Rather weak Q3 223 results for Aperam

The Q3 23 results were weak with the group releasing its lowest EBITDA ever. That said, this included a “triple-digit” negative inventory valuation which tempers this statement. The outlook for Q4 shows that the management does not expect a significant recovery in the very-short term, which is not surprising, particularly in Europe. The downward revision in our numbers will depend on the shape of a potential recovery in the group’s end-markets in FY24, but our target price will obviously go down

When the going gets tough(er).

Aperam released a rather weak, albeit expected, set of numbers for Q223. The group describes Europe as a continent “in recession”, with falling volumes and prices. No significant improvement is expected for Q3. We will have to cut our forecasts and valuation after this release.

A tougher environment.

The Q123 results came in slightly short of expectations. This was due to destocking in Europe as well as a price/cost squeeze. Q223 should be in a similar vein and may lead us to revise our forecasts downwards (note however that we were higher than the consensus). Our target price is likely to end lower after this revision.

FY22 more than OK, before an expected slow down in FY23/24

Aperam released an unsurprising set of (good) numbers for FY22. Energy prices, inventory valuation and cost inflation weighed on Q4 margins though (not a surprise either). The outlook calls for a normalization of the group’s markets, as had been expected. We will adjust our numbers a tick downwards, particularly for FY23 and possibly FY24.

Q322: a less favorable context

The Q322 results were substantially lower than those of the previous quarters. This had widely been expected with pressure on both prices and volumes. No drama though, as profitability remains pretty decent. We will revise our overly-optimistic forecasts downwards. We will also reconsider our valuation metrics given the less positive momentum.

Q2 22 results: solid in a less favorable context

Aperam released a solid set of numbers for Q2 Despite less favourable external factors, margins were still very strong Q3 will show a softening in profitability, at a high level though We will revise our current year forecasts a tick higher with no major impact on valuation

Q1 22 fine with some doubts for H2

The Q1 22 results were strong (again). The positive outlook for Q2 is reassuring. We still believe that end-markets will slow down at some stage. We will revise upwards our very conservative forecasts but will probably not change our target price much.

A strong FY21 with a supportive Q1 22 outlook

The FY 21 results came in slightly higher than consensus. This was driven by prices (c. +30%) and volumes (c. 10%). Energy costs not so much of an issue as long as prices hold up. The group announced a new share buy-back programme of up to €100m. It remains to be seen how long prices can hold up at current levels, but the current context is clearly still supportive. We’ll revise our numbers a tick upwards.

Q3 21 results: strong, but the market is demanding

The Q3 21 results came in ahead of market expectations. The outlook for Q4 is encouraging, with prices still at a high level. The market has assessed that it will be difficult to do much better going forward, thus the negative share price reaction. We will still increase our forecasts, at least for the current year, with an under-proportionate impact on the group’s valuation.

Results were excellent and substantially above consensus expectations

A strong Brazil (positive seasonality and high demand) and normalising prices in Europe explain the performance, as well as safeguard measures Shipments remained at a high level in Q2 21 Operating CF was a positive €115m despite a €118m working capital build-up, with FCF at €87m The new share buy-back is not really a surprise despite the ongoing acquisition of ELG in Germany We will revise numbers and valuation upwards

A brilliant Q1 21 and a significant acquisition

The Q1 21 results came in substantially above consensus Volumes and prices have both helped almost all segments The group will acquire ELG, which we consider as very positive We will revise upwards our numbers and valuation

A nice set of results and a promising outlook for Q1 21

FY20 results came in above expectations Volumes in Europe, cost control and Brazil explain these nice results Q1 21 is expected to be even higher than the nice Q4 20 The balance sheet remains very solid, allowing for a pleasing dividend policy Expect us to revise upwards our forecasts and price target

A pretty satisfactory Q320

Q3 20 very decent thanks to volumes and cost-cutting Q4 20 should be marginally better in terms of profits We will fine-tune our estimates to the upside

H1 20: not bad after all

H1 20 was obviously severely impacted by the pandemic The group’s profitability has still remained decent thanks to cost cutting Visibility is low but the trough seems behind A tough EU stance on imports would help…

Q1 20: decent numbers and outlook in the current context

Q1 20 in line and decent Q2 will obviously look tougher with volumes estimated to be down 25% The sound financial structure is a clear plus for Aperam We believe the group to be in a good shape to weather the storm and benefit from the recovery

Alien Metals - Hancock Project, Mining Lease Granted

Alien today reports intraday that the Western Australian Government has granted a mining licence for the Hancock iron ore project for a 21-year term. The granting of the mining licence is the latest milestone delivered by Alien as it advances the project towards development and production.

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

SP Angel Morning View: Gold resilient as US interest rates climb on long-term inflation concerns

NextSource Materials - Initiation

NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat

I3 Energy (I3E LN) - Canada royalty assets sale

I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward

Jubilee Metals - Operational Update Q3 FY2024

Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August

DEC FY23 Results Update

DEC reported FY23 results which were in line with expectations and announced the acquisition of joint venture assets from Oaktree along with an updated capital allocation framework.

LIBERUM: New Energy Nuggets: Hydrogen - the future is green

SP Angel Morning View: Global Li-ion battery demand reaches all-time in Q1 2024

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

Gulf Marine Services (GMS LN) - Contract award

GMS has announced a new contract award, at improved day rates, adding to order book and overall revenue momentum.

Challenger Energy (CEG LN) - £1.5m strategic investment in Challenger

Challenger has announced a £1.5m investment in the company from investor Charlestown Energy. This now allows Challenger to be fully funded for the foreseeable future as it works towards closure of its significant Uruguay farm out to Chevron, and the US$12.5m cash payment to be received once this is achieved.

Tethys Oil AB (SSE: TETY): Increasing further the size of the prize

• The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. • Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Tethys Oil’s unrisked recoverable prospective resources on the block are estimated to be 435.9 mmbbl (Pmean). • The geological chance of success ranges from 6% to 11% for the six

Is there a “big-picture” change in the cards?

We note that this morning’s announcement by Aminex for a significant potential resource increase in the Ruvuma basin. We believe that the recent pullback in the share price (likely due to delays in the first gas production schedule) provide a good risk/reward opportunity, especially given the future potential in next 12-24 months, highlighted by today’s announcement.

Morning Note – 4 April 2024