Daily Brief Energy/Materials: POSCO Holdings, Geopark Ltd, Medco Energi, Vale and more

• KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
• This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
• We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.

• • The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia are now back online.
• Each well is expected to reach 4,000 bbl/d gross production (8,000 bbl/d gross total, 2,400 bbl/d net to GeoPark).
• The total gross production of both wells could reach 9,000 bbl/d by YE23.

Medco Energi’s H1/23 results were acceptable in our view. The company’s earnings were soft, weighed down by lower O&G selling prices despite higher production volumes. That said, we expect Medco’s earnings to rebound in H2, considering the recent rally in oil prices. Positively, the company’s leverage and liquidity profile remain strong. We believe Medco will be able to accommodate its USD 400-800 mn acquisition in the Middle East without breaching the 2.5x net leverage target.

In addition, we note positively Amman Mineral Nusa Tenggara’s (AMMN) successful IPO in July 2023. We note that Medco’s 21% stake in AMMN is worth USD 6.1 bn (based on AMMN’s current market cap of c. USD 29 bn), which is far larger than Medco’s own market cap of USD 2.2 bn.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Vale’s ESG as “Adequate”, given its “Adequate” scores for all pillars. Controversies are “Material”, while Disclosure is “Strong”.