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On the occasion of yesterday’s first-ever Capital Markets Day, the group presented its strategy and elaborated on the new growth investments for the years to come. Some of these are under way, the outcome of which will have to be evaluated in terms of opportunity and risk. That said, we remain a bit cautious in the short-term on manganese and nickel, where prices are still depressed owing to the tough macro environment.
Companies: Eramet (ERA:EPA)Eramet SA (ERA:PAR)
The trading statement for the Q3 23 showed the expected sharp contraction in sales, leading to yet another reduction in the group’s guidance (the fourth in a row).
No uptick in prices is expected for Q4.
Lower input costs are helping, but the fall in profits is spectacular.
We will not change our estimates materially (at least for FY23) since we had expected this negative development.
In our view, there is room to improve the group’s communication.
A military coup is going on in Gabon, a key country for Eramet
This is where the group mines…100% of its manganese, its biggest segment
The outcome of the coup is obviously uncertain, but the negative impact could be massive
In any case, expect at least disruptions for this business
We will put a discount on the segment, implying a significantly reduced target price given its size
Companies: ERA ERA AAL FRG BHL UFO PREM
The H1 23 results were significantly below market expectations.
Prices were the main trigger for these weak numbers, even if volumes were also down.
The FY23 “adjusted EBITDA guidance has, again, been revised downwards despite the strong performance in Weda Bay (38.7% held) which hides a pretty tough year for the rest of the business”.
We will revise downwards our numbers for FY23 substantially, as well as going forward in all likelihood.
As expected, revenues in Q1 23 were significantly down on both a yoy and sequential basis. This is mainly due lower prices and somewhat lower volumes in manganese. As a result and considering the current price levels, the group has revised its FY23 EBITDA guidance downward by some 9% on an adjusted basis. We still do not appreciate the new reporting of the group (i.e. adjusted vs reported) which does not help transparency in our view.
Eramet released an expected set of results for FY22, which showed a higher level of profitability and a significant decrease in indebtedness. Looking forward, the context is less favourable due to declining prices but no one expected such operating conditions to last forever. The outlook suggests that our numbers are too high and we will amend these at least for FY23 while we will integrate the first benefits of the Lithium project, whose commissioning is expected in FY24.
The group’s revenues were firmly up in Q3 on a yoy basis.
They nonetheless showed a significant slowdown qoq, mainly due to prices, which should remain under pressure in Q4, leading the group to lower its EBITDA guidance for FY22.
We will fine-tune our numbers and valuation to the downside, even if the group’s new projects look promising.
The group released a strong set of results for H1 22
These were supported by volumes, but most of all prices
The latter should be less favorably oriented in H2
The group marginally increased its FY EBITDA target (from €1.5bn to €1.6bn)
We will fine-tune our numbers, with no big changes expected
Our TP may look optimistic given the less favorable momentum on commos writ large, even if we feel comfortable with our recommendation
Prices were strong across the board in Q1.
The operational performance was also satisfactory.
The group has raised its FY22 guidance.
We will upgrade our numbers and price target after this release.
The FY21 results came in rather above the group’s guidance.
The production of manganese ore, the exports of nickel ore and the production in Weda Bay have all steadily increased.
The disposal of Aubert&Duval is good news.
Including ongoing disposals, net debt would be a mere €388m.
The outlook is unsurprisingly bullish, even if it may be adjusted throughout the year, with current nickel and manganese prices currently very supportive.
Eramet will proceed with the Lithium project in Argentina
The group will join forces with Chinese Tsingshan
First production is due in FY24
We appreciate the group’s diversification, particularly in “green” raw materials
The Q3 trading statement shows a pretty strong rebound in activity.
The pricing situation remains favorable in most of the group’s segments.
Eramet upgraded its EBITDA guidance for the full year to “close to €1bn”.
We will also upgrade our numbers on the back of these solid Q3 revenues.
The H1 21 results were significantly up on volumes (manganese) and prices
Current prices suggest a further improvement in profitability
Seasonality should also give it a boost
The group raised its FY EBITDA guidance
We will revise our forecasts upwards
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Last week, JOG successfully secured its second GBA farmout, locking in a path to delivering zero-capex barrels. The surprisingly muted share price response to the farm-out leaves JOG trading at an unjustifiably large discount to our valuation. With a material fully funded development project under its belt and a clean balance sheet, JOG presents a very low-cost way to access high quality development barrels for investors and potential acquirers alike. If the threat of M&A does not narrow JOG’s v
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Plexus FY23 revenue and losses were in line with expectations. As well as the further development of its licensee relationship with SLB (Schlumberger), Plexus is focussed on its re-entry into the rental of exploration wellheads from Jack-up rigs, the sale of surface production wellheads and the provision of specialised solutions and applications to operators, particularly for Plug & Abandonment (P&A) work. Plexus won a substantial c£5m special project contract during the year, which was expanded
Companies: Plexus Holdings
• 3Q23 production was 2,518 boe/d, near our forecast of 2,674 boe/d.
• Arrow held US$12.9 mm in cash at the end of September. This is ahead of our expectations of US$6.6 mm on lower capex and opex.
• Four new wells are expected to be on stream by YE23 including RCE 7, RCE-8 and two wells at Oso Pardo.
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Companies: Arrow Exploration Corp.
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Alien and the Iron Ore Company of Australia (IOCA), continue to lay the foundations for operations at Hancock, one of its direct shipping iron ore (DSO) projects in Western Australia. Progress made to date ensures that, should a positive investment decision be made following the conclusion of Definitive Feasibility Studies (DFS), Hancock will be in operation and generating cashflow soon after capital is invested.
Companies: Alien Metals Ltd
• With the acquisition of interests in Sygna and Statfjord Øst expected to complete in January, the process to establish a stable well-funded producing business in Norway is almost complete. FY23 production at Sygna and Statfjord Øst net to Longboat Norge is ~250 boe/d.
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Companies: Longboat Energy Plc
We have been roadshowing Trident Royalties all week during which time the company released an announcement that they have entered into a commitment letter with BMO and CIBC for a new $40m revolving credit facility (RCF), with the potential to increase the facility to $60m via an accordion feature. The proceeds from the $40m are going to be used to repay the existing secured debt facility of $40m with Macquire in Q1 next year.
Companies: Trident Royalties Plc
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Companies: TLOU PTAL HTG ENW ITM BLVN RKH HBR UJO GMS JOG MATD CEG GENL AXL
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Jersey Oil & Gas, Serica Energy, Trinity Exploration & Production, Longboat Energy, Ithaca Energy, Neptune Energy, Pantheon Resources, Nostrum Oil & Gas, Kufpec, ORLEN.
Companies: TRIN LBE JOG