In today’s briefing:
- Enchem: Block Deal Sale of 14% of Outstanding Shares
- Cash Call at 38% Discount
- Defensive Areas Starting to Lead; 10-Yr Treasury Yield Testing Support at 3.35-3.4%
- Perpetua Resources Corp (PPTA) Post-Results FYE22 ACF Equity Research 12042023
- China Utility Powers Up South American Presence With Peruvian Purchase
Enchem: Block Deal Sale of 14% of Outstanding Shares
- Chosun Business Daily reported today that Enchem is considering on conducting a block deal sale of nearly 14% of its outstanding shares, representing about 160 billion won.
- Brahman PS Investment is the likely seller in this block deal sale. If the block deal sale is successful, Brahman will have gained more than 6x on its original investment.
- We would not be buyers of the block deal sale mainly due to unattractive valuations, volatile profitability, and not enough block deal sale discount.
Cash Call at 38% Discount
- The timing was ripe for a rights issue after the share price had gained 64% since 24 October and addresses the capital structure, a need to win relevant contracts.
- The rights issue is priced at a 38.6% discount (with a negative impact on the share price). TERP is €8.8438, theoretical value of the right is €1.1762).
- Exclusively considering the cash injection and new number of shares, TP would be €9.07/share, with the caveat of the large dilution and uncertainty about the execution of the restructuring.
Defensive Areas Starting to Lead; 10-Yr Treasury Yield Testing Support at 3.35-3.4%
- Since late-January/early-February we’ve recommended shifting to defensives considering our belief that 4165-4200 will cap upside on the $SPX in 2023, while also conceding that a reach to 4300-4325 is possible.
- Considering limited upside in both scenarios, we continue to recommend shifting to defensives and believe that now is the time to be tactically overweight defensives
- Defensive Sectors including Health Care (XLV), Utilities (XLU), and Staples (XLP) are hitting 2+ month RS highs, and are staging bullish price and RS reversals, as are gold miners (GDX).
Perpetua Resources Corp (PPTA) Post-Results FYE22 ACF Equity Research 12042023
- EBIT beat – loss came in lower by 2.43%, Δ $(0.73)m vs. ACF est.;
- EBITDA beat – loss came in lower by 2.43%, vs. ACF est.;
- EPS beat (+ fully diluted) loss 4.22% lower vs. ACF est.
China Utility Powers Up South American Presence With Peruvian Purchase
- China Southern Power Grid Co. Ltd. has agreed to pay around $2.9 billion to acquire two Peruvian assets from Italy’s biggest utility Enel SpA, as the Chinese state-owned major deepens its footprint in South America amid a global business expansion.
- Under the agreement, a subsidiary of the Rome-based company will sell its entire 83.15% stake in distribution and supply company Enel Distribución Perú S.A.A. and 100% stake in advanced energy services provider Enel X Perú S.A.C. to China Southern Power Grid International (HK) Co. Ltd
- The deal will further strengthen the Guangzhou-based operator’s presence in South America.
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