Daily Brief Energy/Materials: EcoPro Materials, John Wood, Wheaton Precious Metals, Martin Marietta Materials, Vitesse Energy and more

• In this insight, we make comparisons between EcoPro Materials (450080 KS) and HD Hyundai Marine Solution (443060 KS) post their IPOs
• Ecopro Materials’ share price is likely to face continued weakness, especially with the potential for a major block deal sale by BRV Capital and end of the lock up period.
• We believe that HD Hyundai Marine Solution’s share price has surged above its intrinsic value. More insiders are likely to start selling HD Hyundai Marine Solution in the coming months.

• On 12 May, The Times reported that Sidara was planning to make a higher bid for Wood after its initial offer was turned down by the company last week.
• This proposal was unsolicited and conditional. Premium is 30%, implied equity value £1,418 million (c.$1.775 million), implied EV £2,508 million; 5.3x EV/Fwd NTM EBITDA. Sidara recognizes value.
• Shares are trading at a lower spread than at the time of Apollo’s 240p proposal. Nevertheless, without a significant sweetening, the likelihood of a deal seems relatively low.

Wheaton’s (WPM’s) Q124 results exceeded both our and the market’s forecasts. It produced more (with the single exception of gold, which recorded a small negative variance in production) and sold more at higher prices than our prior expectations for the period. This led to a positive 5.6% (US$15.8m) variance in sales that was minimally counteracted by a US$0.8m negative variance in costs (including G&A costs) to result in a US$15.3m (10.3%) positive variance in pre-tax profits that, to all intents and purposes, fell straight through to the bottom line.

• The Q1 2024 earnings for Martin Marietta showed some level of optimism for the company’s growth prospects, though the transcript also raises some potential concerns.
• Mr.
• Ward Nye, the CEO, highlighted various positive aspects including steady product demand, favorable commercial dynamics, and recent transactions aimed at optimizing the company’s portfolio.

• Vitesse increased its 2Q24 quarterly dividend 5% to $0.525, reflecting a strong production outlook driven by the execution of management’s strategy to grow the asset base with near-term development acquisitions and organic growth projects that surpass its economic hurdle rates. The current yield is 8.7%.
• Vitesse’s business philosophy is built on the premise of compounding cash invested in oil-oriented producing assets in the Bakken play to sustain and grow the asset base in a fiscally conservative manner to support a fixed dividend.
• Management’s capital allocation framework revolves around returning cash to shareholders through the dividend policy.