Energy & Materials Sector

• If NPS and passive funds each tender half, it could hit 24%, pushing investors to consider both sides. The market’s eyeing a ratio of about MBK 3 to Choi 7.
• This tight vote could drag out the event longer than expected, and MBK might scoop up more shares if they miss their minimum target.
• MBK will likely go for open market buys against Korea Zinc’s buyback. Consider tendering to MBK Monday and spread trading futures, or push Korea Zinc to raise their buyback offer.

• Another play is spread trading Korea Zinc single-stock futures: go long on the front-month and short on the farther-out contract to profit from price convergence.
• The key is when longer-dated futures’ volume will rise and if the basis difference with front-month futures will create arbitrage opportunities. November’s volume seems more for hedging than arbitrage.
• MBK is likely to launch a second tender offer, potentially extending the spread trading timeline and giving us more chances to hit sweet spots.

• Korea Zinc raised the share buyback and tender offer price from 830,000 won to 890,000 won. Korea Zinc’s share price closed up by only 0.6% today to 794,000 won. 
• As a result, the amount of capital involved in this share buyback and tender offer would increase from 2.7 trillion won to 3.2 trillion won.
• Despite higher share buyback/tender offer of Korea Zinc by Choi family, we believe that this fight for the control of Korea Zinc is increasingly in favor of MBK/Jang family.

• Delay in EUDR to lead to renegotiation of premium
• Talks of removal of Ivorian cup lump ban

• In my latest portfolio update, I discussed the potential of investing in cyclical businesses and how shifts in a company’s business model or balance sheet can often go unnoticed by the market, creating compelling investment opportunities.
• Today, I present Mattr Corp, a company that not only revamped its business model and balance sheet without receiving due recognition but also strategically repositioned itself within new end markets. This transformation aligns perfectly with all three of my key criteria for identifying attractive investments in cyclical stocks.
• Mattr Corp., a Canadian industrial conglomerate, is undergoing a strategic transformation into an advanced engineering company by leveraging its extensive expertise and decades of experience in materials science for industrial applications.

• The Spanish government has approved Esseco’s bid for Ercros, after previously approving Bondalti’s offer in June, signaling a significant step in the ongoing takeover battle for the chemical company.
• The next step lies with the CNMV, Spain’s stock market regulator, which must first approve Bondalti’s bid before considering Esseco’s. However, both bids have opposition from shareholders holding 27%.
• Ercros is trading in line with comparables, but there’s potential for bidders to improve their offers, which is likely. Gross spread to Esseco’s offer is 2%. Reiterate long.

• Pure nickel play PT Vale Indonesia, a leading global producer, could transform significantly over the next few years with plans to take stakes in projects more than doubling current output
• However, we see risks of a lull into 2025 as production is near capacity, the nickel price could potentially remain pressured from major global oversupply and operating costs could rise   
• Given the weak consensus 2025E ROE of 5%, a 1.6x P/B is not particularly inexpensive, although for longer-term investors considering the expansion potential this could be an entry point  

• Element Solutions Inc’s second quarter of 2024 showcased a commendable performance with notable strides in organic growth and margin expansion, reflecting efficient strategic execution despite broader market softness in consumer electronics and industrial segments.
• The company reported a revenue increase of over 20% in their Circuitry Solutions, primarily fuelled by robust demand in high-performance computing, artificial intelligence, electric vehicles, and certain mobile markets.
• This growth was somewhat moderated by weaker demand in power electronics and electronics assembly materials within some electric vehicle sectors.

• Rio Tinto recommended a price of $5.85 on the US stock and $8.60 on the CDIs, totaling about AU$10 billion or US$6.7 billion, with a 90% premium to the undisturbed price
• The deal is all cash and is expected to close in mid-2025, pending various approvals including shareholder and board approval
• Rio Tinto’s acquisition of Arcadium is seen as a countercyclical move, paying for optionality and long-term potential rather than immediate returns, reflecting a shift in their M&A strategy.

