Daily Brief Energy/Materials: WorleyParsons Ltd, Deep Yellow Ltd, Anglo American, Copper, Iron Ore, Premier Energies Limited, Schlumberger Ltd, HI-Tech Pipes, Kinder Morgan and more

• DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
• DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
• As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

• Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
• This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
• The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

• Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
• The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
• Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.

• In this note we assess the JSE Top 40 index effect of an Anglo American restructuring or takeover by BHP, assuming the Amplats and Kumba stakes are spun out.
• We also explore the details of BHP’s initial offer and what the market could be pricing with respect to a potential revision of BHP’s stock offer (minimum).
• If Kumba is unbundled from Anglo American, we expect the stock to enter the JSE Top 40. Potential deletes are included in the note.

• Copper market may be running ahead of a fundamental story, with extreme tightening in the copper concentrate market
• Chinese demand has stepped back due to surging copper prices, but expected to acclimatize to higher price levels
• Supply side challenges may take a couple more quarters to resolve, leading towards a tighter refined market in the future and potential supply shortfalls by 2030.

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• The short term is suddenly looking bullish for iron ore, as rumors abound that tier-1 cities in China may remove home-buying restrictions in May, and auto stimulus measures were announced. 
• Cities like Chengdu and Nanjing have already announced measures to make home-buying more attractive, such as removing purchase qualifications and pilot programs for old-for-new home housing. 
• We like 62% Fe and see it trade up to its upper limit of 130 USD/ton (vs. current 117 USD/ton). On equities, we like Vale (VALE US) .

• Premier Energies Limited (0377949D IN) is looking to raise US$300m in its upcoming India IPO. The bookrunners on the deal are JP Morgan, Kotak, and ICICI Securities.
• Premier Energies (Premier) is a manufacturer of solar photovoltaic (PV) cells, and solar modules. It also executes EPC projects and provides follow-up O&M services.
• As per Frost & Sullivan (F&S), the firm was the second largest domestic manufacturer in terms of annual installed capacity as of Mar 2024.

• During Schlumberger’s (SLB) first quarter 2024 earnings, the company’s evenue grew by 13% YoY, and EBITDA grew in the mid-teens, in line with SLB’s full-year financial ambitions.
• International activity fuelled the growth, with revenue increases observed in 21 of the 25 international GeoUnits.
• North America, however, showed a decrease in activity, resulting in a 6% YoY fall in revenue.

• HI-Tech Pipes (HITECH IN) is engaged in manufacturing of ERW Steel Round & Section Pipes, cold Rolled Strips, coils, and colour coated sheet, etc. and has distribution across India.
• The company has grown impressively in the last 5-7 years and has seen improved balance sheet and working capital situation.
• However, tapering return ratios, prolonged concern on cash conversion and erosion of margins are few talking points that should be taken into account.

• Kinder Morgan’s latest quarterly earnings confirmed that the company had a robust quarter.
• The Chairman of the Board, Mr.
• Rich Kinder, highlighted the growth potential in the demand for natural gas, driven substantially by the increasing demand from new and expanding data centers, especially those required to support Artificial Intelligence (AI).