In today’s briefing:
- POSCO Future M: A Rights Offering Capital Raise of 1.1 Trillion Won
- Unpacking Posco Future M’s Rights Offering Disclosed After Market Close Today
- Thai Rubber Production To Grow In 2025, But Rains, Prices Can Spoil Party
- Asia base oils demand outlook: Week of 12 May
- China Hongqiao (1378 HK): Leading the Low-Cost, Low-Carbon Aluminium Shift
- Will the India/Pakistan Conflict Push Cotton Prices Higher?
- Pre-IPO Xiamen Jihong Technology (PHIP Updates) – Lack of Sustainable Growth Logic
- Neturen Co Ltd (5976 JP): Full-year FY03/25 flash update
- Criterium Energy Ltd (TSX-V: CEQ): Stepping on the gas
- Vaalco Energy (NYSE: EGY): Strong quarter. Resilient to low oil price
POSCO Future M: A Rights Offering Capital Raise of 1.1 Trillion Won
- Posco Future M (003670 KS) announced today that it plans to complete a rights offering capital raise of 1.1 trillion won.
- The capital raise will involve 11.483 million new shares, representing 14.8% of current outstanding shares. The expected rights offering price is 95,800 won, which is 15.8% lower than current price.
- We have a Negative view on POSCO Future M and this capital raise, which is likely to have a negative impact on its shares due to the dilution risk.
Unpacking Posco Future M’s Rights Offering Disclosed After Market Close Today
- The pricing’s standard—20% discount, 14.82% dilution. First-round price on June 12, final on July 16. The 20% discount could offer a bigger arb window than Samsung SDI or Hanwha Aero.
- Posco Holdings confirmed full participation, taking half of the offering (500B+ KRW). With the ESOP in play, only 40% (400B KRW) remains, limiting potential trading upside despite the 20% discount.
- Future M’s down 8% in after-hours, Holdings 3.5%. The sharp drop follows no deal leaks and sector concerns, suggesting more downside tomorrow, with the price gap key for day-night trading.
Thai Rubber Production To Grow In 2025, But Rains, Prices Can Spoil Party
- Initial projections hint at 4.93 million ton output in 2025
- Pre-tariff war Q1 2025 reports robust export returns
- Highest earnings from exports in 8 years at US$577.1 million in Feb
Asia base oils demand outlook: Week of 12 May
- Asia’s base oils demand likely to ease as signs of weaker-than-expected lube consumption incentivize blenders to trim inventory levels.
- Prospect of seasonal slowdown in consumption starting in a few weeks would coincide with expected completion of wave of plant maintenance work, boosting supply.
- Firm base oils margins, prospect of weaker fundamentals and low crude oil prices add to incentive to procure sufficient volumes just to meet term commitments.
China Hongqiao (1378 HK): Leading the Low-Cost, Low-Carbon Aluminium Shift
- China Hongqiao has delivered steady ~6 Mt volumes, ~25% EBITDA CAGR, and 15–27% ROCE over the last three years, supported by integration and energy transition gains.
- China Hongqiao is relocating 4 Mt of capacity to Yunnan to tap low-carbon hydropower, advancing its green aluminium transition.
- China Hongqiao offers strong earnings visibility backed by low-cost operations, while trading at attractive valuations relative to peers.
Will the India/Pakistan Conflict Push Cotton Prices Higher?
- YTD our absolute return strategy is up 10,2% Will the India/Pakistan Conflict Push Cotton Prices Higher?
- India is an important exporting and producing country of cotton.
- According to the latest USDA data, India is the second-largest cotton producer behind China.
Pre-IPO Xiamen Jihong Technology (PHIP Updates) – Lack of Sustainable Growth Logic
- In order to maintain revenue growth, it’s necessary to continuously increase advertising investment. However, due to fierce market competition, the ROI from advertising is declining, leading to weak profitability.
- The big concern here is once Jihong’s e-commerce business loses its growth momentum, future performance will inevitably enter a downward trend. Jihong lacks a sustainable growth logic for the future.
- Jihong’s valuation could be about RMB3.2-4.3 billion, based on the valuation of cross-border social e-commerce business (P/E of 15-20x) + the valuation of traditional paper packaging business (P/E of 10-12x).
Neturen Co Ltd (5976 JP): Full-year FY03/25 flash update
- FY03/25 results: Revenue JPY57.5bn (+0.5% YoY), operating profit JPY1.6bn (-0.9% YoY), net income JPY1.8bn (+17.7% YoY).
- FY03/26 forecast: Revenue JPY58.0bn (+0.9% YoY), operating profit JPY1.6bn (-1.1% YoY), net income JPY1.3bn (-28.4% YoY).
- Dividend policy update: FY03/26 annual dividend JPY67.0 per share, payout ratio 176.7%, DOE target raised to 4.0%.
Criterium Energy Ltd (TSX-V: CEQ): Stepping on the gas
- • The staged development of gas discoveries at Tungkal is the primary driver of near-term growth.
- Assuming flat oil production, bringing just two gas discoveries online could enable Criterium to triple output to ~3 mboe/d and triple 2P reserves by early 2027 • The first discovery to be developed, SE MGH (15 bcf 2C resources), is expected to see resource conversion to reserves in 2025.
- In early 3Q25, the existing well—previously tested at 8 mmcf/d—will be re-tested, with initial production of 5-7 mmcf/d anticipated by 1Q26.
Vaalco Energy (NYSE: EGY): Strong quarter. Resilient to low oil price
- • 1Q25 WI production of 22,402 boe/d was at the high end of expectations.
- The Ebouri well continues to produce at ~1 mbbl/d (gross) on test.
- • Cash flow from operations was US$32.7 mm, while capex of US$58 mm came in below projections.
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