Daily Brief Energy/Materials: Pertamina Geothermal, ABM Investama, Hawkins Inc, Rent.com.au Ltd, Rio Tinto PLC, Lyondellbasell Indu Cl A, Newmont Mining, Pan American Silver and more

• Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.
• PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.
• In this note, we talk about the company’s financial performance and other issues, based on its recent filings. 

• Pertamina Geothermal (0125738D IJ) is offering 10.35bn shares in its IPO at a price range of IDR 820-945/share to raise between US$567-653m and valuing the company between US$2.27-2.61bn.
• The stock will not get fast entry to the MSCI, FTSE or local Indonesia indices (IDX30 Index/ LQ45 Index/ IDX80 Index).
• The stock should be added to MSCI Small Cap in May and to the FTSE All-Cap in September bringing in some passive flow.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• HWKN reported fiscal third quarter (January 1) results where sales benefited from price increases while the firm dealt with supply bottleneck for sourcing fertilizer.
• HWKN has been relying on price increases to drive sales higher and generate gross profit dollars. Volumes have not increased as much as sales prices have.
• The water treatment business is seasonally soft in FYQ3. However, the segment reported sales greater than we were expecting. We believe this is mostly to HWKN renewing its annual contracts.

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• Friday’s weekly close is setting up to confirm a high probability bearish outlook when all 3 pillars are definitively triggered.
• A weekly close below 6077 will confirm a high probability multi-week to multi-month correction target in the 5415/5650 range.

• LyondellBasell continued to outperform the broader equity market as declining margins seem largely priced-in.
• The company remains well-positioned to weather increased risk of recession in 2023 and geopolitical tensions in the future.
• The firm is well- positioned to weather an increased risk to recession in the 2023.

Newmont will update guidance for 2023 when it releases Q4 results on 23 February 2023. We anticipate a strong close to 2022 (production up 6% quarter on quarter and costs down 13% in Q4) and believe a dividend recalibration is possible, albeit reflecting industry inflation rather than a reassessment of capital allocation policy in general. In this context, we see Newmont as a sustainable choice among gold producers, not only in an ESG sense, but also in its ability to maintain 6Moz pa of low-cost production.

Pan American Silver (PAAS) has reported that its shareholders approved the proposed share issue to acquire all outstanding Yamana Gold shares as part of its recently announced plan of arrangement to buy all non-Canadian assets of Yamana. At the same time, Yamana shareholders voted in favour of the special resolution approving the acquisition by PAAS of all the issued and outstanding shares in the company following the sale of all Canadian assets to Agnico Eagle. The transaction is expected to be completed in Q123 subject to receiving a number of regulatory approvals.