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Fortum surprised the market with a new cost reduction plan and a 33% reduction in its growth capex program through to 2025 from €1.5bn to €1bn. This programme has been welcomed by the market and is certainly in line with what investors have been hoping for in recent quarters for the sector, moving away from growth stocks with high capex, which are now at the bottom of the list in terms of performance.
Companies: Fortum Oyj
AlphaValue
A good first half for the group, which benefited from a positive price effect with an average price 50% higher than last year thanks to hedged contracts at high prices. The deconsolidation of the Russian assets has been well absorbed despite a €1.9bn impairment while the group intends to take legal action by 2024.
Fortum reported a good start to the year with EBITDA up by 69% to €891m (cons €722m) and €781m excluding Russia. The group confirmed the future deconsolidation of its Russian assets in the Q2 with an expected impairment charge of €1.9bn after FX effects.
2022 could have proven to be the death warrant for Fortum amidst the costly losses relating to Uniped leading to its deconsolidation but also, to a lesser extent, its exposure to Russia and the related impairments. However, Fortum managed to get back onto its feet and deliver more-than-acceptable results versus the market expectations, driven by both higher commodity prices and power generation, and managed to pay a dividend this year.
Fortum reported robust growth in the third quarter, amidst the deconsolidation of Uniper and the full exit from the Russian market. The fears concerning volatile energy markets and margin call requirements didn’t prevent the group from recording a strong performance, with a 14.5% increase in EBITDA to €1.54bn. Caution is however required for the coming months given the prevailing volatility in the commodities markets.
While Fortum’s results are severely affected by Uniper’s headwinds, leading to a massive loss of €11.6bn at the operating profit level, the latter must not mask the solid resilience of Fortum stand-alone. We note a particularly good performance of Generation and Russia vs the first quarter. However, the Q3 is at risk given current energy prices and the recognition of further Uniper losses from the gas curtailment. The worst might be yet to come.
Fortum reported a complex set of Q1 22 results which were littered with a plethora of one-off and extraordinary events, preventing us from drawing clear conclusions as to the health of the underlying business. No matter; in the current environment, the really big news was the announcement of a ‘controlled’ exit from Russia – although it remains to be seen what ‘controlled’ means…
Unfortunately for Fortum, a beat on the FY21 results now takes a back seat to Russian-led uncertainty. In particular, the group confirmed a €5.5bn book value of Russian assets, and a 185TWh/year of Russian long-term gas contracts (50% of Uniper’s contracted volumes), but uncertainty remains on the risks related to financial commitments, potentiality and timing of impairments, margin call risks, as well as the one which will bear the costs in the case of gas shortages.
Fortum missed our expectations and consensus estimates for the 9M 21 results, while the yoy figures remained very strong: comparable EBITDA is up by 102% and comparable EBIT multiplied by 3.5x to €1.47bn. The company particularly struggled to manage a very volatile gas market environment and surging power prices, impacting its funding requirements. However, the full-year outlook was reaffirmed and the dividend policy is intact. Cautious view confirmed.
What if the best solution for the energy transition were … nuclear power? Nuke is back at the heart of political debates in the context of the current energy crisis and massive but insufficient investments in renewables. This short review provides an overview of nuclear power in Europe and speculates on options. This ‘nuke optionality’, hinging on a favourable green taxonomy, is a game-changer for EDF, Centrica, Fortum but also Engie, Iberdrola, Enel and EDP.
Fortum has reported a good set of first half 2021 figures, slightly better than expectations and benefiting, in particular, from higher achieved power prices and volumes. Moreover, as a quarter of FY21 production remained unhedged (but only 10% for Uniper), we are confident on the H2 outlook. Closing of the Exergi sale expected before 2022. In our view, these elements are already priced in. Neutral recommendation confirmed.
Fortum has announced the sale of its 50% ownership in Stockholm Exergi for €2.9bn to an investor consortium led by APG, a Dutch pension fund. With a significant premium compared to our valuation, the deal will allow the group to deleverage and make its carbon footprint greener, as these two metrics worsened after the consolidation of Uniper. Is this enough to accelerate the asset rotation and a total squeeze-out of Uniper ?
Fortum released a solid set of Q1 21 figures. The strong performance of Uniper combined with positive price effects in the Nordics were the main drivers. As a result, net profit soared to €837m and beat expectations by 8%.
The group remained highly impacted by the low level of prices over Q4 20, resulting in a c.30% drop in the full-year operating profit (excluding Uniper). However, on the back of the particularly cold seasonal temperatures, prices are back to normal levels in the first months of the year. We confirm our negative recommendation.
EBITDA came in at €512m and operating profit at €207m, both below expectations. This is mainly due to the particularly low electricity prices in Q2 20, due to weather conditions – but the group was partly protected by its hedging strategy. This confirms that keeping its financial strength (with a minimum BBB rate) is the first short-term target. A FY20 guidance has still not been mentioned (due to the consolidation of Uniper and the COVID-19-related uncertainties).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Fortum Oyj. We currently have 93 research reports from 2 professional analysts.
