Daily Brief Energy/Materials: Kauntam Papers, Indo Tambangraya Megah, Sintana Energy , NextDecade Corp, Pan African Resources, Vedanta Resources and more

• Kauntam Papers (KAUN IN) is implementing a significant capacity expansion project, estimated to increase production capacity by 50% within 18 months. Total Capex: 735Cr, including debt of Rs. 535 crore.
• Despite recent industry challenges, Kuantum Papers maintained a healthy EBITDA margin of approximately 22% Q2FY25. The company expects improved margins with anticipated demand increases and raw material price stabilization.
• Under Project NIRMAN, focused on Industry 4.0 integration, the company has successfully implemented online sensors and control logic in its wood bleach section, improving automation and efficiency.

• Indo Tambangraya Megah (ITMG IJ) recently had a decent move when it reported strong 3Q 2024 earnings in November. Despite that, it trades at a 12% dividend yield (65% payout).
• In our last insight, we flagged an increase in mine life to 19 years (vs 14 years), further clarifying high-margin cash flows for longer. 
• The company has 926 mn USD in net cash, ~50% of its market capitalization, and is trading at 5.5x PE (assuming 350 mn USD profits vs. 9MFY24 273 mn USD).

• • QatarEnergy has acquired 27.5% WI in PEL 90 from Chevron.
• While no details have been disclosed, it’s noteworthy that QatarEnergy is a partner of TotalEnergies on the adjacent PEL 56 license, where the Venus discovery is located.
• QatarEnergy is also a partner of Shell on PEL 39.

• The WTR Sustainable Index was down 1.3% W/W versus the S&P 500 Index (down 0.6%), the Russell 2000 Index (down 2.6%), and the Nasdaq Index (up 0.7%).
• Energy Technology (13.4% of the index) was down 4.1%, while Industrial Climate and Ag Technology (48.4% of the index) was down 1.0%, ClimateTech Mining was up 0.2%, and Advanced Transportation Solutions (20.7% of index) was down 1.6%.
• Top 10 Performers: DCFC, GWTI, AMMP, AVL, LOOP, INVZ, WAVE, REE, SPI, PNPN

Almost exactly half way through its financial year, Pan African has reiterated its production guidance for FY25 of 215,000oz – not least as a result of c 9,000oz gold produced at MTR in H125 following a seamless ramp-up process that has proceeded ahead of schedule since commissioning in early October. As a consequence, we have revised our production expectations for FY25 up by 3,130oz (1.5%), although we have revised our normalised headline EPS (HEPS) expectations down by a modest 4.2% to reflect lower margin initial start-up production supplanting established, steady-state production from Evander and Barberton and the recent 3.0% strengthening of the rand against the US dollar. Note that production in H225 is expected to be 44.6%, or 38,590oz, higher than in H125. Guidance for FY26 was exactly in line with our prior expectations.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Vedanta Resources, China Hongqiao, Gajah Tunggal
• In the US, November advance retail sales came in above estimates at 0.7% m-o-m (0.6% e / 0.5% revised p), bolstered by a jump in car purchases and solid online shopping during Black Friday.
• That said, retail sales excluding auto slowed to 0.2% m-o-m (0.4% e / 0.2% revised p). Separately, November industrial production unexpectedly fell 0.1% m-o-m (0.3% e / -0.4% p), the third straight month of decline, owing to weaker utilities and mining output.