Daily Brief Energy/Materials: Core Lithium Ltd, VanEck Vectors Junior Gold Miners ETF, Hindustan Zinc, HD Hyundai , Occidental Petroleum, Iron Ore, Zephyr Energy, Exxon Mobil, Lyondellbasell Indu Cl A, Pan American Silver and more

• The theory is that stocks which are down hard FY-to-date by end-April end up being good sells because Australians will harvest their losses into end-June. 
• The idea is then to buy those oversold names and hold them for 30-40 trading days. That has worked 10 out of the last 12 years hedged vs ASX200.
• This year, the “sold-down” list is very heavily weighted to miners. They have continued to fall since end-June so it’s down. But hedged vs a basket of miners? It’s up.

• The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
• This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
• In this insight, we take a look at the latest lists of potential ADDs and DELs for the index rebal event in September 2024.

• Vedanta Ltd (VEDL IN) is looking to raise US$760m from selling some stake in Hindustan Zinc (HZ IN).
• Overall, while the deal would represent just 2.6% of the firm’s outstanding shares, the deal is a large one to digest at 41 days of the stock’s three month ADV.
• In this note, we take an early look at the deal, and comment on the deal dynamics.

• According to our NAV analysis, it suggests a base case valuation of 122,473 won per share for HD Hyundai, representing a 50% upside from current levels.
• The combined value of HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Electric & Energy, and HD Hyundai Marine Solution is 11.4 trillion won.
• We estimate HD Hyundai’s 73.85% stake in Hyundai Oilbank to be 7.0 trillion won. We also applied a 5x OP of its core business and a 50% holdco discount.

• Occidental’s Q2 revenue grew 1.7% YoY but missed estimates by 1.7%. Net profit surged by 34.9% YoY and beat estimates by 32.5%.
• Total production rose by 3.3% YoY led by robust growth in the Permian and Gulf of Mexico. Production touched its highest in four years.
• Average crude oil realisations rose 8.6% YoY, and natural gas increased by 11.3%, while domestic gas realisations fell sharply by 60.3% YoY.

• Iron Ore Price Decline: Iron ore prices dropped 1.7% in Week 32, driven by reduced steel output and fading demand. Stimulus-driven rally failed to sustain.
• Options Market Trends: Weekly options volume surged, with put volume increasing 106%, pushing the put/call ratio to 1.33, indicating bearish sentiment.
• Implied Volatility Shifts: Implied volatility (IV) surged midweek, particularly for September contracts, reflecting increased market uncertainty; options skew narrowed to just 0.3% suggesting more expensive calls.

• 2Q24 production in the Williston Basin was 1,226 boe/d.
• This excludes natural gas liquids (historically 150-200 bbl/d).
• This represents an increase of 7% compared to 1Q24 but 2Q24 production from the six wells Slawson wells continues to be partially impacted by gas export infrastructure constraints.

• Exxon Mobil Corporation reported its second-quarter earnings for the year 2024, showcasing robust financial performance with earnings totaling $9.2 billion, marking the second-best second-quarter results in the past decade.
• The earnings were bolstered by record production levels in key regions such as Guyana and the Permian Basin, reflecting ExxonMobil’s sharp focus on its advantaged assets.
• The recent acquisition of Pioneer has further scaled up Permian production to 1.2 million barrels per day, contributing significantly to the overall production boost.

• LyondellBasell faced a challenging yet ultimately positive quarter, reflecting a complex global economic environment marked by energy and feedstock cost variations and varying regional demand dynamics.
• The company reported a substantial 30% improvement in underlying business results compared to the previous quarter, primarily driven by increased production volumes.
• The company’s financial health appears robust, with a second-quarter EBITDA of $1.4 billion and notable earnings per share of $2.24.

Pan American Silver (PAAS) delivered a robust set of Q224 results, with lower silver production offset by the stronger sales and commodity prices. This was coupled with good cost control in the gold segment and resulted in a 65% increase in mine operating earnings and 31% growth in EBITDA. Strong cash flow generation was the main highlight of the results, with free cash flow exceeding that of the whole of FY23. PAAS expects production to be more heavily weighted to Q4 and silver output to be towards the lower end of guidance. We have reduced our FY24e EBITDA by 3.6% but our valuation remains virtually unchanged at US$23.5 per share due to a slightly lower weighted average cost of capital (WACC).