Daily Brief Energy/Materials: Korea Zinc, Entree Resources, Shandong Nanshan Aluminum A, Rio Tinto Ltd, SGX Rubber Future TSR20, Peabody Energy , Vedanta Resources, Pulsar Helium, Frontline and more

• Never a dull moment for Korea Zinc (010130 KS) (KZ).  After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
• KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
• MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms. 

• Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
• If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.  
• Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days

• Entree Resources (ETG CN) has been roaring over the past three weeks on the back of …no official news!
• As we highlighted in our prior insights we expected an arbitration ruling by late 3Q24, but there has been no news published by Entree or Rio Tinto Ltd (RIO AU) 
• Volume spike and price action remind us of Turquoise Hill buyout in 2022.

• Nanshan Aluminium International Holdings (NAI HK)  is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai International.
• Nanshan Aluminium International is a leading alumina manufacturer in Southeast Asia.
• The firm’s primary focus has been tapping into Indonesia’s abundant bauxite and coal reserves, utilizing the low-temperature Bayer process to produce metallurgical-grade alumina in sand form.

• Discounts to NAV of covered holdcos mainly widened during September. Discounts to NAV: C.F.Alba, 46.6% (vs. 46.2% as of August 30); GBL, 40.7% (vs. 41.1%);
• Heineken Holding, 14.9% (vs. 16.5%); Industrivärden C, 0.9% (vs. 1.7%); Investor B, 2.6% (vs. 1.9%); Porsche Automobile Holding, 35% (vs. 35.7%). Rio DLC spread widened to 26% (vs. 19.8%).
• What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• EU commission proposes longer phase-in time  
• Some tire makers are delaying EUDR rubber booking  
• EU’s faltering EV market is a concern  

• Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coals
• Despite recent success and a positive recommendation, the stock has lagged behind other coal companies
• With a current share price of $23.40, market cap of $2.9bn, and strong FCF yield of around 30%, Peabody presents a promising risk/reward opportunity in the current market environment

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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.

• Vedanta Resources

• Pulsar has signed a drilling contract to deepen the Jetstream #1 well later this quarter.
• A further 500 m will be drilled to intersect the full anticipated height of the reservoir.
• The prospective resources at Topaz are associated with these deeper horizons.

• Frontline plc’s latest earnings report for the second quarter of 2024 presents a mixed bag of results influenced both by geopolitical complexities and market-specific challenges, as well as strategic decisions executed by the company.
• Delving into the current performance and potential future scenarios gives us a balanced understanding of where Frontline stands in the volatile tanker market.
• For the second quarter of 2024, Frontline reported daily earnings that, while showing robust figures, slightly tread under the first quarter with VLCCs making around $49,600, Suezmax at $45,600, and LR2/Aframax tanks earning about $53,100 per day.