It's difficult not to be super exited on $GLNG outlook. Despite their efforts to simplify the company, I admit is still complex, but I would say it could mean a change for the LNG spin-off next year. Take a look, the core business is amazing and the stock is too cheap to ignore!
NFE stake is worth more than $500M right now, but I argue the current valuation isn't fair. Despite YTD weakness, the long-term thesis of attractive free cash flow and growth remains intact. The market isn't considering downstream terminals growth, blue hydrogen and Fast LNG
I'd say the perception of NFE being short of gas has impacted the stock. However, NFE recently upgraded its guidance and showed the growth has not slowed down. We are very bullish on 2022-23 with a target price of $50, which implies almost $9 of $13 Golar current valuation
Shipping. The market is tight as the current rates show and it's not going to ease anytime soon. Golar has not fully benefited from this environment. However, 2022 looks great with current legacy charters ending. I expect record results for 2022 and a spin-off by 2H22
FLNG. The best part where Golar has unique, wonderful and proven technology. Hilli performance has been stellar and will add at least $100M FCF next year due to the oil derivative and T3. Perenco is hurriedly drilling, so I expect good news on increasing the production in 1H21
Growth? Gimi is coming online soon. I'd say it justifies the current market cap excluding NFE and Avenir stakes. Gimi adds $100M FCF after debt service each year during the next 20 starting from late 2023. Take or pay, hedged against inflation and BP as a conterparty. Wow!!
Also, I expect a new FLNG project during 2022. BP/Kosmos have invested $5.5bn to get 2.5Mpta on phase 1 and will only require $0.9bn to double the production. Also, they priorize a low carbon footprint and nobody can't compete against Golar technology. It's only a matter of time!
Last, there is a huge opp for Golar to build their own gas project and if it's successful, the stock could be worth $100. Liquidity is not a problem anymore and I feel Golar will move forward really fast
Stock performance has been disappointing, but patience will pay off!
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When I pitch Nagacorp, one of the main pushbacks is around Chinese tourism coming back. More or less, investors understand how profitable and FCF generative the business is, the strong balance sheet and the shareholder-friendly policy
In 2019, Nagacorp contributed approximately 27% of local GDP tourism growth and approximately 1.2% of the national GDP in Cambodia, therefore, Nagacorp is very correlated with Cambodia's tourism which grew strongly until covid
By now, the Chinese aren't traveling abroad. Three reasons explain it: 1. Government promotes domestic tourism, 2. Still fear of Covid and problems that might arise if they get infected out of China, 3. Less budget as macro isn't very good
Nagacorp management are likely in shock after reading Moody's research and the stock reaction. Naga issued and statement confirming the cash position by October 17. It would not be surprising if Naga had not reported the cash on September 30 just 20 days ago!
By the end of September, Naga had $298M cash and 472M debt (bond maturity June 2024). Cash has increased to $324M, but some working capital movements exist. Naga is making 28/29M monthly EBITDA or 342M annual EBITDA. Taxes are included while net interest are 30M.
No growth capex as the company has postponed Naga 3, while maintenance capex is 20-30M per year. That means 282M FCF per year and 212M in the next 9 months. 298M cash + 80M dr.Chen loan + 212M cash generation= 590M which is enough to cover 472M payment in June 2024
Nagacorp: I cannot believe it. Moody's (again) scaring retailers arguing that refinancing risk still exists after Dr. Chen's $80M loan. That explains the recent weakness after removing the refinancing risk:
It's funny that the analyst expects $350M EBITDA in 2023 and $485M in 2024 while I'm forecasting 300M for 2023 and 350M for 2024, therefore, taking a much more cautious approach. However, I don't see any refinancing risks, but room enough
Naga is making 28/29M EBITDA runrate. Below EBITDA are no taxes, only capex (very limited) and interest costs. Said that, even in a super bearish scenario, Dr. Chen, who owns 70% of Naga, will provide 20-30M extra loan. Sorry, I cannot see the refi risk
Great write-up on Kistos. Also, video thesis (from min 39). @HiddenValueGems is a well-experienced former sell-side analyst. Definitely, worth following!!
Said that, I'm less optimistic about production. I think his production outlook slightly overvalues the Q10a field. Also, I have my concerns about the Orion oil field. Getting permission depends on the politicians and their incentives are not aligned with Kistos
In any other environment, Kistos would have ordered equipment before obtaining the permit, however, right now it is difficult to obtain permits to exploit oil fields despite having the license. The positive: Netherlands is a tinderbox and we have early elections on 22 November
$CLCO has been trading weakly in line with LNG spot market rates past weeks. A surplus of gas inventories in Europe, muted Chinese LNG imports which were down 4.8% yoy in 1Q23, and seasonality are the main reasons. However, we are close to the turning point!
Current TFDE rates are at $45,000/day, but the forward freight market indicates it will rise to $68,000 in June, $76,000 in July, and $102,000 in August. Moreover, Q4 is expected to average $209,000/day!
LNG contango and Chinese demand picking up are main the drivers
This optimism is reflected in the LT charters. $CLCO has announced a 3y charter at $120k/day starting early 2024. Moreover, Marinakis has recently secured 2024 and 2026 deliveries for 10-13y at $105k which looks very well for CoolCo late 2024 newbuildings tradewindsnews.com/gas/capital-ga…
I attended the Pax Global call conference and will upload the transcript as soon as it's available. I feel there is more and more interest from investors and I'm pleasantly surprised we've seen Chinese questions for first time (ever?). Really good call, let me explain my thoughts
Pax confirmed my statements. It's not very difficult to understand it if you dig into numbers. Pax is careful about 2023 because Brazil and it's the largest weight. In 1H22 it was 30% of revenue and we'll have to wait until the annual report to know the FY numbers
*Notice that APAC region didn't grow double-digit but because of the Indian currency's strong depreciation and mostly, because of Chinese integration. Chinese numbers are now consolidated in APAC and were declining very fast. The comp effect for next year won't be relevant