Daily Brief Energy/Materials: Alumina Ltd, Ercros , Gold Fields Ltd, Hellenic Petroleum Sa and more

• I have received several questions from readers on Alcoa (AA US)’s non-binding proposal for Alumina Ltd (AWC AU) in the context of the current gross spread of 9.2%. 
• The questions primarily concerned Citic Resources Holdings (1205 HK) voting intentions, the probability of a bump and the likelihood of Aloca shareholders supporting the transaction. 
• CITIC Resources’ lack of public endorsement of the transaction is due to HKEx listing requirements and not an indication of a NO vote risk.  

• Ercros (ECR SM), a venerable Spanish chemical company has received a €3.6/share, cum dividend, offer from Bondalti. The premium is 40.6%, implied equity €329.17 million and implied EV €421 million.
• The offer represents 6x EV/Fwd NTM EBITDA, typical mid-cycle multiple for commodity chemicals, 12.9x Fwd P/E. The offer price accounts for an improving H2. The shares suffer from low liquidity.
• Therefore the top shareholders will be glad to cash in. How long does the Spanish government take to authorise FDI will be the primary concern. Gross spread is 4.7%. Long.

• Indices were rebalanced in the closing auction last week Thursday.

• Turnover on the JSE for the day was R25.6bn, R12.9bn traded in the closing auction (50%).

• Turnover at the November rebalance was R40.6bn. 

ELPE reported its final results on 29 February. Adjusted net income of €0.6bn was lower than our forecast of €0.64bn. A positive surprise was that the board is recommending a final dividend of €0.60 per share, which was above our expectation of €0.30 per share. We believe this reflects management’s confidence in the current shape of the business. The balance sheet has been strengthened year-on-year, with net debt reduced from €1.94bn (at end-FY22) to €1.63bn. Our forecasts are under review.