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• Axalta Coating Systems recently disclosed its financial performance for the second quarter of 2024, showcasing record-breaking results in the face of challenging market conditions.
• The company reported a 4% rise in net sales, reaching $1.35 billion, with a significant boost in volumes across all end markets.
• Additionally, adjusted EBITDA increased notably by $64 million year-over-year to $291 million, reflecting a 400 basis-point improvement in margins to 21.5%.

• ISA staying the course.
• The July meetings of the ISA featured the first reading of the consolidated text of the deep-sea mining code, which paves the way for formal comment to be submitted by member states to be incorporated into the second reading scheduled for the November 2024 meetings.
• The election of Leticia Carvalho as the new Secretary-General of the ISA should not pose an obstacle to further progress on the mining code, as she reiterated her intention to work toward adoption of the final version of the code at the ISA’s 30th meeting, scheduled for early 2025, in line with TMC’s intended timetable of submitting its exploitation application to the ISA by the end of this year.

• Rio Tinto Ltd (RIO AU) has reached an agreement to buy Arcadium Lithium (LTM AU)/(ALTM US) for US$5.85/share (~A$8.70/share), a ~90% premium to the October 4th closing price of $US3.08/share.
• Terms remain below where Arcadium was trading back in January of this year. But it is perhaps disingenuous to call the Offer Price opportunistic. More a counter-cyclical move.
• The Scheme Offer is subject to a 75% shareholder vote and minimal regulatory approvals. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.

• Embattled Kiwi building materials giant announced emergency fundraise in September
• Accounting quality has deteriorated significantly in recent years, AI tool shows
• Share price is a quarter of its 2007 peak, company leadership is in flux

• Rubber Board new and replanting subsidy program starts rolling  
• RRII, IOCL sign MoU to boost research in process oils  
• Rubber Board stalls Kerala Govt move to shut Central Nursery 

• Rubber Board new and replanting subsidy program starts rolling  
• RRII, IOCL sign MoU to boost research in process oils  
• Rubber Board stalls Kerala Govt move to shut Central Nursery 

• For the week ending 04/Oct, US crude inventories rose by 5.8m barrels, exceeding expectations of a 2m barrel build. However, gasoline and distillate stockpiles fell more than expected.
• US natural gas inventories rose by 82 Bcf for the week ending 04/Oct, higher than analyst expectations of a 73 Bcf buildup. Inventories are 5.1% above the 5-year seasonal average.
• Chevron and Shell experienced target price upgrades, while Schlumberger and Occidental’s target prices were cut. Notably, BNP Paribas downgraded Exxon to Underperform from Neutral.

• Boise Cascade’s second quarter 2024 earnings reflected a complex but strategically navigated economic landscape, manifesting both strengths and areas of concerns.
• The company reported a year-on-year decrease in net income from $146.3 million in Q2 2023 to $112.3 million in Q2 2024, alongside a slight decline in consolidated sales reaching $1.8 billion, down by 1% from the previous year.
• Despite a softer market environment characterized by elevated mortgage rates and broader economic uncertainties, the firm has pushed forward with essential growth projects and sustained its shareholder capital return strategy.

• • Zephyr has decided to extend the State 36-2R well in the Paradox basin by drilling a 5,500 ft lateral on the well.
• • We are not surprised by this decision given that the acid job performed on the existing 130 ft interval was very successful with peak test production of >2,100 boe/d.
• • Zephyr believes that the ultimate recovery of the extended well could reach 2 mmboe, which is well above what would have been recovered from the 130 ft interval.

• 3Q24 production was 33,215 boe/d with production in Colombia still impacted by downtime and blockades (we expected 34.6 mboe/d).
• Production at Llanos-34 continues to decline. Production in Brazil remains shut-in. GeoPark had highlighted these downside risks in August.
• This was partially offset by (1) high production of 1,581 boe/d from Llanos Exploration (Llanos 87 and 123), mainly driven by the Toritos 2 and the Toritos Norte wells and (2) increasing production in Ecuador (1,786 boe/d).

• MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
• All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
• If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.

• Arcadium Lithium (LTM AU) has disclosed a binding offer from Rio Tinto PLC (RIO LN) at US$5.85 per share, a 90% premium to the undisturbed price of US$3.08 (4 October).
• The offer is attractive compared to analyst price targets and peer multiples but unattractive compared to cyclical low timing and precedent transactions.
• The shareholder structure requires an activist to disrupt the vote. The long-dated offer provides optionality on a bump if lithium prices materially re-rates. 

