In today’s briefing:
- STAR Chip Index Rebalance Preview: Potential Changes in June
- EUDR May Be Subject To Revision
- BWGI’s Tender Offer for Verallia
- ARG: Slight Miss on Q1 Production; Copper Price Supports FCF
- Southern Energy Corp. (SOUC LN/SOU CN): First recompletion expected by the end of 2Q25
STAR Chip Index Rebalance Preview: Potential Changes in June
- There could be 1 constituent change for the STAR Chip Index at the June rebalance. There will also be a few capping changes.
- Estimated one-way turnover is 2.1% resulting in a round-trip trade of CNY 1.04bn (US$141m). Passives need to trade between 0.65-1.65x ADV in the potential changes.
- Jinhong Gas (688106 CH) is also a potential delete from the STAR100 Index and that will lead to increased passive selling in the stock.
EUDR May Be Subject To Revision
- Importers labeling rubber used as synthetic or compounded to avoid due diligence
- Automated checks may miss incorrect documentation
- Ongoing review for the list of products which need documentation before entering EU
BWGI’s Tender Offer for Verallia
- BWGI proposes a voluntary tender offer at €30 per share (cum dividend), aiming for majority control without delisting, supported by the Moreira Salles family’s substantial financial capacity and credibility.
- BWGI’s offer, backed by a $26 billion family office, presents a credible liquidity event; however, valuation and DCF analysis suggest room for a higher bid or competing interest.
- Market volatility may increase investor preference for deal certainty, potentially improving acceptance of BWGI’s offer despite its modest premium over Verallia’s recent trading levels and long-term valuation benchmarks.
ARG: Slight Miss on Q1 Production; Copper Price Supports FCF
- Quarterly copper production was 13.2Mlbs, below our estimate of 14.9Mlbs due to the scheduled annual plant maintenance.
- Cash costs came in at $2.22/lb, above our estimate of $1.88/lb.
- Copper prices rose substantially in Q1, followed by a sharp drop in recent days due to U.S. tariffs, despite this, copper remains high at >$4.00/lb.
Southern Energy Corp. (SOUC LN/SOU CN): First recompletion expected by the end of 2Q25
- Southern has raised US$5 mm in new equity at a price of 3.8p per share (C$0.07 per share).
- Investors participating in the transaction will also receive a full warrant for each new share, with an exercise price of 4.8p per share (C$0.09 per share).
- US$3.1 mm of outstanding convertible debenture will be converted into equity on the same terms.
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