Daily Brief Energy/Materials: LG Chem Ltd, Oci Co Ltd, John Wood, Armour Energy, Trigon Metals , Wheaton Precious Metals Corp and more

• We now have an environment that allows Korea’s battery ETFs to include LG Chem in upcoming reviews. KODEX is in June, and TIGER is in July.
• If LG Chem is included in each review, the expected one-day inflow is at 0.7-0.8x DTV, which can lead to a price impact similar to that of SKIET in 2021.
• We should consider setups targeting this, including Long Short, which utilizes LG Energy Solution or LG Corp as a hedge.

• The Korea Exchange announced today (20 April) the change in index constituents and major dates for the Oci Co Ltd (010060 KS) spin-off. 
• Oci Co Ltd (010060 KS)’s shares will be suspended from trading from 27 April to 26 May 2023.
• After the spin-off and relisting of holdco/opco shares, we believe that there is a greater probability of OCI Co (opco) shares outperforming OCI Holdings (holdco). 

• “Feedback” from shareholders overturned numantine resistance from the Board of Wood, which has reluctantly decided to grant due diligence access to Apollo. New PUSU deadline is 17 May.
• As top shareholder of Vallourec, Apollo knows the sector. At the 240p offer proposal, Wood would be valued at an undemanding 5.7x EV/Fwd EBITDA on consensus numbers. 
• My fair value estimate is 261.7p (average of SOTP-multiples and DCF). There is value in the sector and Apollo may have turned a corner. Long.

• Armour Energy Limited (AJQ.ASX) is a junior energy producer and explorer with assets across northern, southern and eastern Australia.
• The company has been listed on the ASX since April 2012 and is set to pursue a growth strategy with particular focus on production optimisation at Kincora to be delivered over the next 24-30 months.
• Importantly, we should also see a return to high-impact exploration with the drilling of the Enterprise North-1 well in the Otway Basin subject to regulatory approvals.

• Trigon reported high-grade near-surface drill results (3.62% Cu over 17.0m)
• Management announced that its mine contractor is preparing to start mining with the first blast scheduled for May 16, 2023
• Despite a strong month for the stock (up ~40%), TM is trading at just 0.2x NAV compared to copper producing peers at 0.7x NAV

Wheaton’s (WPM’s) Q123 results are scheduled for 4 May. Ahead of their release, we have refined our forecasts to reflect, principally, a hiatus in mining the high-grade Pampacancha pit at Constancia, owing to regional road blockades (announced by Hudbay, on 30 March) and the suspension of production from the lower levels of the Stillwater West mine by Sibanye-Stillwater for around four weeks, following damage to shaft infrastructure during non-routine maintenance (announced on 13 March). We have also updated our estimates for actual cf forecast, precious metals prices.