Daily Brief Energy/Materials: Hanwha Corporation, Crude Oil, Rio Tinto Ltd, Steel, SigmaRoc, Panoro Energy ASA, Omai Gold Mines, ADF Group , Ring Energy Inc and more

• We believe the new restructuring plan of the Hanwha Group is likely to have a positive impact on Hanwha Corp but could negatively impact Hanwha Ocean. 
• Our NAV analysis of Hanwha Corp suggests NAV of 3.2 trillion won or NAV per share of 43,168 won, which is 50% higher than current share price. 
• The biggest component of the valuation is Hanwha Corp’s 34% stake in Hanwha Aerospace which is worth 4.1 trillion won. (187% of Hanwha Corp’s market cap). 

• USA’s Strategic Petroleum Reserves (SPR) is currently at its lowest in 40 years. Should this be a source of concern? Perhaps not.
• USA is the world’s largest producer of crude oil. From being vulnerable to imported oil, US has become self-reliant.
• SPR expressed differently now, stands at 188 days of net imports compared to less than 100 days as was seen in the 1980s, 1990s, and early 2000s.

• The Discounts to NAV of covered holdcos mainly widened during March. Discounts to NAV: C.F.Alba, 47.3% (vs. 47.1%); GBL, 38.15 (vs. 37.7%); Heineken Holding, 16.7% (vs. 16.5%); 
• Industrivärden C, 1.4% (vs. 4.4%); Investor B, 6.1% (vs. 5.6%); Porsche Automobile Holding, 45.4% (vs. 43.7%). Rio DLC spread tightened to 24.9% (vs. 25.6%), and on 26 March reached 27.7%.
• What seems interesting: listed assets vs. Industrivärden C and the Rio DLC (long RIO LN/short RIO AU).

• Chinese authorities are to limit steel production while pushing forward industrywide structural adjustments as steel mills suffer from growing losses amid sluggish demand.
• Several ministries led by the National Development and Reform Commission (NDRC) Wednesday said regulators will continue efforts to control crude steel production this year, focusing on energy conservation and carbon reduction.
• The authorities will foster industry strengths and weed out weak players to promote the structural adjustment and optimization of the steel industry.

• SigmaRoc (SRC) is a European aggregates/limestone operator with a strong investment opportunity due to a recent transformational acquisition
• SRC is trading at a favorable valuation compared to US competitors and has outperformed in terms of EPS growth and cash flow conversion
• SRC has potential for significant returns over a 3-year period supported by strong cash generation, pricing power, and limited downside risk, making it an attractive investment prospect for growth and value appreciation

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.

• Panoro has agreed heads of terms for the award of Block-23 in EG. Panoro could hold up to 80% WI in the block.
• There will now be a period of exclusive negotiations to finalise a Production Sharing Contract.
• Block EG-23 is located offshore Equatorial Guinea north of Bioko Island and adjacent to the producing Alba gas and condensate field.

• Omai announced its initial PEA on the Wenot Open Pit, reporting a highly profitable, low capex project, with substantial upside.
• The PEA reported a low AISC of US$1,009/oz, IRR of 19.8%, and an after-tax NPV5% of US$556M (at US$1,950/oz Au).
• The average annual production is expected to be 142Koz over a 13-year mine life, mining an average grade of 1.51 g/t Au at 92.5% recovery.

• ADF Group will be reporting Q4 & FY24 financial results on April 11th before market open.
• For Q4, we are expecting revenue of $77.1M (+50% YoY), gross margin of 22% (vs.
• 18% last year), and adjusted EBITDA of $13.6M (+132% YoY).

• Acquisitions are expected to remain a centerpiece of management’s three-pronged strategy to increase scale in the asset base, reduce outstanding debt, and ultimately position the company to return cash to shareholders.
• The Stronghold acquisition in 3Q22, followed by the Founders acquisition in 3Q23, added operational scale and inventory depth on the southern portion of the Central Basin Platform (CBP).
• Together with Ring’s Northwest Shelf (NWS) assets, the inventory provides a diverse set of horizontal and vertical development opportunities.