• Late last evening, Rio Tinto Ltd (RIO AU) and Arcadium Lithium (LTM AU) announced a definitive agreement where Rio will acquire Arcadium for US$5.85/share in cash.
• Arcadium Lithium (ALTM US) closed nearly 31% higher at US$5.55/share and Arcadium Lithium (LTM AU) should follow when the stock opens.
• Arcadium Lithium (LTM AU) could move around 40% higher today to catch up with Arcadium Lithium (ALTM US) – that would still leave a 5.4% spread to the offer price.

• On October 9, Rio Tinto agreed to acquire Arcadium Lithium through a Jersey scheme of arrangement for $5.85/share, a 90% premium, valuing Arcadium’s diluted share capital at $6.7 billion.
• As of October 4, Arcadium shares on the NYSE had fallen by approximately 54.1% since listing. Rio Tinto is taking advantage of low lithium prices to acquire high-quality lithium assets.
• The offer price is generous: 17.3x 25e EBITDA vs. closest comparable Albemarle Corp (ALB US) at 12.2x 25e EBITDA. Gross spread is 5.1%. I set my PT at $5.85. Long.

• Huaqing Petroleum to set up plant worth US$1.39 billion in Hunan
• Linglong commences serial production at its Serbia plant 
• ZC Rubber Group cements network for supply to Nordic countries

• Vishnu Chemicals (VCL IN)  is now backward integrated with the soda ash, CO2 Gas plant and ore requirement to overcome the challenge of raw material price volatility. 
• Company operated in niche & specialty chemical segment and will launch detailed  capex plan in Q2 for forward integration. 
• Management aims to consolidate EBITDA margins around 17.5%-18% by year-end, with a target of achieving consistent margins at 20% over the next 2-3 years.

• Shiva Pharmachem Limited (9155347Z IN) is looking to raise around US$110m in its India IPO.
• It is a manufacturer in the Indian specialty chemicals business and was the largest manufacturer of acid and alkyl chlorides by volume in CY22 in India, as per Frost&Sullivan .
• In this note, we talk about the company’s historical performance.

• 3Q24 production was 15,160 bbl/d. This is well above expectations of 13 mbbl/d.
• While the river levels were at record lows, PetroTal has maximized the barge fleet capacity during the quarter.
• Production during the first week of October was 10.7 mbbl/d. With the end of the dry season in sight, production is expected to return to capacity by mid-November, 

• Qarbotech, a Malaysian startup that enhances photosynthesis via advanced carbon quantum dots material, has raised US$1.5 million in funding from 500 Global, Better Bite Ventures, ID Capital, EQT Foundation, and Epic Angels Limited.
• The seed extension round will enable Qarbotech to scale its operations in Malaysia, Indonesia, Thailand, and Vietnam, where demand for advanced agritech solutions is surging. 
• “This investment will allow us to ramp up production and bring our patented solutions to more farmers across the region, empowering them to produce more with less environmental impact,” said Amirul Merican, COO of Qarbotech.

• Arcadia’s share price soared by 47% following news of potential deal with Rio Tinto
• Rio Tinto confirmed talks with Arcadia for a deal worth $4-6 billion, causing speculation and excitement in the market
• Arcadia, with ten operating sites and diverse lithium operations, is a key player in the lithium industry with significant growth potential.

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• Change in HIL Ltd (HIL IN) started after the appointment of professional CEO Mr. Akshat Seth. 
• HIL is turning around its acquisition of Parador and Topline, which were Loss making. The company was not performing due to lower demand in US, EU etc. 
• Aiming for 14-16% Revenue growth and 2-3% EBITDA Margin improvement due to distribution growth, Parador Turnaround and high demand in real estate segment.

• Merdeka Copper Gold (MDKA IJ) provides a well-rounded exposure to gold and copper, where it has significant expansion plans in place for both metals through developing new assets. 
• The company has exposure to the EV battery ecosystem through Merdeka Battery Materials, which has one of the world’s largest nickel deposits at its SCM mine, developed by Rio Tinto.
• Merdeka Battery Materials is developing multiple HPAL processing plants in partnership with leading battery material companies. Valuations for FY2025E and FY2026E look interesting as new projects start to kick in. 

