Daily Brief Energy/Materials: CPMC Holdings, Rain Industries, TMC the metals co and more

In today’s briefing:

CPMC Holdings (906 HK): All Eyes on the Bids, but Underlying Still Solid
Rain Industries- Forensic Analysis
TMC the Metals Company, Inc. – Metal Competition Driving Geopolitics of Seafloor Nodules

CPMC Holdings (906 HK): All Eyes on the Bids, but Underlying Still Solid

We are convinced that both bids for CPMC Holdings (906 HK) will go ahead, as they are progressing well. The downside risk is minimal, in our view.
The strong underlying result justifies a high price for the stock. Excluding distortions from non-recurring items in FY22, earnings have increased by 32.7% in FY23 and 26.8% in 2H23.
The stock now trades on 13.8x and 12.8x PERs for FY24 and FY25, in line with sector average; but below that for Shanghai Baosteel Packaging-A (601968 CH).

Rain Industries (RINDL IN) is one of the global leaders in coal tar pitch and calcined petroleum coke. The company also engages in cement manufacturing.
The company has been facing heat lately especially business related. The fact that there are goodwill impairments, reversal of DTA and costly refinancing puts Rain in a worrying shape.
The company also has seen impairment in fixed assets especially the CWIP. The company also faces high liability for its DB plan in Germany.

Major accomplishments and milestones. The last 12-plus months saw significant advances for TMC with respect to internal execution and achievements on both the operational and financial fronts, as well as industry and political developments that appear conducive to the company’s aim of bringing the first seafloor polymetallic nodule resource into production.
Advancing scientific knowledge and addressing concerns. As the premier player in the seafloor mining industry’s development, TMC significantly expanded its effort to deepen the scientific knowledge of deep-sea mining’s impact on local environments and, together with independent third parties, develop baseline assessment tools to evaluate the environmental impacts of seafloor mining versus land-based operations.
The company utilized the data collected during a 4Q22 large-scale pilot collection project and a follow-up environmental data collection campaign conducted in 2H23, which it shared with the international scientific community, to inform its environmental application process with the ISA.

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