In today’s briefing:
- Brickworks (BKW AU)/Soul Patts (SOL AU): An Attractive Merger to Unwind the Cross-Shareholding
- EU Replacement Tire Market Shows Mixed Trend Amid Import Pressures
- Ecolab’s AI Mousetraps Are Just the Beginning—Is This the Future of Pest Control?
- The Egg-Price-Bubble Has Busted!
- Asia base oils demand outlook: Week of 2 June
- The Beat Ideas: Finolex Industries Ltd ~ Vertically Integrated PVC Manufacturer
- [US Nat Gas Options Weekly 2025/22] Henry Hub Rebounds on Hotter Summer Forecasts and Falling Output
- Ramkrishna Forgings: Where Inventory Vanishes and Optimism Appears
- Deepak Nitrite: Strategic Integration and Ambitious Expansion
- Enterprise Products Partners Seizes Petrochemical Gold Rush With Strategic Terminal Upgrades; What’s Next?
Brickworks (BKW AU)/Soul Patts (SOL AU): An Attractive Merger to Unwind the Cross-Shareholding
- Brickworks Ltd (BKW AU) entered a combination deed with Washington H. Soul Pattinson and Co. Ltd (SOL AU). A newly-capitalised ASX-listed company (TopCo) will merge Brickworks and Soul Patts.
- The scheme vote is low risk as both Brickworks and Soul Patts shareholders will support the merger, which provides an elegant solution to unwind the cross-shareholdings.
- Investor support for the transaction seems strong, as evidenced by the A$550 million commitments for TopCo at a stingy NIL discount to the SOL last close price.
EU Replacement Tire Market Shows Mixed Trend Amid Import Pressures
- Q1 2025 sees 14% YoY surge in all-season consumer tire sales
- Truck and bus tire sales volumes in Q1 2025 fall 4% YoY
- Imports of PCLT tires grow by 12% YoY in Jan-Feb 2025
Ecolab’s AI Mousetraps Are Just the Beginning—Is This the Future of Pest Control?
- In reviewing Ecolab’s first-quarter 2025 financial performance, the company demonstrated notable strengths alongside areas presenting challenges.
- Ecolab reported double-digit earnings per share (EPS) growth, achieving a 12% increase, even as organic sales climbed by 3%.
- This robust performance highlights the company’s ability to maintain an upward trajectory despite a weakening demand in some end markets.
The Egg-Price-Bubble Has Busted!
- YTD our absolute return strategy is up 10,6% The Egg-Price-Bubble Has Busted!
- The price of a dozen eggs in the US has crashed from $8 to $2,5 within five months – highlighting extraordinary volatility in the egg market.
- For context: The rise of egg prices can be primarily contributed to the ongoing avian influenza (HPAI) outbreak that began in 2022.
Asia base oils demand outlook: Week of 2 June
- Asia’s base oils demand could soften as weakening supply-demand fundamentals incentivize buyers to maintain lower stocks.
- Seasonal slowdown in lube consumption set to coincide with pick-up in supply following restart of growing number of plants after maintenance work.
- Weaker demand in markets like Japan frees up more surplus volumes for export, adding to supply.
The Beat Ideas: Finolex Industries Ltd ~ Vertically Integrated PVC Manufacturer
- Finolex Industries (FNXP IN) is a leading, vertically integrated Indian PVC manufacturer, the 2nd largest in PVC resin and 3rd in pipes & fittings, with captive production offering cost advantage.
- Margin recovery in FY26 is targeted post headwinds faced by industry via pricing correction, improved product mix, enhanced discount management, and cost efficiency programs.
- Potential ADD/BIS mandates mid-FY26 may curb Chinese imports, possibly enabling a 5–10% domestic price increase, reshaping the market.
[US Nat Gas Options Weekly 2025/22] Henry Hub Rebounds on Hotter Summer Forecasts and Falling Output
- For the week ending 30/May, U.S. natural gas prices gained 3.4% on the back of forecasts of a hotter-than-expected summer and tightening supplies.
- For the week ending 23/May, the EIA reported that U.S. natural gas inventories rose by 101 Bcf, moderately higher than analyst expectations of a 98 Bcf build.
- Henry Hub OI PCR fell to 0.86 on 30/May compared to 0.89 on 23/May. Call OI decreased by 12.7% WoW, while put OI dropped by 16.1%.
Ramkrishna Forgings: Where Inventory Vanishes and Optimism Appears
- Ramkrishna Forgings (RMKF IN) (or RKFL) Q4FY25 results received a qualified audit opinion where inventory correction resulted in loss of 6.7% of net-worth.
- The result also included several alarming highlights including a resurgence of inventory bulk up, questionable recognition of DTA, increasing debt, excess remuneration given to directors, etc.
- What also takes the limelight is the warrants issue where company has issued warrants at ~3x the floor price to the promoters amidst the financial irregularities.
Deepak Nitrite: Strategic Integration and Ambitious Expansion
- Deepak Nitrite (DN IN) reported stable FY25 consolidated results despite challenging market conditions, with a notable Q4 sequential recovery in revenue and profitability.
- The company achieved record production volumes through debottlenecking and optimization, maintained strong domestic market share, and initiated a significant shift to renewable energy.
- Management outlined an INR 8,500 Cr investment in the PC resin project, alongside other integration and expansion plans, signaling confidence in future growth and resilience.
Enterprise Products Partners Seizes Petrochemical Gold Rush With Strategic Terminal Upgrades; What’s Next?
- Enterprise Products Partners LP recently reported its Q1 2025 financial results, highlighting a mix of operational and strategic highlights that can be dissected for investment considerations.
- During the quarter, the company reported an adjusted EBITDA of $2.4 billion, alongside achieving several operational records and transporting significant volumes, such as 13.2 million barrels of oil equivalent per day and 2 million barrels per day of liquid hydrocarbon exports.
- These indicators underscore the company’s robust capacity and the strength of its infrastructure in handling significant volumes.
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