In today’s briefing:
- CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
- Asian Paints (APNT IN) | Hold Your Guns
- Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares
- Semen Indonesia (SMGR IJ) – Solidifying Indonesia’s Future Path
- Shrinking Inventories Lends Support to Oil Prices in the Near-Term
- Arrow Exploration Corp. – Reserves Additions.
- TMC the Metals Company, Inc. – Pivotal Year Ahead
CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
- On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF).
- A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
- Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.
Asian Paints (APNT IN) | Hold Your Guns
- There is a lot of excitement and uncertainty about the paint sector especially Asian Paints’ leadership in the broader market and among analysts.
- We interact with a couple of paint dealers across Delhi and Dimapur to gauge the sentiment on the ground.
- While there is no denying that Grasim Industries (GRASIM IN) poses a credible threat it might be too early to write off the market leader Asian Paints (APNT IN).
Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares
- On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern.
- The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
- It is RARE for an auditor to raise concerns about a company’s viability of the entity as a going concern. This is likely to negatively impact Kum Yang’s share price.
Semen Indonesia (SMGR IJ) – Solidifying Indonesia’s Future Path
- Semen Indonesia (SMGR IJ) released a positive set of results in FY2023 despite a difficult operating environment and intense competition through increasing efficiencies linked to sustainability at the same time.
- The company continues to work on improving production efficiency as well as distribution through greater digitalisation and is benefiting from synergies from Semen Baturaja.
- Increasing government infrastructure spending will help to drive growth in demand for bulk cement, especially from the new capital, with Semen Indonesia being a prime beneficiary. Valuations look attractive.
Shrinking Inventories Lends Support to Oil Prices in the Near-Term
- As of the week ending 15/March, crude inventories fell more than expected (2 million barrels vs 900k barrels expected) led by higher exports and refinery activity.
- Refineries operations have picked up faster than anticipated, with the utilization rate jumping from 80% in early February to nearly 88% by 15/Mar.
- OPEC members like Iraq, UAE, Gabon, and Kuwait, have exceeded their production quotas, raising concerns about adherence.
Arrow Exploration Corp. – Reserves Additions.
- YE23 2P reserves were estimated at 11.8 mmboe, including 0.7 mmboe for Canada and 4.6 mmboe non-core, leaving 6.5 mmboe for the company’s core Colombian assets.
- This compares with 2.1 mmbbl at YE23 plus 3.9 mmbbl for Carrizales Norte reported in September for a total of 6 mmbbl.
- Adding back 0.6 mmbbl (net) produced at Tapir in 2023 suggests that Arrow has added 1.1 mmbbl at its core Colombian assets since the latest reserve reports (September 2023 for Carrizales Norte and YE23 for the other assets).
TMC the Metals Company, Inc. – Pivotal Year Ahead
- 4Q23 results highlight careful cash management.
- TMC reported 4Q23 results, including a significant decline in Y/Y Exportation and Evaluation expenses, which benefited from the non-recurrence of a 2022 pilot project collection campaign, as well as lower SG&A expenses ($6.5 million versus $7 million in the year-ago period).
- Use of cash for operating activities also declined from $19.8 million to $15.2 million and overall quarterly operating loss was narrowed from $111.3 million in 4Q22 to $33.2 million in the reported quarter, demonstrating management’s careful use of cash and a steady SG&A burn rate.
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