• We are initiating coverage of Sable Offshore (SOC) with a Sell Rating and $6 target.   
• SOC is attempting to restart oil production off the coast of Santa Barbara, California that is unlikely to gain the necessary regulatory approvals to move forward.   
• The offshore oil platforms, previously owned by XOM, have been shut down since 2015. SOC acquired the assets on the expectation it could win approval to restart production. 

• ExxonMobil’s Q3 revenue is expected to rise 6.3% YoY and 3.7% QoQ but its EPS is anticipated to fall 11% YoY and 5.6% QoQ.
• Management expects upstream earnings to decline by USD 0.6-1 billion due to falling crude oil prices. Earnings from the energy products segment are also projected to drop significantly.
• Exxon expects production in 2024 to be around 4.3 Moebd, with 1.2 Moebd coming from the Permian. The total capex for the year is estimated at USD 28 billion.

•  A chemical used in tire manufacture has been causing controversy since 2020.  
•  The United States Tire Manufacturers Association (USTMA) is investigating a series of potential alternatives, following new legislation from California that requires any company selling tires in California to either declare that they do not contain 6PPD, or demonstrate that they are seriously seeking alternatives.  
• As of now, no major fines have been imposed on tire manufacturers specifically for 6PPD use, but there is growing regulatory scrutiny, particularly in regions like the Pacific Northwest where environmental harm has been documented.

• US natural gas prices fell by 1.65% for the week ending 04/Oct, ending a streak of five straight weekly gains. The decline was due to expectations of softening demand.  
• Henry Hub Put/Call volume ratio fell to 0.98 (04/Oct) from 1.03 the previous week as put volumes fell by 20.2% WoW, while call volumes declined by 16.7%.
• Put OI increased for contracts expiring in October and November, while call OI rose for expiries in December, January, February, and March.

• WTI futures rose by 9.1% for the week ending 04/Oct, its strongest weekly gain since October 2022. The surge was led by escalating tensions between Israel and Iran.
• WTI options Put/Call volume ratio fell to 0.64 (04/Oct) from 0.76 (27/Sep) as call volume jumped by 120% WoW while put volume grew by 86.6%.
• WTI OI PCR fell to 0.76 for the week ending 04/Oct from 0.77 last week. Call OI rose by 11.4% WoW, while put OI grew by 10.4%.

• What you need to know: • TM announced several high-grade copper and silver intercepts near shaft 1 at its Kombat mine in Namibia.
• • The holes reported today lie close to existing workings and planned developments, allowing for easy integration into the mine plan.
• • The highlight hole was hole KWO-217 which intersected 11.21% Cu and 117.9 g/t Ag over 5m.

• 10 Questions for Dyna-Mac What is Dyna-Mac’s business about and what are some key business divisions? Dyna-Mac is a global multi-disciplinary contractor specialising in engineering, procurement, fabrication, construction, and onshore pre-commissioning and commissioning of offshore topside modules and facilities.
• Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape.

• Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition. 
• No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
• Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable. 

• In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
• According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion. 
• The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.  

• S&P 500 futures down 33 basis points, showing signs of exhaustion
• US dollar index up 67 basis points, driven by euro reversal
• China’s unexpected outperformance in equities may be linked to US stimulus actions and coordination

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• The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
• Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition. 
• Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.

• Brent oil futures trading in line with fair value, with bullish bias in options, as volume of bullish calls hit record high
• Ongoing conflict between Israel and Iran raising concerns about further escalation, with recent attacks and strikes indicating potential for heightened tensions
• Global oil inventories are significantly lower than in previous years, potentially impacting market dynamics and prices as demand and inventory levels play a key role

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• Godawari Power and Ispat (GODPI IN) is fully integrated steel manufacturer with a diverse portfolio encompassing iron ore mining, pellet production, sponge iron, steel billets, ferroalloys, and power generation.
• Net Cash Balance Sheet, Mining Expansion, and upcoming Integrated Steel Plant provide huge potential for the captive consumption.
• Execution of the capex plan within the stipulated timeframe is the key risk.

