September 28th, 2021 | 13:31 CEST
Nel, JinkoSolar, Saturn Oil + Gas: It looks good!
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"[...] The Oxbow Asset now delivers a substantial free cash flow stream to internally fund our impactful drilling and workover programs. [...]" John Jeffrey, CEO, Saturn Oil + Gas Inc.
Saturn Oil & Gas - Oil: bull market meets P/E 1
Eric Nuttall is convinced oil is in a multi-year bull market. He is a senior partner at Canadian asset manager Ninepoint Partners and sees a rosy future for oil stocks. This is because the fear that demand has peaked - for example, due to the promotion of electric mobility - would, in reality, lead to the world heading for an oil shortage, says the commodities expert in an interview with Bloomberg. Globally, too little would be invested in the exploration of new oil fields. If this is true, the champagne corks should pop at Saturn Oil & Gas - and also at its shareholders.
The Canadian oil producer has just massively increased its oil reserves.
Thanks to the acquisition of the Oxbow oil field - on outstandingly favorable terms - the Company has been able to increase its production by 2,000% this year. Just recently, an independent appraiser confirmed reserves of 43.3 million barrels of oil equivalent (BOE). That translates to a value of CAD 435.7 million or CAD 0.87 per share. Saturn had acquired the assets in June 2021 for a net CAD 76.8 million. The price was agreed last year when the oil price was down due to the Corona pandemic. Now not only the oil should bubble up, but also the earnings. Saturn Oil & Gas aims to generate a net operating income of around CAD 70 million annually. Measured against the current share price, the stock is thus valued at a price-earnings ratio of just over 1. Too little, say the analysts of the German GBC Research. Their target price is CAD 0.46. Saturn shares are currently trading at around CAD 0.18.
Nel - New order creates a good mood
Nel shareholders finally had reason to rejoice again last week. On the one hand, the rise in the share price gave hope for a turnaround. On the other hand, there were good reasons for the increase; the Norwegian hydrogen specialist reported an order again after a long time. The Company received an order from the British utility SGN to deliver a 5 MW alkaline electrolyzer. SGN is thus planning the first 100% hydrogen-based home heating system on the east coast of Scotland to supply up to 900 households. The contract includes installation and commissioning, as well as longer-term service and maintenance. The electrolyzer will produce up to 2,093 kg of green hydrogen per day. The system will be powered by a nearby offshore wind turbine and grid electricity. This announcement was well received, and not just by investors. Barclays raised its price target for Nel shares to 25 Norwegian kroner and recommended "overweight."
JinkoSolar - New momentum from IPO of the subsidiary?
Not only the federal election could bring new momentum for the shares of JinkoSolar. The Chinese manufacturer of solar modules and cells is preparing the IPO of its subsidiary Jiangxi Jinko. While this has been known for some time, it is now becoming concrete. The IPO is to take place on the Sci-Tech Innovation Board of the Shanghai Stock Exchange (SSE). In addition, the first figures of the subsidiary have been published. According to these, Jiangxi Jinko is expected to generate sales of between 23.6 billion and 23.8 billion yuan in the first nine months of the current year. In the process, the net profit of the JinkoSolar subsidiary is expected to be between 625 million and 655 million yuan. Even after the IPO, JinkoSolar intends to retain a majority stake in Jiangxi Jinko.
Investors seem to have a renewed appetite for renewable energy and electric mobility-related stocks like JinkoSolar and Nel. It is likely that this will become greater as a result of the outcome of the federal election. For many, the surprise could be great if oil suddenly becomes scarcer due to less exploration. Saturn Oil & Gas is prepared for this and is very attractively valued.
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