Closing FY22 on a strong FCF, 8.8% yield, and acceleration in hydrogen

Bekaert reported FY22 results in line with the guidance, underlined by better-than-expected FCF generation stemming from well-managed WC. The return to shareholders looks attractive with a yield at 8.8% based on €90m of dividend payments and the unexpected €120m of buyback (again). Given the health of Bekaert’s balance sheet, this return could have been higher but external growth remains a priority. The FY23 performance will depend on the rebound of the Chinese market. “New Bekaert” appears to b

Q3 22: huge pricing and lower volumes again; a FY22 guidance, at last

Bekaert’s Q3 trading update came in with a strong price effect, yet decreasing sequentially on tougher comps, and plunging volumes on par with the performance in H1 22. The company finally issued a guidance for FY22, topping our expectation on top-line growth but slightly falling short of our adjusted EBIT forecast. The company also confirmed its mid-term targets, which point to structural improvements and decreased cyclicality. 2023 is likely to be a good stress test.

Q1 22 figures showed astonishing pricing and weakening volumes

Bekaert’s Q1 trading update was above expectations on the back of a huge price effect offsetting the weak volumes especially in China. Despite the split between price mix and pass-through pricing being unknown, this once again confirmed the company’s good pricing power coupled with the positive trend in the ongoing portfolio rotation. The initial comments on the FY22 outlook call for an increase in our top line and EBIT expectations. Chinese lockdowns remain the key uncertainty.

Expectation-beating FY21 results, strong set-up to navigate the crisis

Bekaert reported a guidance-beating set of FY21 results on the back of revenue growth combining a +9% volume effect and a +19% price effect. Despite the seasonally lower profitability in H2 and cost headwinds, the company comfortably met its outlook, with underlying EBIT landing 50bps ahead of the AV estimate. The absence of guidance for FY22 reflects the high uncertainty on the market environment although the management has reiterated its mid-term outlook as a sign of confidence. A €120m buybac

H1 21: how to use cash?

Bekaert posted record H1 21 on every line. With a positive alignment of the volume rebound, skyrocketing raw material prices, and improving price/mix, the underlying EBIT margin landed at 12.4%. Management has started to weigh up M&A options to use the rapidly growing cash pile. Mid-term outlook was upgraded only two months after Bekaert’s CMD.

Takeaways from the CMD

Having postponed the date from last March to give the new CEO time to settle in, Bekaert finally held its CMD with an expected upgrade to FY21 guidance, and a mid-term outlook in radical continuation of its current strategy. The main limitations remain the uncertainties about raw material headwinds which could lead to sticky margins on the worst-case scenario. Uncertainty also surrounds M&A targets and the magnitude of cost reductions, while the most recent track record calls for management effe

The portfolio review is delivering on its promises

Bekaert posted strong results in every respect. Despite FY20 consolidated sales down by 13% yoy, profitability and cash generation came in at record levels (FY20: underlying EBITDA margin of 12%, FCF up by 8% yoy) and paved the way for a massive deleveraging (net debt down 40% yoy). The company’s new CEO shows confidence looking into 2021.

Profitability rises faster than top line

Q3 20 trading update: the top line was pushed by tyre demand while the margin outlook exceeded expectations. Consolidated sales recovered +24% qoq, while FX acted as a brake. Management resumed FY20 guidance, expecting the underlying EBIT margin to rise despite sales down yoy. As a result, the net debt/underlying EBITDA ratio should end the year below 2.0x.

Wires for tyres? Not this time!

Bekaert posted a 20.2% yoy revenue contraction, mainly affected by its 42.2% exposure to the tyre & automotive sector (-29.1% yoy) and 18.9% exposure to the Construction sector (-28.8% yoy). Limiting this contraction, the basic materials and energy & utilities sectors grew by 33.4% yoy and 10.6% yoy, respectively. This translated into a €87m EBIT (benefiting from lower overhead costs, temporary plant shutdowns, and an increased focus on higher margin activities). As of now, the company has not g

Solid margin growth in 2019

FY19 results show negligible revenue growth and double-digit growth in the underlying EBIT margin. Rubber Reinforcement, Speciality businesses, and BBRG have done well, while Steel Wire weighed. Additionally, the company achieved significant deleveraging. Bekaert aims to improve its profitability progressively during 2020-21 to achieve a 7% underlying EBIT margin.

