Category

Energy & Materials Sector

Daily Brief Energy/Materials: Newcrest Mining, Pertamina Geothermal, Hanwha Corporation and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Newmont’s Indicative Offer for Newcrest Mining (NCM AU)
  • Pertamina Geothermal IPO: Valuation Insights
  • Introducing ARIRANG K-Defense, Sector ETF Currently in the Limelight in Korea

Newmont’s Indicative Offer for Newcrest Mining (NCM AU)

By Brian Freitas


Pertamina Geothermal IPO: Valuation Insights

By Arun George


Introducing ARIRANG K-Defense, Sector ETF Currently in the Limelight in Korea

By Sanghyun Park

  • ARIRANG K-Defense Industry Fn ETF (449450 KS) shows the fastest AUM/ADV growth among recently listed sector ETFs. It is virtually the only one enjoying the influx of local retail investors.
  • The increasing trend of ETF AUM, coupled with the growing interest of local retail investors in the defense sector, will likely lead to flow improvement in each constituent.
  • The passive impact of some stocks in the upcoming rebalancing is expected to expand to 0.4-0.5x ADTV. Notable names in this regard are Hanwha Corporation and SNT Motiv.

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Daily Brief Energy/Materials: Pertamina Geothermal, MAG Silver Corp, Sherwin Williams Co and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Pertamina Geothermal IPO: The Investment Case
  • Mining Monthly: January Edition
  • Sherwin-Williams: Acquisition Of SIC & Other Drivers

Pertamina Geothermal IPO: The Investment Case

By Arun George

  • Pertamina Geothermal (0125738D IJ)/PGE, a subsidiary of PT Pertamina (Persero) (PERT IJ), is seeking to raise up to US$657 million at a price range of IDR820-945 per share.
  • PGE is the largest geothermal concession holder in Indonesia, in terms of capacity installed, according to Wood Mackenzie.
  • The investment case rest on steady growth, high margins, strong cash generation, manageable leverage, ambitious growth plans and attractive dividend payout.

Mining Monthly: January Edition

By Atrium Research

  • Gold had strong start to the year rising over $100/oz to $1928/oz in January.
  • As we anticipated from our December note, the mining sector had a strong start to the year with gold and copper breaking out to near-term highs up 6% to $1928/oz and 12% to $4.20/lb, respectively, during the month of January.
  • The explorers, despite having a strong January, remain inexpensive and continue to trade at an average of ~$33/oz (in the ground), down ~50% from 2020 highs.

Sherwin-Williams: Acquisition Of SIC & Other Drivers

By Baptista Research

  • Sherwin-Williams’ fourth quarter results were mixed as the company failed to meet the revenue expectations of Wall Street despite a high single-digit percentage sales growth.
  • The company managed an earnings beat as a result of the significant year-over-year gross margin improvement.
  • Sales in North and Latin America increased by double-digit percentages in the industrial sector, offsetting some of the weaker circumstances in Europe and Asia.

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Daily Brief Energy/Materials: Pertamina Geothermal, ABM Investama, Hawkins Inc, Rent.com.au Ltd, Rio Tinto PLC, Lyondellbasell Indu Cl A, Newmont Mining, Pan American Silver and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Pertamina Geothermal Energy IPO – Somewhat like an Energy Explorer. Somewhat like a Power Producer
  • Pertamina Geothermal Energy IPO: Offering Details & Index Inclusion
  • Asia HY Monthly – January 2023 – Lucror Analytics
  • HWKN: Viewing from the Sidelines
  • Rent.com.au Ltd – Good Cost Control in the Face of Seasonal Weakness
  • Rio Tinto PLC (RIO LN) – Prominent Topside Failure – Meaningful Correction Risk
  • LyondellBasell: What To Expect As It Reports Full Year Results
  • Newmont Corporation – Sustainable in several senses
  • Pan American Silver – Shareholders approve Yamana transaction

Pertamina Geothermal Energy IPO – Somewhat like an Energy Explorer. Somewhat like a Power Producer

By Sumeet Singh

  • Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.
  • PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.
  • In this note, we talk about the company’s financial performance and other issues, based on its recent filings. 

Pertamina Geothermal Energy IPO: Offering Details & Index Inclusion

By Brian Freitas

  • Pertamina Geothermal (0125738D IJ) is offering 10.35bn shares in its IPO at a price range of IDR 820-945/share to raise between US$567-653m and valuing the company between US$2.27-2.61bn.
  • The stock will not get fast entry to the MSCI, FTSE or local Indonesia indices (IDX30 Index/ LQ45 Index/ IDX80 Index).
  • The stock should be added to MSCI Small Cap in May and to the FTSE All-Cap in September bringing in some passive flow.

