Daily Brief Energy/Materials: Modec Inc, SK IE Technology , Xinyi Solar Holdings, Nexgen Energy, Pan American Silver, Valvoline , Geopark Ltd and more

• In March, Modec Inc (6269 JP) announced the TSE had said Modec at 29.3% (end-Dec-23) was below the required 35% tradable shares level required for continued listing on TSE Prime. 
• It announced a “Basic Plan” to comply with the criteria which involved convincing one of the three major corporate holders to sell some. They needed to sell about 6%.
• Mitsui E&S has announced it will sell 32%, and 37% including greenshoe. This is overdoing it in a huge way. Mitsui E&S is getting out. This is a re-IPO.

• Anticipation grows for increased block deals before July 24th’s pre-announcement rule takes effect, emerging as a key investment focus in the local market.
• The local market expects heightened activity in the three weeks post-May 15th, following first-quarter earnings announcements, a strategic move to mitigate insider trading controversies.
• Local traders eagerly await which companies will capitalize on the post-first-quarter earnings window, with a highly anticipated block deal involving SK Innovation selling a portion of its stake in SKIET.

• Modec Inc (6269 JP) has announced a secondary offering of up to 25.2 million shares (including overallotment). The largest shareholder, Mitsui E&S Holdings (7003 JP), is the seller.
• MODEC’s goal with the secondary offering is to reconfigure its shareholder mix to have a diverse base of shareholders who support its long-term strategies and a better tradable share ratio.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 22 and 28 May (likely 22 May).

• Mitsui E&S Holdings (7003 JP) is looking to raise approximately US$451m through a secondary follow-on offering, via selling approximately 21.9m shares (32% of TSO) of Modec Inc (6269 JP)’s stock. 
• The deal is a large one to digest at 81 days of three month ADV. 
• In this note, we will talk about the placement and run the deal through our ECM framework.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• The index changes and indicative weights for the June 2024 index rebal event will be announced after market close on Friday 17th May 2024.
• In this insight, we take a look at the potential index changes and our latest flow expectations.

• Red Pine exploration withdrew previously announced assays for Wawa gold project due to inconsistencies in results
• CEO manipulated assay results, leading to inaccurate data being used for internal mineral resource estimates
• Geological expert Renee Sterk discusses the shady practices in the industry and the consequences of such actions

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Pan American Silver (PAAS) has seen an encouraging start to the year with Q124 silver and gold production in line with management expectations and costs for both segments below its quarterly guidance. Q1 is typically one of the slowest quarters for PAAS and the company’s maintained guidance points to significant improvements in production and costs in H224. This should be supported by the current strength in commodity prices. We have increased our FY24 EBITDA estimate by 25% and upgraded our valuation from US$22.2/share to US$23.4. We believe there could be further upside to the share price if commodity prices remain at elevated levels and the company delivers on its operational guidance in FY24.

• Valvoline is a vehicle service center focused on quick lube and basic maintenance services.
• They have a new focus as a pure play company after divesting their global products business in 2023.
• The team pitched Valvoline with a price target of $84, representing a 95% price upside and 22% IRR.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• GeoPark is acquiring 49.5 mmboe 2P reserves (>90% light oil), 118 mmboe 3C contingent resources and ~5 mmboe unconventional production across four blocks in the oil window of the Vaca Muerta in Argentina from a subsidiary of Mercuria.
• The Vaca Muerta in Argentina is a hot spot for unconventional development and a strategic area for most supermajors and YPF.
• The formation is estimated to hold 16 bn bbl of oil and 300 tcf of natural gas and produces >350 mbbl/d (x4 since 2019).