Daily Brief Energy/Materials: Prakash Industries, Shell PLC, Balchem Corp, Pan African Resources, Sailfish Royalty , Seadrill , SGX Rubber Future TSR20, Valeura Energy Inc, Dic Corp, Dynacor Group and more

• Prakash Industries (PKI IN) Bhaskarpara Coal Mine is now received all the government approvals ensuring stable, self-supplied coal for steel production as well as open market sale.
• This development reduces raw material costs, boosts EBITDA potential, and strengthens PIL’s valuation amid past corporate governance concerns.
• PIL has manageable debt and with rising EBITDA, the company is available at a very attractive valuation compared to its peers.

• Shell’s Q2 revenue fell by 7.4% YoY and its adjusted earnings dropped by 3.1%. However, its revenue and EPS surpassed analyst expectations by 2.3% and 13.1%, respectively.
• Shell’s free cash flow rose 44.4% YoY to USD 10.8 billion, while its net debt fell to its lowest since 2015, dropping by 13.1% YoY to USD 35.2 billion.
• Shell’s LNG sales grew 6.4% YoY, while oil and gas production earnings rose 9% YoY, supported by a 3.1% production increase from new fields.

• Balchem Corporation’s third-quarter results for 2024 highlight its resilience and adaptability amid a mixed economic environment, showcasing strengths that bolster its growth potential while also signaling areas for investor caution.
• The company posted impressive financial results, with revenues reaching $240 million, a 4.3% increase compared to the previous year.
• This growth was mainly driven by robust performances in the Human Nutrition & Health and Specialty Products segments.

On 5 November, Pan African Resources (PAF) announced that it is to acquire privately owned Tennant Consolidated Mining Group (TCMG) in Australia’s Northern Territory for a total consideration of US$54.2m in an all-share deal that involves it issuing an additional 125.4m shares (or 6.5% of its existing share capital). The acquisition price equates to an undemanding US$42.15 per resource ounce of gold or US$139.21 per reserve ounce. While we expect the acquisition to have little effect on PAF’s earnings in FY25 (apart from the increase in share capital), we estimate that it will increase FY26 earnings by US$24.6m (or 19.1%) and FY27 earnings by US$42.6m (or 29.6%) and, on this basis, will undoubtedly be accretive.

• Sailfish Royalty reported Q3 financial results that missed our estimates due to decreased production from Mako Mining.
• Mako management has outlined that production will return to normal levels in Q4.
• Over the last nine months, FISH has repurchased 1.6M shares, decreasing its share count by 1%.

• SDRL reaffirmed contract activity remained sluggish even though the Company is 70 percent contracted through the end of 2025. Day rates have not compressed. 
• SDRL has managed through 2024 with less of its fleet operating than desired due to special surveys and mobilization of two rigs to Brazil.
• For 2025, SDRL should have two rigs (West Auriga and West Polaris) operating in Brazil giving the Company the ability to grow adjusted EBITDA. 

• Premium brands focus on high-value large rims, leaving small-rim markets.
• Factory closures signal overcapacity as brands exit small-rim tire production.
• New players gain ground in small-rim segments in Europe and North America.

• The 3Q24 production and cash position at the end of September had been reported previously.
• Production in September and October stood at ~26.4 mbbl/d. This is very high.
• The company expects production to be ~26 mbbl/d over 4Q24. We only assumed 24-25 mbbl/d. 

• Cumulative Q3 FY12/24 sales reached JPY807.7bn, a 3.3% YoY increase, with operating profit up 158.5% YoY.
• Packaging and Graphics segment saw improved product mix and price adjustments, boosting operating profit by 78.1% YoY.
• Functional Products segment sales rose 7.4% excluding divestiture impact, with operating profit increasing 41.8% YoY.

• DNG reported another record quarter, posting 20% YoY sales growth and 50% YoY EBITDA growth due to the increased gold price and record levels of ore processed.
• Dynacor again improved its balance sheet, with $42M in cash (up from $35M last quarter) with negligible debt, while also repurchasing shares.
• We remain bullish on DNG going into 2025 and beyond as its kicks off its plans for expansion in both Peru and West Africa.