February 1st, 2024 | 07:30 CET
Top news: Plug Power, TUI, Prospera Energy
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
Prospera Energy: Targets achieved and oil price rising
Prospera Energy's share price is currently showing signs of rising. The oil price has left its downward trend, and a barrel of WTI is trading above USD 77 again. At the same time, Prospera Energy is increasing production and drilling new wells. Prospera Energy's turnaround is going according to plan. A few days before the end of 2023, the ninth horizontal well in a heavy oil reservoir was completed and put into operation. The production capacity of the last new wells is not yet included in the production capacity of 1,800 barrels per day at the turn of the year. Prospera's total production capacity in January was already 2,200 barrels per day.
The Canadian oil producer is optimistic about the new year. Production volumes are also set to increase significantly in 2024. The aim is to increase production to 5,000 barrels per day by the end of the year. In addition, new methods are to further increase the efficiency of existing wells. Enhanced Oil Recovery (EOR) processes are to be tested to increase the oil's flow rate. This should enable Prospera to increase sales and profits significantly in the current year. The share is currently trading at CAD 0.85. In February 2023, the share was already trading 100% higher. Back then, the production volume was significantly lower. Prospera is now in a much more solid position, continues to grow, and is valued at only half the price.
Plug Power: Buy anti-cyclically now?
After shocking its shareholders with a significant capital increase, causing the stock price to collapse, Plug Power has triggered reactions from analysts. The response by BMO Capital Markets is particularly drastic. **The analysts have downgraded the hydrogen specialist's shares to "Underperform" and slashed the price target from USD 3.50 to USD 2.50. Jefferies is somewhat more optimistic. Their analysts have a price target of USD 4 for the Plug Power share. This is still enough for a "Hold" rating.
Now that more and more analysts are turning bearish on Plug, the anti-cyclical entry becomes interesting. However, a lot of courage is needed. It is not yet clear when the capital increase will be completed, as the new shares will be sold via banks and not placed in a single transaction. The duration and price are, therefore, uncertain. There is hope that Plug Power is expecting debt financing in the billions. This is expected in the third quarter. However, Plug Power must also meet equity requirements for this. The capital increase must, therefore, be completed, and the Company must not burn too much capital in the first half of the year.
TUI: Soon to be climate-neutral?
TUI has been successfully involved in the booming cruise business for years. The subsidiary TUI Cruises developed positively in 2023. Last year, the occupancy rate of the Mein Schiff fleet reached the record level of 2019 again, definitively leaving the impacts of the pandemic behind. TUI Cruises is expecting new record figures for 2024. However, the huge ships are considered to be polluters. To change this, TUI wants to switch to environmentally friendly energy. In the summer of 2024, the first cruise ship powered by methanol is expected to be launched. For this, the tourism group plans to collaborate with the Hamburg-based energy company Mabanaft, which will ensure the fuel supply. Initially, the fuel will still be conventional methanol, but TUI aims to transition to climate-neutral green methanol in the future.
The TUI share has lost around 10% of its value this year. However, after the share price jump of around 50% between October and December, a consolidation is certainly appropriate. Analysts are currently holding back. The last "Buy" recommendation was issued by Deutsche Bank in December 2023. The analysts see TUI on the road to recovery and have set a price target of EUR 10.50.
It will undoubtedly be some time before TUI can offer climate-neutral travel. Nevertheless, at least the tourism group is making an effort. Prospera Energy, with a market capitalization of just CAD 34 million, is becoming increasingly attractive. The Company is delivering on its promises, and the rising oil price is playing into its hands in terms of growth. At Plug Power, one must continue to expect significant price jumps - up and down. The financing problems will continue to affect the Company and investors in the current year.
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