In today’s briefing:
- Yankuang Energy Placement – Doesn’t Appear Well Flagged Although Deal Size Is Large
- Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
- Global Commodities: Demand for Oil Is Good, Just Not for Crude
- The Holy Grail of Commodity Trading // Shipping Rates Explosion
- Tata Steel – Earnings Flash – FY 2023-24 Results – Lucror Analytics
- Zephyr Energy Plc (AIM: ZPHR): Higher 1Q24 Production than We Anticipated. All Eyes on High Impact Drilling in the Paradox
- Morning Views Asia: Indika Energy
- Panoro Energy ASA (OSE: PEN): Northern flank at Hibiscus estimated to hold 8 12 mmbbl reserves
- U S Silica Holdings Inc (SLCA) – Monday, Mar 4, 2024
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Yankuang Energy Placement – Doesn’t Appear Well Flagged Although Deal Size Is Large
- Yankuang Energy Group (1171 HK) is looking to raise up to US$608m through a primary follow-on, via selling 270m H-shares.
- The deal is a somewhat large one to digest, at 10.6 days of three month ADV and 2.7% of current mcap.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
- The June 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 31st May 2024.
- There will be 5 changes for the SSE 50 index and 18 changes for the SSE 180 index.
- These changes could collectively cause one-way index flows of ~US$1.8bn during the June 2024 index rebal event. In this insight, we take a look at our final flow expectations.
Global Commodities: Demand for Oil Is Good, Just Not for Crude
- Brent crude has weakened by $10 since early April, with the prompt time spread indicating plentiful supply relative to consumption
- Demand for crude oil for combustive fuels like gasoline and diesel is expected to peak towards the end of the decade, while demand for natural gas liquids used in petrochemical production is set to rise
- Preliminary demand data for April showed signs of improvement, with observable oil inventories increasing, particularly in China, due to lower oil prices prompting stockpiling
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The Holy Grail of Commodity Trading // Shipping Rates Explosion
- The Holy Grail of Commodity Trading? If there is a holy grail of commodity trading, I would say it’s becoming a master in reading the movements in the futures forward curve.
- Knowing how futures contracts change and how the curve shifts from contango to backwardation, and vice versa, gives commodity traders a lot of useful info about the physical supply and demand.
- While many market participants argue about the meaning and definition of backwardation and contango, the direction in which the spreads are actually moving is far more important to us.
Tata Steel – Earnings Flash – FY 2023-24 Results – Lucror Analytics
Tata Steel’s Q4 and FY 2023-24 numbers were weak in our view, with the restructuring of the UK operations weighing on group performance and offsetting the robust Indian business. The financial risk profile deteriorated significantly, due to lower earnings and soft cash flows. Liquidity was inadequate, driven by the poor cash flows and large dividends.
We expect the steel industry’s operating environment in FY 2024-25 to be constructive and support Tata Steel’s earnings. However, the company’s solid earnings for the Indian operations should be offset by the restructuring of the UK business, for which another GBP 1.6 bn of additional costs is projected. It is unclear if there is light at the end of the tunnel.
Zephyr Energy Plc (AIM: ZPHR): Higher 1Q24 Production than We Anticipated. All Eyes on High Impact Drilling in the Paradox
- 1Q24 production (excluding NGL) in the Williston was 1,151 boe/d.
- This is 140 boe/d above our expectations and ~100 boe/d above 4Q23 production.
- Production in March (excluding NGL) had increased to 1,212 boe/d.
Morning Views Asia: Indika Energy
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
Panoro Energy ASA (OSE: PEN): Northern flank at Hibiscus estimated to hold 8 12 mmbbl reserves
- The northern flank at Hibiscus, appraised by the DHIBM-7P pilot vertical well, is estimated to hold 8-12 mmbbl gross reserves (Panoro WI: 17.5%).
- This is above our early estimate of 8 mmbbl.
- The well was drilled from the pilot hole of the recently drilled Hibiscus South well that had already encountered 5-6 mmbbl recoverable resources in a north-east extension of the field.
U S Silica Holdings Inc (SLCA) – Monday, Mar 4, 2024
- SLCA has seen a decrease in shares and reduction in debt, making its enterprise value cheaper
- Core thesis remains unchanged, with focus on potential split of company’s two businesses for separate valuations
- Recent acquisition in frack sand business by Atlas Energy provides comparable valuation exercise for SLCA, suggesting potential value of company’s assets and opportunity for increased valuation in the future
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.