Daily Brief Energy/Materials: BHP Group Ltd, POSCO Holdings, JX Advanced Metals, SGX Rubber Future TSR20, Deep Industries, Kauntam Papers, Plains All American Pipeline, L.P., Condor Energies , Vista Energy SAB de CV and more

• Discussion on recent acquisitions and earnings highlights in the resource sector
• Focus on BHP’s South Australian copper business and potential growth opportunities
• Analysis of return on capital employed for different assets within BHP’s portfolio

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• POSCO Holdings and Samsung SDI stand out for shorting, as both were hit hard by the EV battery chasm. With June rebal looming, they’re likely getting the boot.
• Samsung Biologics and Hanwha Aerospace could replace them, with a large float cap gap and strong price momentum, making it unlikely for the gap to flip by May.
• As June rebalancing nears, volume could drop, increasing passive impact. With shorting back, passive flow intensity may rise, leading to significant price action.

• JX Advanced Metals (5016 JP) is a global leader in the semiconductor and ICT materials sector. It is seeking to raise up to US$2.6 billion.
• In JX Advanced Metals (5016 JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on extensive proforma adjustments, the non-focus business remaining the largest profit contributor, margin pressure on the non-focus business and medium-to-long-term targets will likely disappoint.

•  Export earning crosses US$1 billion in 2024, up 7.66% from 2023  
• Local downstream producers appalled over rubber yield fall  
• Domestic tire industry in a bid to consolidate  

• Deep Industries (DEEPI IN) Q3 & 9M FY25 revenue surged 47% and EBITDA grew 53%, driven by robust order book (Rs. 2,701 crore) and major contracts like the ONGC PEC order.
• Robust growth underscores Deep Industries strategic positioning in the energy sector, with record profitability and order book expansion paving the way for long-term value creation amid favorable government initiatives.
• Company is anticipating a growth of more than 30% year-on-year for the next 3 years with target revenue of 800Cr in FY26 and margin of 45-47%.

• Kauntam Papers (KAUN IN)‘s Q3 & 9M FY25 results show revenue and EBITDA declines, yet steady sales volumes, cost optimization initiatives, and ongoing mill expansion efforts.
• Strategic cost management and mill expansion position the company to mitigate revenue challenges, ensuring long-term competitiveness in a dynamic paper industry.
• Industry is also asking for anti-dumping duty on some set of paper, especially copier, to make a level playing field with imported products.

• Plains All American Pipeline demonstrated strong financial performance in the fourth quarter and the full year of 2024, with the company surpassing its initial guidance.
• The adjusted EBITDA for the quarter was $729 million, and $2.78 billion for the full year, which exceeded expectations by approximately $105 million, or 4%.
• For 2025, the company predicts adjusted EBITDA to range between $2.8 billion and $2.95 billion, indicating a growth trajectory of around 3% year-over-year at the guidance midpoint.

• • A potential bypassed 60 m gas pay section, identified using advanced cased-hole logging tools and reprocessed existing 3-D seismic data, was put in production over a 23 m perforated interval at a rate of 1,100 boe/d, increasing to 1,300 boe/d over the past five days as the completion fluid has been recovered.
• The flow rate is above expectations and unlocks reserves.
• • This result showcases the potential upside at Condor’s Uzbekistan assets.

• We continue to prefer Vista for investors seeking exposure to Argentina’s energy sector. We believe stronger operational performance and a reduction in country risk could drive bond outperformance.
• P1 reserves grew by 56.7 MMboe, or 17.8% YoY, to 375.2 MMboe, resulting in a reserves replacement ratio of 323% and a reserve life of 14.7 years.
• Total production increased 17.1% QoQ to 85.3 kbpd in 4Q24, up from 72.8 kbpd in 3Q24. This growth was primarily driven by a 15.7% sequential increase in crude oil production.