06. September 2021 | 13:40 CET
Steinhoff, Saturn Oil + Gas, NIO - Spectacular transformation
A lot happened in the global capital markets last week. In addition to the OPEC+ meeting, where it was decided to turn on the oil taps further, disappointing labor market data again determined the direction of stock prices. Several second-line stocks, likely to face serious revaluations due to strong quarterly figures or new corporate developments, caused a furor. Position yourself now!
time to read:
ISIN: STEINHOFF INT.HLDG.EO-_50 | NL0011375019 , SATURN OIL+GAS O.N. | CA80412L1076 , NIO INC.A S.ADR DL-_00025 | US62914V1061
"[...] 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
Cheapest producer - still
According to the Organization of Petroleum Exporting Countries and its allies, the oil production rate is expected to be raised by 400,000 barrels per day in October due to the economy's recovery. However, due to the spread of Delta and some uncertainty, the oil cartel plans to coordinate monthly to make downward adjustments if necessary. With the acquisition of light oil deposits in the Oxbow area of southeastern Saskatchewan, one of North America's leading oil producers, Saturn Oil & Gas, is also raising output twentyfold. Up to 7,000 barrels a day can now be brought to the surface by the transformed company.,
The figures for the second quarter, published last week, now show the enormous potential in black and white for the first time. The new Saturn shows a daily revenue of CAD 520,000 - reflected in free cash flow of CAD 265,000 per day. With a highly favorable purchase price of only 1.4 times cash flow compared to the industry average, the Canadian company secured a production area of almost 280,000 net acres, financed in a combination of debt and equity. The debt portion, including interest, is expected to be repaid by the mid of 2023. The sale of large tranches of production for the next four years has already secured the repayment of the debt burden. Moreover, Saturn Oil & Gas can generate further cash flow by optimizing and completing over 550 existing wells.
After repayment of the loan, the management around CEO John Jeffrey is already planning further acquisitions. If one calculates only the secured cash flow, one arrives at a price-earnings ratio of 1 at a share price of CAD 0.17. In the peer group, P/E ratios of over 5 are currently paid; the industry giant BP is valued at 7 based on the year 2022. The drastic undervaluation is now slowly coming to the surface. With high volumes, the share has already risen in the past trading week. Saturn Oil & Gas certainly still has plenty of potential.
The Steinhoff share also shot up sharply in recent days. The market is waiting for a decision in the settlement process. However, this has now been postponed again to September 9. At the first part of the creditors' meeting in Amsterdam on Friday, no final agreement was reached on the settlement proposal. However, there were positive signals that the current proposal has a good chance of being accepted by the majority. The settlement marathon will continue on Monday in South Africa before a further round is scheduled for September 8 in the Netherlands. Even if the settlement is accepted, there are still glaring risks to the continued existence of the Group. Steinhoff is and remains a gambling stock.
NIO is on the lookout for a bride
The sports car manufacturer Lotus has ambitious goals to advance the electrification of its vehicles. To achieve them, it now opened the door wide for Chinese electric carmaker NIO. The electric car startup invested, through its VC arm, in Lotus Technologies, a newly founded unit of the car manufacturer, which is already part of the Chinese Geely Group. The parties agreed not to disclose the price or amount of the investment.
However, what was revealed is that Lotus is building a new manufacturing facility in Wuhan that will incorporate the world's most advanced manufacturing technologies to become a global center of excellence for Lotus' premium lifestyle models. Covering an area of over one million square meters with an investment of over RMB 8 billion, the plant has a production capacity of 150,000 vehicles per year. The NIO share is turning upwards again after a setback and successful tests of the support area at around EUR 37 and offers an interesting trading opportunity at the current level.
Due to the successful acquisition in the second quarter, the Saturn Oil & Gas share still offers considerable potential compared to the industry average. Even if the settlement proposals are accepted at Steinhoff, utmost caution is still required. In contrast, NIO provides an attractive entry opportunity at current levels.