and now has a strong likelihood of reaching a successful completion, although there is a lengthy period before completion and likely political opposition. Long.

• In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
• Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
• Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 

• Coterra Energy held its 2024 Earnings Call, reporting robust results for the second quarter.
• The company highlighted strong financial performance alongside diligent execution of operational strategies, despite facing a 42% drop in realized natural gas prices between Q1 and Q2 2024.
• Ensuing from this price drop, revenue only saw a modest 12% decline, illustrating Coterra Energy’s resilience and strong market positioning.

• Civitas Resources provided a detailed overview of its operations and financial results during the second quarter of 2024 earnings.
• The company, having undergone significant structural transformations, particularly with its strategic entry into the Permian Basin, demonstrated notable advancements in operational efficiencies and financial performance.
• Civitas Resources has demonstrated robust operational success, particularly in integrating and optimizing its Permian assets, which are now producing over 185,000 barrels of oil equivalent per day.

• Sailfish Royalty is a precious metals royalty and streaming company focusing on assets in the Americas.
• The Company has a strong respect for shareholder capital, currently offering a 5.0% dividend yield and actively repurchasing shares.
• FISH has a 3% NSR on the Spring Valley project in Nevada that is expected to begin production in 2028 and scale to 349Koz Au per year.

• SM Energy Company delivered a mixed set of results for the second quarter of 2024, showcasing both strengths and some areas that invite caution.
• Below is a holistic investment thesis and summary based on the company’s recent earnings call.
• Starting with the positives, SM Energy posted significant production growth, particularly in the Permian region.