In today’s briefing:
- KOSDAQ Global Rebalancing This Week: Trading Considerations
- Alumina (AWC AU): Scheme Vote on 18 July
- The Beat Ideas: Bharat Wire Ropes- The Turnaround and Transformation
- DRX: Sizeable Beat on Q1 Financials & Returning Cash to Shareholders
- Alumina (AWU AU)’s 18th July Scheme Vote. Alcoa’s Done Deal
- Indo Tambangraya Megah (ITMG IJ): Pure Coal Play at 4.5x PE, 50% of the Market Cap in Cash
- [ETP 23/2024] Jittery Crude And Fiery Natural Gas Markets Defined Energy Markets Last Week
- International Paper: What Value Could They Extract From Suzano & What Makes Them So Valuable? – Financial Forecasts
- Chariot Limited (AIM: CHAR): High impact well offshore Morocco on track to spud in August
KOSDAQ Global Rebalancing This Week: Trading Considerations
- KRX announced KOSDAQ Global rebalancing. Annually in June, effective date follows June options expiry. Passive flow trading on Thursday, the 13th. 49 companies designated, with nine excluded and eleven added.
- Predicting passive capital movement is challenging, but attention must be given to price impacts because reshuffle predictability is low, lacking preemptive trading setups.
- We must anticipate the SSF reshuffle in August, likely including new KOSDAQ Global constituents. KRX plans to list SSFs for all remaining constituents, potentially advancing setup timing for price increases.
Alumina (AWC AU): Scheme Vote on 18 July
- The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range.
- The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
- The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.
The Beat Ideas: Bharat Wire Ropes- The Turnaround and Transformation
- Debt restructuring in 2021 reduced interest costs and improved profitability, with promoters increasing their stake by 4%.
- Revenue and EBITDA have grown significantly, with a revenue CAGR of 35% and EBITDA CAGR of 72% over the past 3 years.
- Strong export presence and increasing domestic market share indicate robust growth potential despite global economic fluctuations.
DRX: Sizeable Beat on Q1 Financials & Returning Cash to Shareholders
- ADF Group reported Q1 financial results that largely beat our estimates, including revenue of $107.4M (+34% YoY) vs. $90.1M and EBITDA of $23.1M (+130% YoY) vs. $17.2M.
- ADF announced a cash utilization strategy including its intention to repurchase up to 3.0M shares from insiders and the doubling of its semi-annual dividend to $0.02/share.
- ADF Group (DRX:TSX, ADFJF:OTC) reported Q1 financial results today before market open that smashed our expectations across the board with the most notable beat being EBITDA coming in at $23.1M vs. $17.2M expected.
Alumina (AWU AU)’s 18th July Scheme Vote. Alcoa’s Done Deal
- Alumina Ltd (AWC AU) and Alcoa (AA US) announced an NBIO on the 26th Feb, before entering into a Scheme on the 12th March.
- Alcoa is offering 0.02854 new shares for each Alumina share, a 13% premium to undisturbed. Key shareholders Allan Gray and CITIC are supportive.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th July. Expected implementation on the 1 August. The IE says fair & reasonable.
Indo Tambangraya Megah (ITMG IJ): Pure Coal Play at 4.5x PE, 50% of the Market Cap in Cash
- Indo Tambangraya Megah (ITMG IJ) reported an inline Q1 FY24, with stabilizing price. Net cash at 875 mn USD is 50% of mkt cap.
- If coal prices remain stable at 135 USD/ton, the company will be able to churn out 400 mn USD of profits (~24 mnt sales).
- With a minimum 65% dividend payout ratio, we derive a dividend yield of 15%. This number could be an upside risk as payout ratios have also been 100%.
[ETP 23/2024] Jittery Crude And Fiery Natural Gas Markets Defined Energy Markets Last Week
- Crude oil prices crater as OPEC meeting outcome fails to support oil prices. Despite OPEC+ extending larger cuts until end-2025, prices fell on fears of excess supply.
- Henry Hub Gas prices rose sharply last week driven by expectations of a hotter-than-expected summer in the US & Outages in Norway.
- Energy majors fell sharply on 3/June and ended the week in the red. BP and Exxon Mobile were downgraded. Berkshire ramped up holdings in Occidental.
International Paper: What Value Could They Extract From Suzano & What Makes Them So Valuable? – Financial Forecasts
- International Paper, a prominent player in the paper and packaging industry, recently disclosed its financial results for the first quarter of 2024.
- These results are pivotal when assessing the company’s current operational efficiency and financial health, especially considering its potential acquisition by Suzano, a Brazilian firm also in the paper and packaging sector.
- The reported quarter saw International Paper navigating through a mix of challenges and strategic advancements.
Chariot Limited (AIM: CHAR): High impact well offshore Morocco on track to spud in August
- The FY23 financials were in line with our forecasts.
- The high impact Anchois East well continues to be expected to spud in August.
- A drilling success could increase the size of Anchois to over 1 tcf (300 bcf net to Chariot).
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