In today’s briefing:
- Systematically profitable business selling at ~2x EV/EBIT
- SOLV Energy, Inc. (MWH): Six Months Later, the IPO Story Remains Intact Despite AI Trade Pullback
- Valero Energy Corporation’s Refining Powerhouse Is Back — Can Tight Capacity Keep Margins Elevated?
- Aequitas: Hubei Dinglong A/H Listing – Astute Expansion Prior Years; YMTC Might Be Largest Customer
- Shell plc’s Hidden Growth Story — Namibia, LNG Canada & Nigeria Move Into Focus!
- Sims Ltd (SGM): After Rally 46%—What to Do?
- Dic Corp (4631 JP): 1H FY12/26 flash update
- AVLNF: The Market Knows the Resource; It May Not Yet Appreciate the Opportunity
- Monday Macro Update: We Have Retuned To “Square One” In Terms of Iran and the Strait of Hormuz
- Cotton’s Short Squeeze Is Getting a Fundamental Assist
Systematically profitable business selling at ~2x EV/EBIT
- Canaf is a $14.9M market cap business with $9.8M in net cash that earned $2.3M in 2025.
- The CEO is redeploying capital derived from a South African commodity business into higher-return opportunities.
- I believe margin expansion and continued growth are inevitable, which should lead to an aggressive rerating.
SOLV Energy, Inc. (MWH): Six Months Later, the IPO Story Remains Intact Despite AI Trade Pullback
- SOLV priced at the high end, opened 20% higher and subsequently completed a heavily demanded upsized follow-on at $36.00.
- Revenue, margins, EBITDA and backlog all accelerated sharply following the IPO, reinforcing the company’s infrastructure growth story.
- The stock’s pullback reflects a broader rotation from AI infrastructure, but renewed enthusiasm could quickly put MWH back in favor.
Valero Energy Corporation’s Refining Powerhouse Is Back — Can Tight Capacity Keep Margins Elevated?
- Valero Energy Corporation reported a robust second quarter in 2026, driven by strong operational and commercial performance across its refining, renewable diesel, and ethanol business segments.
- The company’s refining operations delivered an operating income of $4.5 billion, a substantial increase over the prior year’s $1.3 billion, with throughput volumes averaging 3 million barrels per day.
- This performance was supported by resilient demand for transportation fuels amid volatile geopolitical and macroeconomic factors.
Aequitas: Hubei Dinglong A/H Listing – Astute Expansion Prior Years; YMTC Might Be Largest Customer
- Hubei Dinglong (HDLNG HK) , aims to raise at least US$750m in its H-share listing.
- It provides upstream integrated materials and solutions for the semiconductor and other high-tech industries in response to the broad and growing demand for supply chain localization and technology roadmaps.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
Shell plc’s Hidden Growth Story — Namibia, LNG Canada & Nigeria Move Into Focus!
- Royal Dutch Shell plc reported a strong second-quarter performance driven by operational excellence, strategic portfolio management, and active cost discipline amid volatile market conditions.
- The company’s Pennsylvania Petrochemicals Complex delivered its best results to date, and its refineries operated at a record 102% utilization during a high-margin period.
- Shell’s ability to adapt production toward middle distillates such as jet fuel reflects the strength of its integrated model, optimizing value across its assets and markets.
Sims Ltd (SGM): After Rally 46%—What to Do?
- The company is laser-focused on turning around, and the team managed to do that.
- Valuations have normalized, and earnings guidance has improved thanks to the Sims Lifecycle services’ growing activities.
- The trend for hyperscalers like Alphabet (GOOG US) , Amazon (AMZN US) and Microsoft Corp (MSFT US) replacing their older server racks for new ones is not ending anytime soon.
Dic Corp (4631 JP): 1H FY12/26 flash update
- Sales increased by 13.3% YoY to JPY593.0bn, with operating profit rising 92.2% YoY to JPY51.9bn.
- Recurring profit rose 157.7% YoY to JPY52.3bn, and net income attributable to owners increased 184.1% YoY to JPY37.2bn.
- DIC revised its full-year forecast, expecting sales of JPY1.14tn and operating profit of JPY78.0bn.
AVLNF: The Market Knows the Resource; It May Not Yet Appreciate the Opportunity
- Resource update resets the narrative. Avalon’s updated mineral resource estimate (MRE) has confirmed that Nechalacho remains one of the largest advanced rare earth development projects in North America while substantially expanding its long-term resource inventory.
- The update removes lingering questions with respect to the project’s geological relevance and shifts attention toward economics and execution rather than resource scale.
- Strategic value extends beyond headline grade. Unlike many Western REE projects that are primarily light-REE deposits, Nechalacho offers meaningful exposure to dysprosium and terbium, two of the most supply-constrained heavy rare earths used in high-performance permanent magnets.
Monday Macro Update: We Have Retuned To “Square One” In Terms of Iran and the Strait of Hormuz
- In last Friday’s report we suggested that we were back to “square one,” i.e. the MOU, in terms of Iran’s demands before the Strait of Hormuz is “opened.”
- President Trump stated that he is willing to let economic pressure on Iran be the deciding factor, and therefore we would assume no resumption of military strikes against Iran.
- Based on what we believe Tehran can tolerate, therefore, the odds appear high that the stalemate could continue through at least the end of 2026.
Cotton’s Short Squeeze Is Getting a Fundamental Assist
- Cotton has rallied hard over the past couple of weeks.
- The primary driver has -not yet – been a dramatic supply shock.
- Hedge funds had been net short for nearly two years; that positioning began reversing in April, and short-covering into fresh long-buying has done most of the work since.
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