• Option prices are a valuable tool for studying market trends and risk premium
• Gold’s unique properties make it a valuable asset for portfolio diversification and defense against government chaos
• The oil VIX index, OVX, provides insights into market risk and volatility in the oil market, with potential implications for broader market trends

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• NR prices surge over 33% YoY during April-August 2024
• In FY 2024-25 Q1, operating margin of top five tire firms falls ~200 basis points to 14%
• NR prices in downward trend in Oct amid a surge in supply

• From time to time, RaaS Research produces non-commissioned research reports on industries and companies which we believe deserve attention.
• Josh Baker attended the Australian Gold Conference last week and found eight stocks he believes have clear catalysts for a re-rate.None of these companies are currently covered by RaaS.

• SGX Iron Ore futures surged by $5.64/ton last week, with prices peaking at $113.55/ton on 30 Sept amid China’s expanded stimulus measures.
• Short-Term moving averages signal a bullish trend, with the 9-day MA crossing the 100-day MA on 4 Oct, indicating further upward momentum.
• Overbought conditions, with RSI nearing 70, suggest caution, and a tight stop loss remains advisable as support at $105/ton remains weak.

• MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
• Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
• We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

• Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer 
• ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
• If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Capitol Health (CAJ AU). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Xingda International (1899 HK), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP). 

• With China’s slew of stimulus measures released last month, we are confident that copper prices will break 10,000 USD/ton soon. 
• The COMEX spread with LME has now started to build up to over 300 USD/ton, signaling that macro funds are getting bullish on copper.
• We continue to like the equity route to play copper with pure plays like Southern Copper (SCCO US) , Ivanhoe Mines (IVN CN), and Teck Resources (TECK US).

• Helix Energy Solutions has emerged as a prime candidate for strategic acquirers and financial sponsors exploring opportunities in the offshore oil and gas industry.
• The company, which provides specialized services such as well intervention, robotics, and production facilities, is exploring its strategic options, including a potential sale.
• Helix’s latest quarterly earnings call revealed a significant improvement in revenue and profitability, alongside strong operational performance across its key segments.

• A slew of policies announced by the Chinese government led to a short squeeze in the iron ore market, with prices moving up 20% from the lows to 108 USD/ton.
• Mill margins inflected into positive territory, and iron ore, after gapping below its band of 95-130 USD/ton for the last 3.5 years, is now back in its normalized range. 
• While the current move was unexpected, we expect the euphoria to last a while as more clarity on the stimulus emerges and ore prices tick up short-term.

• We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares. 
• Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc. 
• We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc. 

• Ovintiv has been making headlines recently as it is rumored to have been approached by Coterra Energy for a potential takeover.
• While this creates buzz, Ovintiv’s position in the market makes it a compelling acquisition target for strategic buyers like Coterra and others.
• The company’s operational execution has been solid, as evidenced by its recent earnings beat, with Ovintiv reporting strong production figures and significant free cash flow generation.

• Teck Resources Limited, a diversified resource company, has undergone significant transformation, particularly emphasized in its Q2 2024 earnings report.
• The sale of its steelmaking coal business has strategically repositioned Teck as a company with a pure focus on metals vital for global development and the transition to renewable energy.
• This report encapsulates both the financial and operational milestones reached during the quarter, alongside future prospects and challenges.

• MBK ditched the hard floor, eliminating cancellation risk. With a 15% GGT rate, there’s a 4% spread, so if you can secure volume, the deal looks solid.
• MBK’s tender offer has less volume than Choi’s buyback (18%), increasing proration risk, but Choi’s deal also faces legal headaches, leaving some cancellation risk.
• Tax implications differ: MBK’s offer incurs capital gains tax, while Choi’s buyback is subject to dividend tax. Foreign investors may prefer MBK’s 0% withholding tax, impacting participation.

• On 4 October, MBK Partners announced that it is raising its tender offer price of Korea Zinc from 750,000 won to 830,000 won, matching Choi family’s tender offer price. 
• As the price and conditions have changed, the tender offer period for Korea Zinc by MBK Partners and Young Poong will be extended by 10 days until 14 October.
• Unless the Choi family makes another counter offer, upping the tender offer price even further, MBK/Young Poong is in a better position to win this M&A war for Korea Zinc.

