Daily Brief Energy/Materials: Greatview Aseptic Packaging, Korea Zinc, SGX Rubber Future TSR20, Sherwin Williams Co, Source Energy Services, Trigon Metals and more

• China’s State Administration for Market Regulation has formally accepted  Shandong Xinjufeng Technology  (301296 CH) (XJF)’s filing. That’s positive. SAMR previously okayed XJF’s initial 28.22% stake from Jardine Matheson (JM SP).
• No new update on co-founders Jeff Bi and Gang Hong’s non-binding Offer. 
• Separately, the EGM requisitioned by XJF to appoint two XJF-friendly directors progresses.

• Hankyung Business Daily reported that Korea Investment Securities (KIS) is in a serious discussion with the Choi family of Korea Zinc to step up as a white knight.
• KIS/Choi family are considering a plan to launch a counterbid against Jang family and MBK by investing around 2 trillion won+ along with other private equity funds.
• It is probable that tender offer price of Korea Zinc could be raised by 15-25% due to a likely counterbid and current price trading 7% higher than tender offer price.

• Prices showing uptrend after a marginal slide in recent times  
• Kerala climate conducive for production, leading to good yield  
• More regions in bid to expand rubber area buoyed by higher prices

• The key issue is if KIS can form a consortium. PEFs are saying the timeline is too tight and are concerned about the unclear exit strategy.
• To make this work, PEFs need Choi’s 15.65% Korea Zinc stake as collateral, but much of it is already tied up, limiting cash-raising potential.
• They’ll likely continue to leak news to boost the price and buy time. But this will also push MBK to sweeten their offer sooner.

• MBK’s funding plan for Korea Zinc involves using ₩1T from their 6th Buyout Fund and the rest via debt. This setup leaves room to potentially increase the tender price.
• The key question is if there’s enough upside at this price. MBK’s silence on abandoning Youngpoong suggests they’re unlikely to fully bail on Korea Zinc even if the tender fails.
• With MBK’s strategy leaked, institutions may hesitate, fearing less price drop risk, suggesting a proxy battle could heat up. We should consider spread trading and post-tender price moves.

• Sherwin Williams offers a 6.9% yield for the next four years or more through a diversified portfolio of bonds.
• The company is a leader in the paint and coatings industry, with a focus on professional painters and industrial applications.
• Sherwin Williams has a long history and has been a quiet compounder, compounding earnings at 14% per year over the last 20 years.

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• Source Energy Services is a producer, supplier, and distributor of high-quality Northern White Frac Sand primarily in the Western Canadian Sedimentary Basin
• The company offers an end-to-end solution through its Wisconsin sand mine assets, producing 4.8mmtpa of tier 1 Northern White Sand
• Source Energy Services issued 10.5% senior secured notes in December 2020, offering an attractive opportunity at current prices with a low-risk carry of 10.5%

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.

• TM announced a key production milestone, having mined 980tpd over a 30-day period, surpassing a threshold in the Sprott streaming agreement.
• This news de-risks the project as Trigon is no longer required to convert the principal advance into a loan (more detail below).
• As a result of the highly successful underground mining operations, the Company has decided to pause the open pit and only process high-grade underground ore.