I3 has released its full year 2023 results, demonstrating the cash generation capability of its business, and funding position going into the increased planned 2024 CAPEX programme, where new drilling is expected to begin in June.
Companies: i3 Energy Plc
Zeus Capital
Q1/24 sales volumes averaged 2,669bopd, a 2% QoQ and 8% YoY reduction (Q4/23: 2,736bopd, Q1/23: 2,899bopd) as Trinity continues to offset natural production decline through an active programme of workovers, recompletions, and swabbing. Trinity has reiterated its 2024 sales volume guidance of 2,600-2,700bopd (a c5% YoY reduction at the mid-point). Cash at 31 March 2024 was US$8.6m (31 December 2023: US$9.8m). Trinity has also provided an update on the Jacobin-1 well, where the forward plan is to
Companies: Trinity Exploration & Production Plc
Cavendish
Seplat delivered an encouraging operating performance in 1Q24 including production of 49.3kboed, towards the upper end of guidance (44-52kboed). All current guidance was maintained but good progress on the ANOH export infrastructure and an earlier than expected resumption of exports through Zone 6 of the Trans Niger Pipeline improve confidence that guidance will be at least met. Financial performance for the quarter was skewed by a substantial underlift, FX effects, and a high deferred tax charg
Companies: Seplat Energy PLC
Capital Access Group
• FY23 production was in line with our expectations and the YE23 cash balance of US$12 mm had been reported previously. • The highlight of the announcement is the discovery by the CN-8 well of multiple hydrocarbon-bearing intervals. 14 feet of net oil pay were encountered in the Carbonera in an area that was not considered prospective. The pay zone is a clean sandstone exhibiting consistent 25% porosity and high resistivities. The well has been put in production at a gross rate of 330 bbl/d (165
Companies: Arrow Exploration Corp.
Auctus Advisors
Serabi Gold (AIM: SRB, TSX: SBI) have released their FY2023 annual results today, delivering on what has been a strong year back to profitability. Overall, earnings have largely tracked our forecast. The company has also announced a debt refinancing as a post year end balance sheet event.
Companies: Serabi Gold PLC
Tamesis Partners
Arrow has released its 2023 results, alongside updates on its ongoing drilling programme in Colombia. These help demonstrate the progress made on production and cash flows as a result of the campaign so far, with drilling activity ongoing throughout 2024.
88 Energy, Falcon Oil & Gas, Afentra, Touchstone Exploration, Trinity Exploration & Production, Sound Energy, Serica Energy, Star Energy, Southern Energy Corp, Ithaca Energy, i3 Energy, Equinor ASA, OKEA ASA, Aker BP, Galp Energia, Var Energi, TotalEnergies, Eni SpA, Repsol SA, ExxonMobil, Chevron Source: FactSet, weekly change 22/04/24-26/04/24 Oil rose this week amid signs of a tightening physical market while traders continue to assess lingering Middle East risks. West Texas Intermediate edge
Companies: 88E FOG TXP AET TRIN
Beowulf is an AIM/Spotlight-listed developer of two flagship assets; Kallak, a high-grade iron ore project in Sweden and the Grafintec Graphite Anode Materials Plant. The Company's Kallak North project has the potential to produce 2.5mtpa of high-grade, premium iron ore concentrate suitable for the growing green steel industry in Sweden. Additionally, Grafintec's Anode Material Plant Project is well positioned to serve the growing EV battery supply chain in Europe, whilst supporting EU plans
Companies: Beowulf Mining PLC
SP Angel
i3 Energy announced that its 2024 guidance consists of expectations to drill 10.5 net wells (7.6 net wells in Central Alberta, 1.9 net wells in Simonette and 1.0 net wells in the Clearwater play) with 85% of capex allocated to the second half of the year. Total capex expenditure for the year is guided at $US 50.9m. The company indicated that it intends to commence pad drilling of its Montney acreage in Q1 2025 and we perceive the company is bulking up for that significant growth opportunity for
WHIreland
Companies: One Media iP Group PLC (OMIP:LON)Trinity Exploration & Production Plc (TRIN:LON)
Ariana reported an all-share merger with Rockover Holdings last Thursday (25.04.2024). We today provide some more context on our thoughts on the proposal. The first thing to say is that, in our view, Ariana has acquired a low-risk project (open pit, JORC Resource, exploration potential, positive PFS with a good return and amenable metallurgy); this is no greenfield project with attendant exploration risk – it has demonstrated value. We also note that the resource and PFS are calculated at $1,650
Companies: Ariana Resources PLC
Trinity has announced a c28% reduction to its 2P reserves following a YE23 review. Despite the decrease in the Company’s 2P reserves, Trinity’s core business remains robust, with a reserves/production ratio of >12.5 years at YE23. Whilst there is significant potential for growth within the current portfolio, this will be difficult to unlock from the current balance sheet and we believe further financing will be required. We update our target price to 76p (from 202p), a c85% premium to the curren
Canaccord Genuity
Companies: GAL BEM AAU SHG GGP AAL SLI 1SN EEE TECK
Companies: AURA SYA AAL FAR EEE
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