In today’s briefing:
- Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
- SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
- Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong
- [Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates
- SDRL: Pacing Out the Year
- Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update
- Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update
- VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24
- Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update
- Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers
Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
- Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
- August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
- With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.
SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
- SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On.
- The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
- We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On.
Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong
- On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
- The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain.
- Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels.
[Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates
- Exxon Mobil’s Q2 revenue grew 12.2% YoY and net profit increased by 17.3%. Revenue missed estimates by 0.4% while net profit exceeded expectations by 6.2%. v
- Exxon Mobil’s Q2 oil production hit a record high since the 1999 merger, driven by strong output in Guyana and the Permian basin.
- Exxon Mobil expects full-year expenditures to total USD 28 billion, including USD 25 billion for ExxonMobil and USD 3 billion for Pioneer.
SDRL: Pacing Out the Year
- SDRL reported second quarter results with similar commentary as its peers had previously provided. Current market conditions have resulted in contract awards being delayed even though day rates hold steady
- The shift in the environment has meant SDRL is no longer expecting short-term drilling work in the second half for two of its vessels, Sevan Louisiana and West Phoenix.
- In 2025, SDRL is set to enhance its operations in Brazil with the addition of two vessels operating at high day rates.
Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update
- Revenue increased by JPY13mn (+0.1% YoY), with Specialty Steel and Wire Products up JPY171mn (+1.9%) and Induction Heating down JPY158mn (-3.1%).
- Operating profit rose by JPY124mn (+45.9% YoY), with Specialty Steel and Wire Products up JPY104mn and Induction Heating up JPY21mn (+7.3%).
- Full-year FY03/25 forecast progress rates: 22.5% for revenue, 19.7% for operating profit, 26.1% for recurring profit, 23.4% for net income.
Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update
- Sales increased JPY8.1bn (+8.4% YoY) due to higher sales in Films, Environment and Functional Materials, and Functional Textiles.
- Operating profit rose JPY3.2bn, with increased profit in Films, Environment and Functional Materials, Functional Textiles, and Real Estate segments.
- Biotechnology business sales and segment profit details are missing; pharmaceuticals contract manufacturing improved profitability after FDA warning letter close-out.
VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24
- • 2Q24 WI production was 25,411 boe/d, in line with our expectations and within the company’s guidance for 2Q24 (23.8-27 mboe/d).
- • WI production of ~3.3 mbb/d in Cote d’Ivoire was particularly high.
- WI production has now stabilized at ~4.5 mbbl/d.
Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update
- Consolidated Q1 FY03/25 results: Revenue JPY40.6bn (-1.7% YoY), Operating profit JPY1.3bn (+66.7% YoY), Recurring profit JPY1.2bn (+87.9% YoY), Net loss JPY147mn (+345.5% YoY).
- Segment performance: Revenue JPY20.5bn (-11.4% YoY), Operating profit JPY562mn (-40.6% YoY); Revenue JPY18.1bn (+12.1% YoY), Operating profit JPY580mn (JPY295mn loss in Q1 FY03/24).
- Additional segments: Revenue JPY2.4bn (+8.3% YoY), Operating profit JPY157mn (+582.6% YoY); Revenue JPY1.6bn (-19.3% YoY), Operating loss JPY12mn; Revenue JPY967mn (+14.0% YoY), Operating profit JPY59mn (+145.8% YoY).
Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers
- Ovintiv recently announced results for its second quarter of 2024, highlighting continued success in execution, free cash flow generation, and shipment of shareholder returns.
- The North American energy producer has reported a net earnings of $340 million and an impressive cash flow exceeding $1 billion, outdoing consensus estimates.
- This performance is underscored by a production outperformance on both oil and natural gas, as well as cost efficiencies.
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