Daily Brief Energy/Materials: HD Hyundai , Kunlun Energy, Boral Ltd, ADX Energy Ltd, Ecovyst, Pulsar Helium, Quadrise Fuels International, Delta Dunia Makmur and more

• HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024. 
• The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won. 
• A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

• Kunlun Energy (135 HK)‘s 2.2% drop in core earnings in FY23 is distorted by the expiry of exploration rights of oilfield projects. All other segments have done well.  
• FY24 outlook is positive – reduction in E&P distortion, addition of more city gas projects, higher utilisation of LNG plants and terminals, and optimisation of gas pricing mechanism.
• Net cash of Rmb20.4bn equals 29% of market capitalisation, providing room for a higher dividend payout. A re-inclusion into the HSI is not totally out of the cards.

• In its 19th March Target Statement, Boral (BLD AU) rejected Seven Group Holdings (SVW AU) cash/scrip Offer after the independent expert (IE) concluded the Offer was neither fair nor reasonable.
• In its updated Bidder’s Statement, Seven slammed the IE report and its conclusions, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
• Of interest: the IE’s maximum value for Seven’s Offer is just 1.7% below its fair valuation range. Including a control premium. Yet Seven obtained control of Boral in July 2021. 

• The logging program has confirmed open fracture networks and vuggy porosity (matrix porosity) essential for well productivity coincident with hydrocarbon shows between 1346 m and 1702 m measured depth.
• This represents 356 m of gross interval across three interpreted lithological sequences.
• This compares with only 115 m of liquids-rich gas shows announced previously.

• The macroeconomic conditions continue to pose as a tailwind for Ecovyst (ECVT) with commodity prices holding and the USA’s GDP expected to remain positive in 2024
• ECVT faced several challenges in 2023 that should be a non-factor in 2024’s financial results. ECVT has already set expectations for a soft first half of the year
• The scheduled maintenance cycle at oil refineries played a role in ECVT’s fourth quarter results and how ECVT is projecting 2024 to pan out

• The interpretation of the wireline logs at the Jetstream #1 well at the Topaz helium project suggests a predominantly gas saturated interval between 1,650-2,200 feet containing discrete zones with productive permeability.
• Drilling observations and log data interpretation suggest the presence of permeable zones in the form of fracture and/or vuggy porosity.
• Good permeability is very important for flow rate.

Quadrise continues to advance towards commercial revenues for its innovative fuel and biofuel technologies, with each of its projects approaching key milestones in 2024. Preparatory steps for the MSC Shipmanagement (MSC) fuel trials are now complete and fuel supply agreements are nearing finalisation. Quadrise will achieve its first licensing revenues on the successful completion of Valkor’s project financing (timing uncertain). Quadrise also successfully concluded its Morocco trial, paving the way for commercial negotiations. According to management’s guidance, the potential Valkor revenue, the £1.5m gross proceeds raised in March 2024 and the £1.7m of cash (at end-December 2023) will provide Quadrise the necessary working capital resources to 31 March 2025. By then, the Morocco and Utah projects should be generating commercial revenue and the trial with MSC will be near completion.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Hongqiao
• Delta Dunia Makmur