Daily Brief Energy/Materials: LG Chem Ltd, SK Innovation, Natural Gas, SGX Rubber Future TSR20, Hindalco Industries, 88 Energy Ltd, DuPont, Ercros , Yunnan Yuntianhua Co A, BP PLC and more

• LG Chem is considering on paying higher dividends using sale proceeds from LG Energy Solution. 
• This breaks the company’s principle of using only ordinary income from operating activities as a source for dividends.
• If indeed LG Chem goes ahead with this plan, this would be as a result of heightened demands from major activist investors including Palliser Capital.

• There is an end of a lock-up period for 55.3 million shares (33% of outstanding shares) for SK Innovation (096770 KS) starting 20 November 2025.
• This could potentially result in additional selling by insiders which could negatively impact its share price in the coming weeks.
• SK Innovation is currently trading at relatively high valuation multiples. We remain Bearish on SK Innovation.

• Henry Hub prices are rising ahead of a colder U.S. winter, but stronger domestic production and expanding LNG exports could temper the pace of seasonal gains.
• Global LNG capacity is set to soar by 60% by 2030, raising the risk of a supply glut that could depress international gas prices and challenge U.S. competitiveness.
• While global LNG oversupply may pressure prices abroad, surging AI-driven electricity demand and slower renewable deployment could lift domestic gas consumption and keep prices resilient.

• Export volumes fall, but revenues hold firm on higher prices  
• Domestic latex consumption surges 89%, reshaping local demand base  
• Chinese investments deepen industrial linkages and energy synergy

• We remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass), with Int’l Compass reports all echoing this sentiment.
• In our prior Int’l Compass (Oct. 16) we discussed how the pullback was testing the uptrend, and we were buyers; this worked out well with indexes back at all-time highs.
• Taiwan, China, Korea, and the U.S. remain our only overweights, but India is becoming more attractive as well — add selective exposure. Many buy ideas highlighted in these countries.

• 88 Energy is a high-risk, high-reward oil and gas exploration company with a primary focus on large-scale, early-stage projects in the politically stable and well-developed hydrocarbon province of Alaska’s North Slope.
• The company’s strategy centers on identifying and de-risking significant prospective resources and then farming out interests to larger partners to fund capital-intensive drilling and development, thereby minimizing shareholder dilution and financial risk.
• Recent divestment from production assets in Texas has sharpened the company’s focus on its core Alaskan exploration portfolio (Projects Phoenix and Leonis) and a new frontier opportunity in Namibia, positioning it as a pure-play exploration entity with significant potential upside contingent on drilling success.

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• DuPont will separate its Electronics unit as Qnity Electronics Inc. on Nov 1, 2025, creating two focused platforms – a high-growth semiconductor materials business and a steadier diverfied industrial company
• Qnity launches with ~$4.3B sales, ~29% margins, strong semiconductor exposure but higher leverage and cyclicality
• We value Qnity at $106/share (17.2× FY26E EBITDA) and DuPont (ex-Qnity) at $47.5/share (13.0× FY26E EBITDA).

• CNMC approval with commitments de-risks the regulatory leg, shifting focus to shareholder acceptance and the Ministry’s decision; the spread has compressed but still offers short-dated, event-driven upside.
• Ercros’s weak H1 performance and cyclical trough distort multiples; the €3.505 offer equates to ~9x EBITDA today but nearer 6× on normalized levels, consistent with control transaction benchmarks.
• Base-Case IRR exceeds 100% annualized if settled by December; downside anchored by €2.56 break price, while any price bump toward €4.40 adds optionality without being part of the base case.

• Yunnan Yuntianhua is a leading state-owned enterprise in China’s fertilizer and chemical sector, possessing significant competitive advantages through its vertical integration and access to vast phosphate rock reserves in Yunnan province.
• The company demonstrates strong financial performance with robust cash flow generation and an attractive dividend yield, though its revenue and earnings are subject to the cyclical nature of commodity markets.
• Future growth is anticipated to be driven by strategic expansion into new energy materials, such as iron phosphate, and a continued focus on high-value fine chemical products, alongside strengthening its market position in Southeast Asia.

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bp has provided an update on its hydrocarbon discovery at the Bumerangue block in the pre-salt Santos Basin, offshore Brazil. While the find was first reported in August, yesterday’s confirmation of a c 1,000-metre gross hydrocarbon column, comprising around 100 metres of oil and 900 metres of liquids-rich gas condensate, adds clarity on scale and composition. Liquids are present across the full column. bp reports high-quality rock properties and, significantly, indicates that it believes that the carbon dioxide content in the reservoir can be managed. Although still at an early stage of evaluation, visible progress at Bumerangue is encouraging given its potential scale and its emerging significance within bp’s upstream growth pipeline.