Daily Brief Energy/Materials: Korea Zinc, Greatview Aseptic Packaging, SGX Rubber Future TSR20, Nickel Industries , Mongolian Mining, Veren, Serica Energy, Atlas Lithium and more

• Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
• If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
• Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.

• The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
• Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
• If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.

• Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
• The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.   
• Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management. 

• Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake. 
• Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
• Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.

• Price surge to continue until 2025
• 13% higher precipitation in Thailand in Jan-Aug 2024 vs 2023

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.

• Nickel Industries
• Tata Motors ADR

• In a filing released last evening after the market, Mongolian Mining (975 HK) announced it had redeemed the entire outstanding principal amount of the perpetual securities and their distribution.
• The announcement is significant as it prepares the company to distribute dividends for FY24 in the March results. 
• The stock trades at 5.2x FY24 PE and 2.5x EV-EBITDA, and we expect the company to have massive net cash by the end of the year.

• Veren has demonstrated robust financial and operational performance in the second quarter of 2024, marked by strategic advancements in both its asset base optimization and financial structure.
• The company reported significant operational efficiency with stable production levels, having produced 192,500 barrels of oil equivalent per day (BOE/d), of which 65% comprised oil and liquids.
• This production performance is consistent with the company’s strategic focus on high-margin liquids-rich plays in the Western Canadian Sedimentary Basin, particularly in the Alberta Montney and Kaybob Duvernay areas.

• • The B6 well on the Bittern field is now in production at a stable gross rate of ~8 mboe/d.
• Net to Serica, this represents ~5.2 mboe/d.
• This is well above our expectations of ~3 mboe/d (net).

• The WTR Sustainable Index was up 3.5% W/W versus the S&P 500 Index (up 0.6%), the Russell 2000 Index (down 0.1%) and the Nasdaq Index (up 1.1%).
• Energy Technology (13.5% of the index) was up 3.3%, while Industrial Climate and Ag Technology (46.3% of the index) was up 1.1%, ClimateTech Mining was up 4.2%, and Advanced Transportation Solutions (21.0% of index) was up 8.4%.
• Top 10 Performers: VIHD, NNOMF, WAVE, EGT, NVVE, CPWHF, VLI, XPEV, MP, DNMR