March 11th, 2022 | 11:35 CET
Saturn Oil + Gas, BYD, Bayer - Winning with strong companies
Table of contents:
"[...] 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
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Saturn Oil & Gas - The producer profits twice over
Of course, the parabolic rise in the prices of the various types of oil is grist to the mill of the dwindling number of pure oil producers. Last June, Canadian energy company Saturn Oil & Gas seized the opportunity to expand its production quotas by a factor of 20 with an acquisition, which was clearly reflected in the third quarter figures and EBITDA of CAD 17.2 million. On the occasion of the IIF Forum held in February, the Company management formulated the target of ramping up production to 8,200 barrels in the medium term.
In mid-February, the CEO of Saturn Oil & Gas, John Jeffrey, again proved to have a good nose. With oil prices still well below USD 100, the Canadians took over other oil and gas assets for a sum of around CAD 8.3 million. The assets are located in the Plato area of west-central Saskatchewan and complement the Company's existing Viking assets. The strategic acquisition includes the production of 240 bbl/d of light oil in numerous light oil drilling locations with reduced risk.
Most recently, the Company announced it had completed the previously announced bought deal offering and a concurrent non-brokered private placement. Under the terms of the two offerings, the Company issued shares at a price of CAD 3.00, raising gross proceeds of CAD 20,613,000 million for the Company. This will be used to fund the completed strategic acquisition. Other uses of funds include drilling and completion, working capital and general corporate purposes. Saturn is significantly undervalued compared to its peer group, with a current share price of just under CAD 3.
BYD - Heavy sell-off
The shares of the electric car company BYD have been severely punished in recent weeks. In addition to the sell-off due to the currently existing geopolitical risks, a personnel matter also caused great uncertainty among investors. It became known that BYD founder and president Wang Chuanfu surprisingly resigned as chairman of Hangzhou BYD Auto. Tian Chunlong will take over the position as Chairman of Hangzhou BYD Auto in the future, and Wang Bo will take over as the new director of BYD's subsidiary, the statement added. BYD explained the recent personnel changes as "streamlining the administrative process" and helping the company "carry out various businesses." However, the personnel matter would have no impact on operations or equity structure. Business development also remains intact, he said.
On the other hand, news that the Warren Buffett-funded company plans to expand production capacity in India was positive. "India is a strategic hub for us to serve the South Asian market," said Ketsu Zhang, executive director, BYD India Private Limited. From a chart perspective, the stock is severely battered, with a price of EUR 22.56. Holding the critical support area around EUR 20 now appears to be necessary.
Bayer - Relative strength
In contrast to the broad overall market, Bayer shares have been crisis-resistant for weeks and could generate a new buy signal with a sustained breakout above EUR 55. Bayer CEO Werner Baumann already commented when announcing the annual figures: "We have grown significantly. We have strengthened our innovation pipeline. And we are making progress with our sustainability goals. All this shows: Bayer is on the right track!"
The sale of the Environmental Science Professional (ESP) segment to financial investor Cinven for USD 2.6 billion has enabled the pharmaceutical and agricultural giant to fill its coffers on the one hand, while on the other hand allowing the Leverkusen-based Company to focus more strongly on its core business. The stock received a tailwind from a study by the major Swiss bank UBS, which continues to give Bayer a "buy" rating and even raised the price target from the previous EUR 85 to EUR 90.
Due to the worsening situation in Ukraine and the sanctions against Russia, the oil price rose like a flagpole. The primary beneficiaries are oil producers such as Saturn Oil & Gas. The current situation at pharmaceutical and agricultural giant Bayer also looks promising. In contrast, the technical picture of BYD is tarnished.
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.
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