June 26th, 2023 | 08:30 CEST
Energy chaos? Not at all! Siemens Energy, ThyssenKrupp, Saturn Oil + Gas
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Siemens Energy: Uncertainty - and a great opportunity
When a DAX share falls by more than 35%, there is fire under the roof. This is precisely what happened to Siemens Energy on Friday, with the share price temporarily plummeting to EUR 15. The reason: Wind energy subsidiary Gamesa is regarded by more and more market experts as unsanctionable. The Company issued a profit warning last Thursday. Then it emerged that quality problems with Gamesa's existing wind turbines could cause costs of more than EUR 1 billion in the coming years - in January, there was still talk of less than half that. Gamesa is already under scrutiny. The Company was integrated only a short time ago in order to have better control. More and more problems are emerging – but the high costs and the associated thin margin remain**.
Now that uncertainty is added to the mix - wind turbines have a lifespan of around 20 years and could therefore cause costs for Siemens Energy for a long time to come - the share remains a hot potato. However, the stock also offers opportunities. Siemens Energy is the first port of call when it comes to the energy turnaround. The largely missing business with photovoltaic systems has been a malus for the share so far. But last week, it became known that the Chinese solar company Longi wants to open a factory in Germany - Siemens Energy could become a partner. Siemens Energy did not comment on the speculation. The current problem situation could be an open window of opportunity for such a strategy shift. The share is interesting for hardcore investors after the price drop, but it could be that Gamesa will continue to cause problems for a long time.
ThyssenKrupp: Everything right with Nucera
ThyssenKrupp is currently doing better than Siemens Energy. Like many industrial companies, the steel group had its back to the wall about a year ago. A gas emergency last winter could have hit the German steel industry particularly hard. But politicians averted the catastrophe, and ThyssenKrupp contributed to today's good starting position with progress in the field of hydrogen. With new capital from a capital increase, hydrogen subsidiary Nucera is to go public to continue its growth course. Since ThyssenKrupp wants to hold its stake, shareholders benefit from the hydrogen fantasy. The core steel business will also depend on hydrogen in the future. The market is still cautious about ThyssenKrupp's plans - the share remains uninteresting.
Saturn Oil & Gas: Tomorrow's dividend stock
The share price of the Canadian oil producer Saturn Oil & Gas has been much livelier for a few weeks. Last month the share price rose by around 5%. On a one-year horizon, however, it is still down 8%. What gives the impression of an extremely boring share could be an opportunity for speculative investors. Saturn operates in Canada and has grown rapidly in recent years thanks to several large acquisitions: from a small producer where every new well was a gamble, the Company grew to produce 17,783 barrels of oil per day in the first quarter. Between the first quarter of 2022 and 2023 alone production increased by 137%. Adjusted cash flow was CAD 54.5 million in the first quarter. Saturn Oil & Gas is valued at only CAD 313 million.
The Company recently managed to step onto the Toronto Stock Exchange. "We anticipate that trading on the TSX will provide us with additional visibility in the marketplace, provide additional liquidity to our shareholders and provide access to a broader and more diverse range of international and institutional investors", commented CEO John Jeffrey. With the current low fossil fuel prices not affecting Saturn Oil & Gas' debt reduction thanks to existing hedging contracts and operational progress at the Company, the stock can be exciting at current levels. As debt repayments progress, Saturn should soon be on the docket of dividend hunters. Since the Company is also pursuing a clear ESG strategy and only recently invested CAD 14.2 million in the renaturation of former operating areas, the stock can also be interesting for sustainably-minded investors according to the best-in-class principle.
Companies in the energy sector are facing exciting times. Last Friday's share price plunge shows that even industry leaders like Siemens Energy can run into problems. In the long term, however, companies that stand for sustainable energy remain exciting. This also applies to Saturn Oil & Gas. Although the Company is not CO2-neutral, it is doing its best to make production as sustainable as possible. Key data such as cash flow and valuation are also right. The energy stock sector offers investors good opportunities - straight investments off the beaten track can pay off.
Conflict of interest
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