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January 11th, 2022 | 12:03 CET

Gazprom, Memiontec, E.ON, Siemens Energy - Water is the oil of tomorrow!

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In the mind of current politics, the world of tomorrow is supposed to get by without oil and petroleum products. Modern fuels with fewer emissions and the abandonment of plastic packaging could reduce the amount of oil and plastic products needed. But with this line of thinking, all countries would have to act in unison and put the petrochemical industry on the sidelines. Whether this will result in less plastic ending up in the Pacific remains questionable, but we are already experiencing one effect: a noticeable increase in the price of all energy and utility services. Green policies are nice, but they slow down economic performance considerably. Who will benefit from the long-term policy choices?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: GAZPROM ADR SP./2 RL 5L 5 | US3682872078 , Memiontec Holdings Limited | SGXE56008290 , E.ON SE NA O.N. | DE000ENAG999 , SIEMENS ENERGY AG NA O.N. | DE000ENER6Y0

Table of contents:

    Nord Stream 2 and Kazakhstan - Catalysts for higher energy prices

    There are currently a number of political trouble spots that are making fossil energy supplies more expensive. The new government has contributed to this and is blocking the last permits for the opening of Nord Stream 2. Within the SPD, however, there are clear supporters of the new gas pipeline in order to achieve supply stability with lower energy prices for Europe. Stability, however, is evidently not the goal of Green policy; here, one wants to make one's own party interests the orientation of Germany's industrial policy. That endangers our industrial location considerably and leads to exploding energy costs in the private sector. We already say thank you! Meanwhile, the conflict in Kazakhstan continues to smolder, affecting the supply of crude oil. Conclusion: The prices will probably continue to rise because instead of political relief, blockade policy is likely to be on the agenda in Berlin!

    Gazprom - Record production of gas in 2021

    To anticipate the answer: No, Gazprom is not dependent on Nord Stream 2. In 2021, the Russian gas giant's natural gas production increased by 62.2 to a 13-year record of 514.8 billion cubic meters (bcm), Gazprom announced in a Telegram release on Jan. 2, citing CEO Alexei Miller.

    "This is the best result in the last 13 years and means an increase of 62.2 billion cubic meters compared to 2020. The increase in Gazprom's production has accounted for most of the increase in global gas consumption in 2021," the CEO said.

    Gazprom's exports to non-CIS countries increased by 5.8 bcm in 2021, reaching the fourth-best result in the Company's history. Exports to Germany increased by 10.5%, Turkey by 63% and Italy by 20.3%, and the China share via the Power of Siberia pipeline is also steadily increasing. Thanks to these results, Gazprom's net profit should reach a record in 2021, and the dividend could be raised again. Gazprom thus remains a top pick in the energy supply sector, far from any political discussions about Nord Stream 2.

    Memiontec - Latest BOOT project starts delivering water

    Memiontec is an Asian specialty stock in the public water supply sector. For more than 20 years, the Company's focus has included all areas of water treatment and purification in Indonesia and Singapore and the People's Republic of China. In so-called BOOT projects (Build-Own-Operate-Transfer), the Company works closely with municipalities and district governments. The Group has a track record of more than 20 years with an established customer base in various industries.

    The Group's latest BOOT project is located in Pekan Baru, Indonesia. It started selling water before the end of 2021. The Pekan Baru BOOT project here refers to the supply of a drinking water treatment plant with a total capacity of 750 liters per second (LPS). The ramping phase has now started with the production and local sale of treated water in a quantity of 200 LPS. The contract also includes the rehabilitation and modernization of the existing water treatment plant. An additional 250 LPS water treatment plant is currently under construction and is scheduled for completion in 2026. In the 2019 Hutan Kota project, capacity has increased to 450 LPS, and three more asset-ownership projects may be completed in the next 25 years. They generate recurring revenue from the communities they serve.

    Memiontec has a strong track record in water treatment solutions and execution in Indonesia. The Group's backlog at the end of November 2021 was SGD 84 million. Chart-wise, the stock reached a high of SGD 0.90 in late summer and is currently trading at SGD 0.68. The share can also be purchased at a low cost with a limit in Germany.

    E.ON and Siemens Energy - Profiteers of the energy turnaround on the DAX

    E.ON and Siemens Energy are profiteers of the upcoming energy transition. When the coal phase-out is completed, and the last nuclear power plant is shut down in 2023, Germany's security of supply will be about the important alternative power generation concepts. Siemens Energy was spun off from the Siemens Group in September 2020 and listed separately. The portfolio includes power generation, power transmission and industrial solutions in both conventional and renewable energy. The renewable energy activities are managed by the subsidiary Siemens Gamesa. The share was a loser in the DAX 2021 with minus 30%. The current price of EUR 22.4 is back in the range of the initial listing and is only just above book value.

    In December, we first drew attention to the pending breakout of the E.ON share at EUR 10.76. Since then, the share has risen by 10%, and the 5-year sideways trend is now history. In 2021, the stock gained more than 30%, making it one of last year's DAX favorites. The chances for the utility giant are still good, as the stock is trading at a P/E ratio of only 13 and pays out a full 4.2% in dividends. Analysts see an average price target of EUR 13.28 in the consensus. As value stocks, E.ON and Siemens Energy are currently more a portfolio stabilization.

    With the current stock market correction in growth stocks, the focus is again more on value stocks. Gazprom, E.ON and Siemens Energy are profiteers of the energy transition and, at the same time, good dividend stocks. Due to its regional significance, Memiontec is an interesting addition with a green touch.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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