Daily Brief Energy/Materials: Idemitsu Kosan, Shandong Weifang Rainbow Chemi, Dropsuite Ltd, Rio Tinto Ltd, Gold, Ambuja Cements, Chevron Corp, Nmdc Ltd, SGX Rubber Future TSR20, KEFI Minerals PLC and more

• In February, Idemitsu Kosan (5019 JP) announced a new buyback to start when the then-existing one had not yet been completed. This is a pattern the last few years.
• On Tuesday, Idemitsu announced the method. Shareholder structure means there is pressure here, and its major peer sees buyback pressure drop imminently. 
• Be aware of tilts and timing, and what might come in May.

• The ChiNext index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• We see 9 changes for the ChiNext index and 5 changes for the ChiNext 50 index in the next index rebal event in June 2025.

• Back on the 28th January, Dropsuite Ltd (DSE AU), a backup, recovery and protection software company, entered into a Scheme Implementation Deed with Texas-based IT automation outfit NinjaOne.
• NinjaOne’s A$5.90/share Offer was a 34.1% premium to last close. The Offer has the backing of Dropsuite’s largest shareholder, Topline Capital (31%). Board & management hold a further 9%. 
• Done & dusted no? Then Topline sold down to 19.7% on the 28th Jan, then 10.5% on the 28th Feb. The Takeover Panel now orders Topline to stop selling. 

• Unification could unlock $27-32B in value, driven by cost synergies, franking credit release, and index upweighting, enhancing Rio Tinto’s market positioning and shareholder returns.
• $2.88B in franking credits are lost annually due to the DLC structure; unification enables full utilization via higher franked dividends and strategic off-market buybacks.
• Increased ASX200 and FTSE100 weighting post-unification could drive $5-7B in passive fund inflows, improving liquidity, stock valuation, and institutional investor appeal.

• Surging demand for gold is leading to unexpected consequences in Ghana
• The gold industry is impacting cocoa production and causing environmental destruction
• Some individuals are turning to illegal gold mining out of necessity due to economic pressures

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• Ambuja Cements (ACEM IN), established in 1983 by traders Narotam Sekhsaria and Suresh Neotia, leveraged strategic foresight to become a premier Indian cement giant within the diversified Adani Group.
• In 2022, Adani acquired Ambuja Cement at INR 385/share, valuing it at INR 49,620 crore ($6.4 billion), at EBITDA/ton levels (INR900-INR1,000) similar to the company’s current performance.
• Ambuja Cement is strategically positioned to achieve a substantial 44% increase in its cement production capacity by FY28, reaching a total of 140 MTPA from the current 97 MTPA.

• Chevron’s 2024 revenue rose 0.9% YoY, beating estimates by 4.7%, but EPS fell 23.5%, missing estimates by 1.2%. The downstream segment reported its first loss since 2020.
• Chevron’s Q4 production fell 1.2% YoY but 2024 output hit a record, with global and U.S. production up 7% and 19% YoY, driven by growth in the Permian.
• Chevron raised its quarterly dividend by 5% to USD 1.71/share and reaffirmed plans to generate USD 10 billion in free cash flow over two years.

• NMDC has aggressive growth plans to double its output over the next 5-6 years. Near-term guidance is also strong with plans to grow at >10% in FY26.
• New levies, delays in execution and lacklustre pricing outlook remain a key concern. However, well-aligned to surging demand from steadily growing domestic steel industry.
• Valuations: Trades at 9x TTM PE which is a slight premium to 5 yr average. Stock offers about 4-5% dividend yield and has payout ratio of >30% provides downside support. 

• China accounts for 43.6% of total Malaysian NR exports in Jan
• Recovery and Rubber Production Enhancement Plan launched
• Risda may become sole purchaser of smallholder rubber

Having required KEFI to work through regulatory overhauls and security threats, its host countries have now taken the brakes off, with the result that KEFI is launching its projects with a serendipitous tailwind of high metal prices. Major banks are signing up for Tulu Kapi in Ethiopia, with board ratification by Africa Finance Corporation following TDB last year. As such, project finance and other preparations are coming together for launch in Q225. In the meantime, KEFI has announced a JV today between its Saudi Arabian vehicle, GMCO, its local conglomerate partner ARTAR and Australian major Hancock. The JV focuses on a 900km2 major mineral belt 50km east and parallel to the analogous belt where GMCO has already discovered one of the world’s top 10% VMS deposits. This follows KEFI announcing material mineral resource upgrades at the Hawiah and Al Godeyer VMS deposits and at Jibal Qutman (gold) recently. As such, KEFI’s projects in both Ethiopia and Saudi Arabia are advancing apace.