In today’s briefing:
- SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
- Petrindo Jaya Kreasi (CUAN IJ): Potential Global Index Inclusion & The Risks
- A Merger Between SK On and SK Enmove + A Massive 8 Trillion Won in Capital Raise
- SK IE Technology – Capital Raise of 300 Billion Won
- SCZ: Soft Q2 Production Results Due to Flood
- Serica Energy Plc: Triton Ramp-Up to Full Production Delayed but Very High Production at BKR
- Sonoco Products’s Latest Earnings Update- A Tale Of Lean Ops, Synergy Gains, & a Billion-Can Boost!
- ARG: Solid Q2 Financials; Paid Off $4M of Debt
- West Fraser Timber: Strengthening Its War Chest with $1.7 Billion Liquidity for Strategic Expansion!
- Criterium Energy Ltd (TSX-V: CEQ): On track for first gas in 1Q26
SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
- Facing tough fundraising, SK avoided a rights issue, opting for a complex deal to limit dilution and ease investor worries.
- It all hinges on how the market views SK On’s cleanup plus Enmove’s steady cash flow—SK Innovation looks oversold, making this a decent long setup.
- Enmove’s stable earnings boost SK On’s P&L, likely triggering a rerate for SK Innovation and setting up a classic NAV compression trade.
Petrindo Jaya Kreasi (CUAN IJ): Potential Global Index Inclusion & The Risks
- PT Petrindo Jaya Kreasi Tbk (CUAN IJ) could be added to a global index in August but there are multiple risks for the stock.
- PT Petrindo Jaya Kreasi Tbk (CUAN IJ) trades at significantly higher multiples compared to its peers and the recent price spike raises the risk of addition to the UMA list.
- PT Petrindo Jaya Kreasi Tbk (CUAN IJ) has outperformed its peers and positioning is big, raising the risk of the stock moving lower over the next few weeks.
A Merger Between SK On and SK Enmove + A Massive 8 Trillion Won in Capital Raise
- On 30 July, SK Innovation (096770 KS) announced that it plans to merge its subsidiaries SK On and SK Enmove. The merged company will be launched on 1 November.
- SK Group has announced a massive 8 trillion won capital raise plan involving this deal including paid-in capital increase of 2 trillion won for SK Innovation and SK On each.
- We provide three major reasons why we are negative on this merger/capital raise.
SK IE Technology – Capital Raise of 300 Billion Won
- SK IE Technology (361610 KS) announced that it plans to raise 300 billion won through a third party paid-in capital allocation.
- SK IE Technology plans to issue 10.5 million new shares (14.7% of outstanding shares). Expected price of capital raise is 28,600 won (2.1% lower than current price).
- We have a Negative View of SK IE Technology as well its plans to raise capital worth 300 billion won.
SCZ: Soft Q2 Production Results Due to Flood
- Santacruz reported its Q2/25 production results, missing our expectations due to flooding at Bolivar which has now been resolved.
- AgEq production came in at 3.5Moz compared to our estimate of 4.6Moz, representing -4% QoQ and -15% YoY.
- SCZ is up 306% since our initiation report in January, yet still remains mispriced in our view.
Serica Energy Plc: Triton Ramp-Up to Full Production Delayed but Very High Production at BKR
- Following the July production restart at Triton FPSO, ramp-up to the steady-state plateau of has been delayed into August.
- With Bittern now back online and Evelyn and Gannet expected to follow shortly, net production at Triton is set to reach 25 mboe/d in the near future.
- It is expected that the production plateau will exceed this level once the new wells are then brought onstream later in August.
Sonoco Products’s Latest Earnings Update- A Tale Of Lean Ops, Synergy Gains, & a Billion-Can Boost!
- Sonoco reported strong financial results for the second quarter of 2025, achieving significant growth in net sales, adjusted EBITDA, and margins despite facing global economic challenges and market-specific disruptions.
- Net sales increased by 49% year-over-year, reaching $1.9 billion, driven by the acquisition of the European metal packaging business Eviosys, now integrated as Sonoco Metal Packaging EMEA (SMP EMEA), and strong volume growth in their U.S. metal packaging segment.
- Adjusted EBITDA rose by 25% to $328 million, with margins expanding by 100 basis points to 17.2%.
ARG: Solid Q2 Financials; Paid Off $4M of Debt
- What you need to know: • Amerigo reported strong Q2 financial results, generating revenue of $50.8M (-1% YoY) vs. our expectation of $52.6M.
- • EBITDA was $17.8M vs. $20.0M expected, while OCF was $11.9M vs. $15.5M expected.
- ARG paid off $4.0M of debt during the quarter, ending the period with net cash of $17.2M.
West Fraser Timber: Strengthening Its War Chest with $1.7 Billion Liquidity for Strategic Expansion!
- The recent earnings for West Fraser Timber Co. Ltd. provides a comprehensive overview of the company’s performance for the second quarter of 2025 amidst a challenging macroeconomic environment.
- West Fraser reported an adjusted EBITDA of $84 million during the period, reflecting an approximate 6% EBITDA margin, as it continues to navigate a cyclical downturn in the industry.
- The company highlighted headwinds such as lower U.S. housing starts, impacted by elevated mortgage and interest rates, which are affecting new home construction and subsequently, demand for West Fraser’s wood products.
Criterium Energy Ltd (TSX-V: CEQ): On track for first gas in 1Q26
- • The MGH-20 well in the North Mengoepeh (MGH) field tested 2.8 mmcf/d with associated oil.
- This is a positive surprise as there are currently no estimated resources at the field that was shut in in 2014.
- • Following the extended well test at SE-MGH, Criterium plans to initiate extended testing on MGH-20 and three additional shut-in wells on the North MGH well pad.
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