Asia HY Monthly – January 2023 – Lucror Analytics

By Charles Macgregor

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.


HWKN: Viewing from the Sidelines

By Hamed Khorsand

  • HWKN reported fiscal third quarter (January 1) results where sales benefited from price increases while the firm dealt with supply bottleneck for sourcing fertilizer.
  • HWKN has been relying on price increases to drive sales higher and generate gross profit dollars. Volumes have not increased as much as sales prices have.
  • The water treatment business is seasonally soft in FYQ3. However, the segment reported sales greater than we were expecting. We believe this is mostly to HWKN renewing its annual contracts.

Rent.com.au Ltd – Good Cost Control in the Face of Seasonal Weakness

By Research as a Service (RaaS)

  • Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through their rental profile, rental bond and payments, and through a growing number of aligned transactional services.
  • The company has reported a positive Q2 operating cashflow of $0.385m due to a $0.68m R&D tax credit.
  • The underlying result demonstrated good cost control in the face of a seasonally weaker market and slippage in advertising revenue as a result of tough economic conditions for the home building sector. 

Rio Tinto PLC (RIO LN) – Prominent Topside Failure – Meaningful Correction Risk

By David Coloretti, CMT

  • At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
  • Friday’s weekly close is setting up to confirm a high probability bearish outlook when all 3 pillars are definitively triggered.
  • A weekly close below 6077 will confirm a high probability multi-week to multi-month correction target in the 5415/5650 range.

LyondellBasell: What To Expect As It Reports Full Year Results

By Vladimir Dimitrov, CFA

  • LyondellBasell continued to outperform the broader equity market as declining margins seem largely priced-in.
  • The company remains well-positioned to weather increased risk of recession in 2023 and geopolitical tensions in the future.
  • The firm is well- positioned to weather an increased risk to recession in the 2023.

Newmont Corporation – Sustainable in several senses

By Edison Investment Research

Newmont will update guidance for 2023 when it releases Q4 results on 23 February 2023. We anticipate a strong close to 2022 (production up 6% quarter on quarter and costs down 13% in Q4) and believe a dividend recalibration is possible, albeit reflecting industry inflation rather than a reassessment of capital allocation policy in general. In this context, we see Newmont as a sustainable choice among gold producers, not only in an ESG sense, but also in its ability to maintain 6Moz pa of low-cost production.


Pan American Silver – Shareholders approve Yamana transaction

By Edison Investment Research

Pan American Silver (PAAS) has reported that its shareholders approved the proposed share issue to acquire all outstanding Yamana Gold shares as part of its recently announced plan of arrangement to buy all non-Canadian assets of Yamana. At the same time, Yamana shareholders voted in favour of the special resolution approving the acquisition by PAAS of all the issued and outstanding shares in the company following the sale of all Canadian assets to Agnico Eagle. The transaction is expected to be completed in Q123 subject to receiving a number of regulatory approvals.


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Daily Brief Energy/Materials: Greatview Aseptic Packaging, Indo Tambangraya Megah, Freeport Mcmoran and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Greatview Aseptic (468 HK): Rival Purchases And Grandstanding
  • ITMG – Div Yield >28%, Net Cash 40% of Mkt Cap, Deep Value with High Coal Price
  • Freeport-McMoRan: Major Drivers

Greatview Aseptic (468 HK): Rival Purchases And Grandstanding

By David Blennerhassett


ITMG – Div Yield >28%, Net Cash 40% of Mkt Cap, Deep Value with High Coal Price

By Sameer Taneja

  • We expect a 10,000-12,000 Rph dividend for FY22 (div yield 28%-33%) from Indo Tambangraya Megah (ITMG IJ) as earnings are set to improve >70% HoH (H1 dividend – 4128 Rph/share).
  • With coal prices remaining elevated, if volumes remain flat YoY, we could see >50% of the stock price returned in dividends throughout FY22e/23e.
  • There is an excellent margin of safety, with almost 40% of the market capitalization in net cash. With a >65% payout ratio, we will see cash levels build further. 

Freeport-McMoRan: Major Drivers

By Baptista Research

  • This was a strong quarter for Freeport with the company managing an all-around beat.
  • Indonesia’s operations by PT Freeport Indonesia are characterized by very low costs due to the gold content and the grades, large volumes, and the world’s largest goldmine is a byproduct.
  • In the quarter, gold and copper sales exceeded the guidance of the company and the company generated strong margins.

