Daily Brief Energy/Materials: JSR Corp, EcoPro Materials, Crude Oil, Indo Tambangraya Megah, VanEck Gold Miners ETF/USA, Medco Energi, Trigon Metals , Zephyr Energy, Gold and more

• JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR. 
• Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
• Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating. 

• May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
• Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
• We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.

• We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024. 
• BRV Capital Management’s stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials. 
• On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla. 

• CTA Positioning Update According to UBS’ biweekly CTA momentum study, CTAs bought oil and sold precious metals in size in February.
• The investment bank expects ⅔ of those flows to reverse in the next two weeks.
• CTA’s have meanwhile built a decent short position in agriculturals, and flows should remain negative there.

• Indo Tambangraya Megah (ITMG IJ) reported its Q4 2023/FY23 numbers with revenues down 46%/35% YoY and profits down 58%/69% YoY on declining coal prices (113 USD/ton Vs 192 USD/ton) .
• We expect spot coal prices to remain range-bound between 130-150 USD/ton, resulting in company profits ranging between 350-500 mn USD (4x-6x PE range) with dividend yield ranging from 11%-15%.
• The company also has a cash buffer of 850 million USD, roughly 45% of the current market capitalization. 

• If you are concerned about the YOLO and FOMO frenzy in the stock market, you may wish to consider gold and gold mining stocks as refuges.
• The technical pattern for gold is constructive, but not unabashedly bullish. 
• Gold miners appear to be washed out against gold and present the best opportunity for gains in the next 6–12 months.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Medco Energi’s ESG as “Adequate”, in line with its scores for the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.

• Trigon reported results from the Feasibility Study on the Kombat Open Pit and Asis West Underground, confirming expectations.
• TM also announced a Mineral Resource and Reserve update for its Kombat Mine, reporting its first underground probable reserves.
• By way of resource conversion, new exploration, and the implementation of the Asis Far West Underground, TM still has substantial upside from what is depicted in the FS. 

• 4Q23 production in the Williston was 1,053 boe/d.
• This only reflects oil and natural gas production.
• Adding our estimates of NGL production (reported in previous periods but not in 4Q23) would lead to ~1,200 boe/d (we forecasted ~1,400 boe/d).

• Gold held flat in February, continuing a long period of consolidation, and most other metals were down modestly.
• The precious metal equities further sold off in February, compounding the losses in January, highlighting to the market this industry is still out of favour.
• We had several significant updates from companies within our coverage.