Q3 19 trading statement: not so bad but a soft Q4 outlook

The Q3 19 top-line growth remains decent However, the tyre business is seen as slowing in Q4 We will downgrade our forecasts for FY19 and going forward

H1 19: fine, but the outlook is rather soft

H1 19 results show a decent level of growth with improved margins Rubber Reinforcement and BBRG have done quite well, while Steel Wire and Speciality Businesses weighed The outlook, albeit vague, suggests a slowdown in H2 We will fine-tune our numbers, with no big change to be expected though

Q1 19 trading statement: OK

- Q1 19 revenues sound, despite a favourable comparison basis - Steel wire market is still under pressure - Tyre and construction markets are doing well - No change to our numbers on the release

Solid organic growth in Q3 led by pricing

In a short trading update, Bekaert reported first nine months consolidated sales of €3,227m, up +5%, while organic growth was +10%, led by volumes (+3%) but mainly price increases and a favourable mix (+7%). In Q3, volume growth moderated to +1.4% yoy as strong demand from the automotive and construction markets were partly offset by weaker industrial steel wire markets, reflecting the impact of rising trade tensions in the global economy. The aggregate effect of passed-on wire rod price incre

Profit warning harms the company's margin expansion story

Bekaert issued a profit warning on its FY18 profit margin which is likely to be substantially lower than expected (20% below market consensus) while the FY18 EBIT should be lower than last year’s. The company cited many reasons including pricing pressure, the slow recovery of Bridon and changes to trade policies. The warning is disturbing and leadd to a lack of visibility.

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PetroTal (PTAL LN) - Paddington would be proud – initiating coverage

PetroTal is a London and Toronto-listed E&P company, holding a 100% interest in the Bretana field, onshore Peru. This delivered production of 19.0mbbl/d in Q2 2023, supporting strong cash flows for the company based on its established oil export routes, onshore cost profile and fiscal terms. On the back of these cash flows and a healthy balance sheet, PetroTal has now established returns to shareholders. As such, the stock offers a strong prospective yield of over 10%, alongside production grow

Independent confirmation of c.1bn barrels liquid hydrocarbons at Kodiak

Chariot Limited (AIM: CHAR): Imminent partner in Morocco

• The US$2.7 mm cash position at the end of June is in line with our expectations. • Although inflation across the industry and rig availability had complicated and delayed the finalization of a farm-in agreement for Anchois in Morocco, negotiations on partnering are in the final stages. A partner could be announced very soon. • Progress has been made across the portfolio. Onshore Morocco, permitting is under way with drilling now expected to start in early 2024 with up to four wells. Prospects

LIBERUM: Trident Royalties*: Utah lithium royalty acquisition

Interim Results

Diversified reported strong interim results, with production that was marginally below our estimate more than outweighed by tight cost control to deliver EBITDA ahead of our forecast; we broadly retain our FY23 estimates.

LIBERUM: Trident Royalties: Benefitting from rising rate environment

Bushveld Minerals: Fully integrated vanadium exposure with potential for operational turnaround & share price rerating

We initiate coverage of Bushveld Minerals (“BMN”) with a price target of GBp9/sh, implying 339% upside to the current price. BMN is a fully integrated vanadium producer that operates mines and plants in South Africa, which we estimate will produce 3,700t of vanadium in 2023E, accounting for >3% of global supply. After operational difficulties, pricing headwinds, and associated balance sheet stress led to a steep de-rating in BMN shares, we expect a rerating to be driven by growing production and

PetroTal (PTAL LN) - Production and operations update

PetroTal has announced production numbers for July and August, maintaining full year guidance, alongside providing an operational update.

Bushveld Minerals: Investment agreed to strengthen balance sheet

Bushveld Minerals (“BMN”) has announced that it has signed a binding term sheet with a South African investment group, Southern Point Resources (“SPR”), that should provide a strengthened balance sheet and greater financial flexibility through cumulative funding of up to US$69.5m-US$77.5m. As part of the funding package, BMN will sell down 50% of its interest in the Vanchem plant and its 64% interest in the Mokopane deposit for a total consideration of US$25m. In our view, this package represent

Jersey Oil & Gas - Interims

Jersey Oil & Gas released its interim results for the period ended 30 June 2023 indicating that it had a period-end cash position of £5.6M, with no debt. The company stated that further cash receipts amounting to $9.4M will be due on completion of the FPSO acquisition agreement and $12.5M on Buchan FDP approval (from NEO Energy, pursuant to the farm-out agreement).

Interim results: solid performance amid challenging macro

The quality of CAML’s asset base came to the fore yet again in H1 2023 as the group maintained an impressively wide EBITDA margin despite the twin challenges of weaker base-metal prices and inflationary pressures on costs. The robust financial performance enabled CAML to declare a 9p interim dividend, maintaining its position amongst the top yielders in the junior mining sector. Capex requirements should reduce materially from next year as the project to transition to more flexible and sustainab

IOG (IOG LN) - Operational update

Blythe H2 well production update. IOG has released an operational update. This reports that gross production from the Blythe H2 well declined from 27.7mmcf/d to 21.2mmcf/d over the course of August, from an initial stabilised rate of 32mmcf/d in early July, with an average rate of 17.8mmcf/d gross achieved over August due to a planned one-week shutdown of the Bacton terminal.

Introduction of Vanchem partner alleviates pressure