In today’s briefing:
- Quiddity Leaderboard ASX Sep 24: Trade Delivers Strong Return Again; 3 Days Remaining for Base Date
- Is Australia Really a Top Mining Jurisdiction?
- Hyosung Siblings’ Cross-Transfers Are Done: The 10%+ Hyosung Corp Stake Block Deal Remains
- Dip in Oil Rigs Drives US Rig Count Down
- West China Cement – Earnings Flash – H1 FY 2024 Results – Lucror Analytics
- Snap-Back Rally Tests YTD Highs; Apr. 2000, Aug. 2007, Feb. 2022 $SPX Top Comparisons Still in Play
- Southern Copper Corporation: Exploration and Development of New Deposits! – Major Drivers
- Gevo, Inc. (GEVO): Initiating Coverage
- Nippon Denko (5563 JP): Initial Report、1H FY12/24 flash update
- Chariot Limited (AIM: CHAR): Commencing Drilling Operations at High Impact Well in Morocco
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Quiddity Leaderboard ASX Sep 24: Trade Delivers Strong Return Again; 3 Days Remaining for Base Date
- In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the September 2024 index rebal event.
- We continue to expect one change for ASX 100 and two changes for ASX 200.
- Separately, there could be 14 ADDs and 6 DELs for ASX 300.
Is Australia Really a Top Mining Jurisdiction?
- Regis’s McFilamy’s gold project faced setback due to cultural significance of land
- Federal Environment Minister Tanya Plibersek’s declaration halted project activities
- Project had already been approved under state and federal legislation, causing surprise and confusion
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Hyosung Siblings’ Cross-Transfers Are Done: The 10%+ Hyosung Corp Stake Block Deal Remains
- The Hyosung siblings swapped ₩60B in shares over August 13-14, raising the elder brother’s Hyosung Corp stake to 40.9% and lowering HS Hyosung below 3%.
- The younger brother must sell additionally at least 11.2% of his 14.2% Hyosung Corp stake. The elder brother may buy, but his cash position and 40% stake limit his need.
- This block deal will be the first to apply the new pre-disclosure rule. So, we should use it to test how the rule affects price movements for better entry timing.
Dip in Oil Rigs Drives US Rig Count Down
- US oil and gas rig count fell by two to 586 for the week ending 16/Aug, indicating a decline for the second time in three weeks.
- US oil rig count fell by two to 483, after rising by three the previous week. Gas rigs increased by one to 98, after declining for three straight weeks.
- For the week ending 09/Aug, US crude oil production fell back to 13.3m bpd, after hitting its record high of 13.4m bpd the week prior.
West China Cement – Earnings Flash – H1 FY 2024 Results – Lucror Analytics
West China Cement (WCC) has released softer than expected H1/24 numbers. The company’s revenue and profitability in Mainland China continued to decline amid the real estate slump, while its performance in Africa was mixed. FCF remained negative and leverage continued to deteriorate. That said, liquidity appears manageable, as we expect WCC to refinance its short-term loans. The main debt maturity wall is in July 2026, when the USD 600 mn notes will come due.
In our view, the key risk is uncertainty over the extent of WCC’s overseas expansion. The company stated that it has no plans for capacity expansion in FY 2024, other than the ongoing developments in Ethiopia and Uzbekistan. However, this contradicts media reports on WCC’s investments in Rwanda, Uganda and Zimbabwe. Hence, we are unsure about the level of the company’s planned overseas capex. Going forward, cement demand in Mainland China is likely to remain weak, due to the slowdown in infrastructure investment (with lower growth) and continued decline in real estate investment.
Snap-Back Rally Tests YTD Highs; Apr. 2000, Aug. 2007, Feb. 2022 $SPX Top Comparisons Still in Play
- We are seeing a broad-based snap-back rally after the S&P 500 found support at our 5100-5191 target/bounce area which we discussed in our 7/30/24 and 8/6/24 Compass reports
- We are not out of the woods as we still see the $SPX and $QQQ going through a 1- to 4-month pullback/consolidation period, and market dynamics remain far from perfect.
- Apr. 2000, Aug. 2007, Feb. 2022 $SPX top comparisons are why we expected SPX to find support at 5100, AND THEN test YTD highs (8/13/24 Compass report).
Southern Copper Corporation: Exploration and Development of New Deposits! – Major Drivers
- Southern Copper Corporation’s second quarter and 6 months results of 2024 suggest a resilient performance with both positive and negative attributes.
- The company reported a 15% surge in London Metal Exchange copper price in comparison to Q2 2023, which combined with production cuts and market deficit, resulted in positive trends for the corporation.
- Copper made up about 76% of the company’s sales in Q2, and despite a weak demand from China, the corporation confidently expects a 0.6% increase in the copper supply for 2024.
Gevo, Inc. (GEVO): Initiating Coverage
- Gevo produces renewable fuels and develops related technologies that help customers meet carbon abatement goals as cost effectively as possible.
- Gevo is pursuing several complementary businesses, each at a different stage in the business cycle, including sustainable aviation fuel (SAF) (Net- Zero 1 [NZ1]) (near FID), carbon tracking (Verity) (near revenue), renewable natural gas (RNG) (operating), bio- propylene (pilot phase joint development agreement [JDA] with LG Chem), and other businesses.
Nippon Denko (5563 JP): Initial Report、1H FY12/24 flash update
- In Q1 FY12/24, revenue was JPY36.5bn (-9.5% YoY), operating profit JPY2.2bn (+15.9% YoY), and recurring profit JPY1.2bn (+7.6% YoY).
- The company revised its full-year forecast to revenue JPY79.8bn (+1.8% YoY) and recurring profit JPY5.0bn (+106.6% YoY).
- The dividend payout ratio changed to 40% of underlying profit, with a minimum dividend of JPY10 per share.
Chariot Limited (AIM: CHAR): Commencing Drilling Operations at High Impact Well in Morocco
- Drilling operations have commenced on the Anchois East well (now named Anchois-3).
- The well has three objectives. An initial pilot hole will be drilled to evaluate the potential of the Anchois Footwall prospect, located in an undrilled fault block to the east of the main field with a 2U Prospective Resource estimate of 170 bcf in the main O Sand target.
- Our unrisked NAV for this prospect is £0.05/sh. We carry a 61% chance of success.