• An $271 million block trade of Pilbara minerals occurred, representing nearly 3% interest in the stock of the lithium miner
• The trade was part of a secondary share sale stemming from an equity collar transaction for China’s Ganfeng, which owns 5.7% of Pilbara
• Equity collars are a trading strategy using options to protect downside, with the block trade price at a 4% discount to the last close

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• Joins hands with Bosch to develop intelligent tire tech for safe driving
• Gets validation from SBTi on zero emission target by 2040
• Gets over 500 approvals for cutting-edge Elect technology

• BP’s revenue is expected to rise 7% QoQ but fall 5% YoY while EPS is anticipated to drop 7% QoQ and 19% YoY.
• Management projected lower upstream production for Q3 compared to Q2, including in high-margin regions. However, retail fuel sales are expected to increase on stronger seasonal demand.
• In 2023, BP allocated over 30% of its total expenditure to charging stations, biofuels, hydrogen fuels, and fuelling stations, a significant rise from just 3% in 2019.

• In the 2024 second-quarter earnings of Plains All American Pipeline, the company displayed a performance that surpassed expectations, revealing robust execution capabilities amidst changing market dynamics.
• The key financial highlight includes an adjusted EBITDA attributable to Plains All American of $674 million, exceeding projected values.
• This positive outcome has led to an upward adjustment of the full-year 2024 EBITDA guidance by $75 million, now ranging between $2.725 billion and $2.775 billion.

• Never a dull moment for Korea Zinc (010130 KS) (KZ).  After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
• KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
• MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms. 

• Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
• If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.  
• Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days

• Entree Resources (ETG CN) has been roaring over the past three weeks on the back of …no official news!
• As we highlighted in our prior insights we expected an arbitration ruling by late 3Q24, but there has been no news published by Entree or Rio Tinto Ltd (RIO AU) 
• Volume spike and price action remind us of Turquoise Hill buyout in 2022.

• Nanshan Aluminium International Holdings (NAI HK)  is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai International.
• Nanshan Aluminium International is a leading alumina manufacturer in Southeast Asia.
• The firm’s primary focus has been tapping into Indonesia’s abundant bauxite and coal reserves, utilizing the low-temperature Bayer process to produce metallurgical-grade alumina in sand form.

• Discounts to NAV of covered holdcos mainly widened during September. Discounts to NAV: C.F.Alba, 46.6% (vs. 46.2% as of August 30); GBL, 40.7% (vs. 41.1%);
• Heineken Holding, 14.9% (vs. 16.5%); Industrivärden C, 0.9% (vs. 1.7%); Investor B, 2.6% (vs. 1.9%); Porsche Automobile Holding, 35% (vs. 35.7%). Rio DLC spread widened to 26% (vs. 19.8%).
• What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• EU commission proposes longer phase-in time  
• Some tire makers are delaying EUDR rubber booking  
• EU’s faltering EV market is a concern  

• Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coals
• Despite recent success and a positive recommendation, the stock has lagged behind other coal companies
• With a current share price of $23.40, market cap of $2.9bn, and strong FCF yield of around 30%, Peabody presents a promising risk/reward opportunity in the current market environment

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.

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.

• Vedanta Resources

• Pulsar has signed a drilling contract to deepen the Jetstream #1 well later this quarter.
• A further 500 m will be drilled to intersect the full anticipated height of the reservoir.
• The prospective resources at Topaz are associated with these deeper horizons.

• Frontline plc’s latest earnings report for the second quarter of 2024 presents a mixed bag of results influenced both by geopolitical complexities and market-specific challenges, as well as strategic decisions executed by the company.
• Delving into the current performance and potential future scenarios gives us a balanced understanding of where Frontline stands in the volatile tanker market.
• For the second quarter of 2024, Frontline reported daily earnings that, while showing robust figures, slightly tread under the first quarter with VLCCs making around $49,600, Suezmax at $45,600, and LR2/Aframax tanks earning about $53,100 per day.