Daily Brief Thematic (Sector/Industry): Albemarle’s BIG Failure and more

• Over 90 resources companies released their quarterly reports on the last day of July, representing 15-20% of ASX-listed resources companies
• Companies such as MC Mining, Bastion Minerals, and QX Resources reported financial struggles and cash balance concerns
• Some companies, like Forrestania and African Gold, disclosed significant expenses on staff, admin, and related party transactions, raising questions about financial management and transparency.

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• The single most complicated question to answer is what exactly the ROI of AI is.
• You can easily argue that there is some value and that it can be done quite profitably when you are just inferencing the model for money.
• The problem is that when you peer a little closer at the training costs, particularly the cost of scaling models at the frontier, it’s starting to become hard to answer. What exactly is the ROI?

• Tata Motors plans to split into TML Commercial Vehicles and a merged PV, EV, and JLR entity, creating focused companies.
• TVS Motor’s July sales rose 9%, with EV sales soaring 61%, reflecting strong growth.
• Hero FinCorp seeks INR 3,668 crore through an IPO, aiming to boost capital for lending activities.

• China’s lithium supply glut is worsening, with output expected to expand by 41% this year, fueling a steeper downward trend in prices for this material, a crucial component of electric vehicle batteries.
• China’s domestic production of lithium carbonate is expected to reach 650,000 tons, a year-on-year increase of 41%, according to Fan Runze, a senior industry analyst at research institute Antaike.
• With more supply expected to be released in the second half, lithium prices could drop to their lowest point of the year, said Fan at a Wednesday conference.

• The headline from The Nikkei is incredible: “NY Office Building Sold at ‘97% Discount.’ This is a 23 floor building in midtown Manhattan which had 35% occupancy, built in 1960’s.
• Banks hold office buildings as collateral for their CRE loans, basically. They also hold other buildings at collateral, like shopping malls and strip malls.
• The risk for US banks from worsening collateral values in CRE is much greater at small US banks (outside the largest 25 by assets) where they have high exposure.

• Feature article: Solid IICs, cash-consolidating REIFs Since the beginning of 2024, the share prices of Infrastructure Investment Companies (IICs) and Renewable Energy Infrastructure Funds (REIFs) have generally remained lacklustre, failing to recover from the losses experienced in 2023.
• A significant factor contributing to this trend has been the sharp rise in interest rates since 2021, which has negatively impacted the sector due to the increased yields on “risk-free” 10-year gilts.
• The recent change in the UK government may bring some relief, with potential relaxations in planning approvals for new onshore wind and solar plants.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Ola Electric (1700674D IN) ‘s IPO launch, pricing, valuation and an attempt to peek into its yet undefined future growth in the rapidly expanding EV space.
• Alcoholic beverage industry is not really in high spirits post-COVID. Worst could be past for Budweiser Brewing APAC (1876 HK) with likely recovery in premium beers and commodity price tailwinds.

• ADX Energy (ADX AU)C; target of A$0.75 per share: Reflections on Welchau – IIndependent consultants have calculated that each of the three reservoirs encountered at Welchau (Reifling – 128 metres, Steinalm -118 metres and the Guttenstein – 111 metres) are hydrocarbon bearing with uncertainty on the hydrocarbon type.
• Laboratory work on the Steinalm reservoir has confirmed the full properties ofthe 43° API light sweet oil that was recovered in an MDT sample run in the Steinalm Formation.
• The vertical extent of this light oil in the Steinalm or in the shallower Reifling and deeper Guttenstein is uncertain and there is no clear evidence of a hydrocarbon-water contact in any of the reservoir formations based on the open hole wireline log data.