March 25th, 2024 | 06:45 CET
Super Micro Computer is soaring; when will Saturn Oil + Gas and Bayer follow suit?
In the rapidly advancing world of technology, Artificial Intelligence (AI) is currently stealing the show, overshadowing traditional industries with its boom on the stock markets. The example of Super Micro Computer is a good illustration of this. While investors are focusing on promising AI pioneers, other sectors are struggling to keep pace with this fast-growing industry. Even companies that are earning good returns are currently struggling. In this article, we shed some light on Saturn Oil + Gas and Bayer to see whether the lid will eventually blow off.
time to read: 5 minutes
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Author:
Armin Schulz
ISIN:
SUPER MICRO COMPUT.DL-_01 | US86800U1043 , Saturn Oil + Gas Inc. | CA80412L8832 , BAYER AG NA O.N. | DE000BAY0017
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
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Super Micro Computer - Taking a breather after the rally
Super Micro Computer, a leading provider in the server manufacturing industry, is benefiting greatly from the continued growth in the AI sector. With rapid development and a share performance that recently surpassed the USD 1,000 mark, the Company is highly rated by analysts, including a recommendation from Bank of America with a target of USD 1,280. Super Micro's highly adaptable modular architecture, a key factor in its competitive advantage, enables the Company to respond quickly to new technology trends and deliver them to customers.
Partnerships with key players such as Nvidia, Intel and AMD strengthen Super Micro's position in a market characterized by expansion forecasts from USD 39 billion to USD 200 billion by 2027. While the high volatility of the stock market cannot be ignored, nor a recent capital increase that led to a temporary drop in the share price, the outlook for Super Micro remains positive. The strategic use of capital for research and development and the expansion of production capacity will strengthen the Company's leading market position.
In the last quarter of the 2024 financial year, the Company's net sales increased by an impressive 103% to USD 3.66 billion, doubling the previous year's figure of USD 1.8 billion. At the same time, gross profit rose by 67% from USD 337 million to USD 564 million. However, it should be noted that the gross margin fell from 18.7% to 15.4%. Diluted earnings per share amounted to USD 5.10. The forecast was revised upwards to USD 14.3 to 14.7 billion in revenue. The share, which reached a high of USD 1229 on March 8, has since fallen to USD 855 as a result of the capital increase and profit-taking. The share is currently trading at around USD 965.
Saturn Oil + Gas - 4th quarter figures presented
Saturn Oil & Gas has not yet broken free. The Company has grown strongly in recent years and is currently focusing on debt reduction. There are several factors here that should have a positive impact on the oil price in the long term. Firstly, there are the oil multinationals that are no longer investing in the development of new oil wells. This will reduce supply over time. Secondly, the EU's strict ban on combustion engines is off the table. This may also be partly responsible for the fact that the price of crude oil has recently risen to over USD 80. This is good news for Saturn, as the Company expects an average price of USD 75 per barrel of oil.
On March 12, the Company announced its Q4 2023 figures, in which record production of crude oil and natural gas was achieved, averaging 26,891 boe/d (barrels of oil equivalent per day). Of this, 82% was oil and the remainder NGLs (natural gas liquids). This represents an increase of 115% compared to the previous year. Adjusted EBITDA amounted to CAD 100.1 million, an increase of 61%. A record quarterly figure of CAD 80.2 million was also achieved for adjusted cash flow from operating activities, which was also up by a whopping 58%. Capital expenditure amounted to CAD 57.2 million, which was used to drill a total of 19 horizontal wells.
At the end of 2023, net debt amounted to CAD 460.5 million. This corresponds to 1.4 times the annualized adjusted cash flow of the 4th quarter. In the current year, the Company intends to repay CAD 180 million and has nevertheless planned a considerable investment program. The budget is around CAD 145.6 million, with which up to 61 additional drill holes are to be drilled. To finance this, the Company has completed a private placement of CAD 50 million, with major shareholders such as GMT Captial Corp. also participating. Those who would like to learn more can take a look at the recent study on researchanalyst.com or the Company presentation from the 10th International Investment Forum. The share recently broke through the important CAD 2.50 mark and is now trading at CAD 2.53. However, this is still a long way from analysts' price targets, which average CAD 5.15.
Bayer - No solution in sight yet
Bayer AG recently published its annual results, which paint a mixed picture and leave investors undecided. After a tough year in which the stock fell sharply, the latest report offers little hope for improvement. In the financial year 2023, sales fell to EUR 47.637 billion, a decline of 6.1% compared to the previous year. EBIT fell just as sharply, dropping from around EUR 7 billion in 2022 to EUR 612 million in 2023, a fall of 91.3%. This led to a net loss of EUR 2.99 per share compared to a profit of EUR 4.22 per share in the previous year.
For fiscal 2024, Bayer expects EBITDA to be 4% to 9% lower on sales of EUR 47-49 billion. The dividend was radically cut to EUR 0.11 per share. In this way, management intends to reduce debt, which amounted to around EUR 34.5 billion at the end of 2023. This figure is to be reduced by at least EUR 1 billion in the current year. At best, by EUR 2 billion. The Company is currently under pressure not only due to financial challenges but also due to ongoing legal disputes. Despite some recent successes in court cases, there is no sustainable solution in sight for the lawsuits that have arisen and are still outstanding. New legal approaches are intended to help reduce these risks.
However, these are legal manoeuvres to avoid claims for damages. The Company is likely waiting to see the results of other companies that have already taken this route. According to the CEO, there will be no capital increase, and a split is currently not on the table either. Recent progress in precision oncology therapies and partnerships to improve diagnostic tests, which are signs of potential future growth, have been positive. The share still lacks the decisive momentum to turn the tide. The share is currently trading at EUR 26.71.
A performance like that of Super Micro Computer is rare to see. The Company has seized the opportunity and launched a capital increase, which should have a positive effect for the future. Saturn Oil & Gas is earning significant profits and has grown strongly. This year, debt is to be significantly reduced once again, thereby increasing the value of the share. Oil prices above USD 75 provide an additional boost. At Bayer, hopes were pinned on the Capital Markets Day. However, CEO Anderson was unable to present any concrete new strategies. The dividend was slashed, and until there is a solution to the glyphosate issue, the share will likely continue to struggle.
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