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Daily Brief Energy/Materials: MMP Industries, Alcoa Inc, Nucor Corp, Vedanta Resources and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • MMP Industries: Forensic Analysis
  • Alcoa Corp: New Brazil Facility & Other Developments
  • Nucor Corp: Launch Of Elcyon & Other Developments
  • Morning Views Asia: JSW Infrastructure, Road King Infrastructure, UPL Ltd, Vedanta Resources

MMP Industries: Forensic Analysis

By Nitin Mangal

  • MMP Industries (MMP IN)  is mainly engaged in the business of manufacturing, selling and distribution and trading of aluminum products such as powder, pyro and flake, paste, foils etc.
  • The company has been on the main board of NSE since F20 but however, its financials are plagued with several forensic concerns.
  • We highlight takeaways mainly related to negative cash flows and their misrepresentation in reporting standards. Additionally, the company is also engaged in various secretarial audit woes.

Alcoa Corp: New Brazil Facility & Other Developments

By Baptista Research

  • Alcoa made progress in 2022 with strategic capacity restarts and efforts to lessen the effects of high energy prices.
  • Global events impacted the price of energy and raw commodities.
  • The company successfully finished the safe restart of its Portland Aluminum Joint Venture smelter in the Australian state of Victoria.

Nucor Corp: Launch Of Elcyon & Other Developments

By Baptista Research

  • Nucor had a mediocre quarter as its earnings dropped compared to the previous two quarters due to reduced shipping volumes and metal margin contraction, particularly at the company’s plate and sheet mills.
  • The startup and construction of the company’s Nucor Stell Brandenburg mill continue progressing incredibly great with respect to schedule, budget, and safety.
  • Lastly, at the end of this quarter, the company announced the approval of the construction of the galvanizing line at its Nucor Steel Berkeley mill.

Morning Views Asia: JSW Infrastructure, Road King Infrastructure, UPL Ltd, Vedanta Resources

By Charles Macgregor

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.


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Daily Brief Energy/Materials: Greatview Aseptic Packaging, Natural Gas, Vedanta Resources, Kinder Morgan, Treatt PLC and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Greatview Aseptic (468 HK): Xinjufeng Technology Acquires Jardine Matheson’s Stake
  • The Commodity Report #88
  • Vedanta Resources – Earnings Flash – Q3 FY 2022-23 Results (Vedanta Ltd) – Lucror Analytics
  • Kinder Morgan: Major Drivers
  • Treatt – Back to steady growth

Greatview Aseptic (468 HK): Xinjufeng Technology Acquires Jardine Matheson’s Stake

By Arun George


The Commodity Report #88

By The Commodity Report

  • The general market consensus going into the new year was that commodity prices would continue to correct.
  • We also positioned ourselves in this camp, as we predicted the turnaround story a few months later.
  • While some commodities such as wheat or natural gas (both commodities that had been priced in a risk bonus for a long time due to the Ukraine war) fell sharply, other commodities such as corn, soybeans, orange juice, or soybean meal remain not far from their highs.

Vedanta Resources – Earnings Flash – Q3 FY 2022-23 Results (Vedanta Ltd) – Lucror Analytics

By Trung Nguyen

Vedanta Ltd’s (VEDL) Q3/22-23 results were weaker than expected, with thin profitability at the aluminium segment due to higher energy and commodity costs. However, we note positively the sale of Zinc International to Hindustan Zinc​ (HZL) and the fourth interim dividend (USD 570 mn). The financial risk metrics remain modest. The key risk remains the weak debt maturity profile, with large maturities in FY 2023-24.

Vedanta as a group has demonstrated a strong willingness to repay debt, and the capacity to do so by upstreaming cash as quickly as possible. In addition, we note the group’s creative methods to upstream cash efficiently, such as: [1] the sale of Zinc International to HZL; and [2] the merger between Cairn India and VEDL in 2017, when oil prices were low, with the deal partly funded by preference shares to Cairn India’s minority shareholders. We believe that the huge dividends by VEDL in FY 2022-23 (USD 3.7 bn) are the highest possible and will likely decline subsequently, given the correction in commodity prices. Still, this could offer comfort to lenders as it would support VRL’s refinancing needs (i.e. gap between the maturing debt and cash inflows).


Kinder Morgan: Major Drivers

By Baptista Research

  • Kinder Morgan had a mixed quarter as the company failed to meet the revenue expectations of Wall Street but managed an earnings beat.
  • The quarter also saw a good increase in their tankers business due to higher rates and more utilization.
  • Although Kinder Morgan benefited from increased commodity prices, its core business, specialty natural gas, performed remarkably well, and the fundamentals remain solid in the future.

Treatt – Back to steady growth

By Edison Investment Research

Treatt’s AGM trading update suggests a more normal and steady pattern of trading has resumed, following the setbacks that caused the profit warning last August. Management has clearly taken rapid steps to address the issues that were identified, and indeed this was already evident in October’s FY22 pre-close trading update. Performance remains in line with management expectations and our forecasts are unchanged.


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Daily Brief Energy/Materials: China Shenhua Energy Co H, Thungela Resources, Vedanta Resources and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent
  • Thungela: The Canary Has Stopped Singing
  • Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng China Enterprises Index (HSCEI INDEX) in March 2023.
  • According to our estimation, there could be one change for the HSCEI in March 2023 and there could be one-way index flows of US$440mn.
  • The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

Thungela: The Canary Has Stopped Singing

By Pearl Gray Equity and Research

  • Thungela’s Goedehoop mine continues to deliver robust results, but most of its assets are underperforming.
  • The stock’s more than 35% ex-post dividend yield had many investors excited.
  • Nevertheless, cyclicality could play its hand soon, according to the canary.

Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

By Charles Macgregor

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.


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Daily Brief Energy/Materials: Schlumberger Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Schlumberger NV: Major Drivers

Schlumberger NV: Major Drivers

By Baptista Research

  • Schlumberger maintained its growth momentum throughout the fourth quarter, producing significant revenue growth and additional sequential and annual margin increase.
  • They had sequential revenue growth and margin expansion in North America and internationally.
  • On the other hand, exploration data sales, INNOVATION FACTORI, and AI solutions saw a significant increase in the digital sector.

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Daily Brief Energy/Materials: Albemarle Corp and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Weekly Overearning Short Candidates:  Albemarle, Builders FirstSource, Mueller Indus., Carlisle Cos.

Weekly Overearning Short Candidates:  Albemarle, Builders FirstSource, Mueller Indus., Carlisle Cos.

By Eric Fernandez, CFA

  • This model seeks companies that are potentially “overearning”, defined as companies with unusually high margins relative to their own history or relative to the industry. 
  • The reasons for the margin increases are sometimes unsustainable or fraudulent. The  critical judgement involves to what extent unsustainable margins are embedded in a company’s forecasts and/or the stock’s valuation. 
  • These shorts tend to have moderate to higher betas, higher valuations due to recent strong results and good short responses to subsequently disappointing earnings.

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Daily Brief Energy/Materials: Surya Esa Perkasa, Warrego Energy, Aag Energy Holdings, Nitto Denko, Exxon Mobil and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • IDX30/​​LQ45/IDX80 Index Rebalance: 4 Days to Implementation
  • Where To Go With Warrego?
  • AAG Energy (2686 HK): Is Xinjiang Xintai Returning for Another Bid?
  • AAG Energy (2686 HK) Suspended: Xinjiang Xintai Offer?
  • Nitto Denko Q3 Results and Buyback Announced
  • Technical Analysis On Exxon Mobil

IDX30/​​LQ45/IDX80 Index Rebalance: 4 Days to Implementation

By Brian Freitas

  • There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
  • Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ)
  • With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

Where To Go With Warrego?

By David Blennerhassett

  • It’s a fair bet Hancock Prospecting and Mineral Resources (MIN AU) are actively discussing the final stages for Warrego Energy (WGO AU) behind the scenes.
  • It is unlikely MinRes aggressively builds a ~19% stake in a company subject to a two-way takeover battle, and declares its position “strategic” with no intention of making an Offer. 
  • This stake may be a bargaining chip from MinRes to keep Hancock on the sidelines in its tilt for Norwest Energy NL (NWE AU).

AAG Energy (2686 HK): Is Xinjiang Xintai Returning for Another Bid?

By Arun George

  • Aag Energy Holdings (2686 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 26 January. 
  • It is likely that Xinjiang Xintai Natural Gas (603393 CH), the largest shareholder representing 56.95% of outstanding shares is seeking to privatise AAG. 
  • The potential bid is likely privatisation through a scheme. Multiples from Xinjiang Xintai’s previous voluntary cash offer in 2018 suggest an offer north of HK$2.00. 

AAG Energy (2686 HK) Suspended: Xinjiang Xintai Offer?

By David Blennerhassett


Nitto Denko Q3 Results and Buyback Announced

By Travis Lundy

  • Nitto Denko (6988 JP) today announced Q3 results, lower full-year guidance with one-quarter left to go, sharply undercutting implied Q4 results vs the Street.
  • The company also announced a buyback of 4.1-4.7% of shares out over the next 6mos. Assuming the share price falls in reaction, this could be closer to the top end.
  • The buyback is non-negligible as a portion of Likely Real World Float and as such the situation is worth a look – for those with a position and those without.

Technical Analysis On Exxon Mobil

By VRS (Valuation & Research Specialists)

  • Exxon Mobil Corporation is engaged in energy business. The Company’s principal business involves the exploration for, and production of, crude oil and natural gas, and the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a range of specialty products.
  • The Company’s segments include Upstream, Downstream and Chemical.
  • The Upstream segment is organized and operates to explore for and produce crude oil and natural gas.

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