Member Info for BouncyDeadCat

Industrial fertilizer is made using NatGas, not Propane. LNG is just NatGas Liquefied.
NatGas (Methane) is upgraded by combining it with nitrogen from the air to form nitrogen fertilizer which is the most common type of industrial fertilizer used in agriculture. 60% of the raw material used to produce Nitrogen fertilizer is NatGas.

I've just looked up the stats for Morocco fertilizer production and export and it's actually phosphorus fertilizer that Morocco currently mines, uses domestically and exports. The country claims 75 percent of the planet's known reserves of phosphorus. Wow.

As Morocco already has an export supply chain footprint in phosphorous fertilizer, adding Nitrogen fertilizer as well (the largest product class), could make them the largest global exporter of fertilizer. It would also give their GDP a boost.

medar - LNG is used for the production of fertilizer, not LPG.

You just need to run the numbers and look at its proximity to the Maghreb pipeline to realise how much of a no-brainer Anchois is.

However, I also think Sound Energy will do well if/when it is able to sew up the domestic and industrial market within Morocco as this market is predominantly LNG.

What part of 'this week' didn't you understand?

Providing you have a seller who is prepared (and has the capital) to build the expensive LNG plant, which also needs to be located close to a deep port (gas still needs to be piped or transported to said deep port if you want to ship it) and you have a foreign buyer who can house and/or deliquify the gas for its intended use - then you have a market.

With regards to pipeline gas - you also need to have circumstances on your side. Is your gas close to a working pipeline? If so, you already have a market of buyers to take it

The economics of both LNG and Pipeline gas will work if the circumstances for delivery to the end user are relatively straightforward.

I think a recession is likely.
However, Morocco still needs to replace the gas it lost from Algeria and Europe still needs to replace Russian gas, so I don't see any factors or reasons that would slow down the development of Anchois.

Yes, their industrial market isn't small.

medar - It will be smaller as Sound is going to deliver gas in the form of LNG which is more convenient for domestic and industrial use. But I wouldn't say that market is small per se.

Moroccans use LNG for cooking and there are no mains gas, so it's a vibrant market and Morocco produces lots of fruit and vegetables which it also exports. This takes a lot of fertilizer - which is produced using NatGas.

When it comes to feeding the Maghreb pipeline, deliquifying LNG would be an extra, as well as costly step.

If it breaks 5400p then there's a good chance it will head down to 4800p.

Funny, because Barclay's came out with an underweight recommendation on RIO today with a £48 price target.

That's what TA seems to be saying.

The Moroccan government seems keen to help the O&G companies produce gas within Morocco as soon as humanly possible and is helping remove all and any roadblocks that stand in their way.

Since Algeria cut Morocco (and Spain) off from its gas which it supplied through the Maghreb pipeline, the Moroccans have been desperate to secure an alternative supply. How better to secure a new supply than to encourage the development of a gas projects within its own territory.

imo The huge offshore Rissana area would normally have been auctioned off to different O&G companies in smaller lots in a bidding process, but a deal was done with Chariot to take the whole entire area. Presumably because the deal needed to be beneficial for both parties. Chariot needed a profitable project with plenty of follow-on opportunity and Morocco desperately needed to replace the gas Algeria took away, so we end up with a very good deal and Morocco end up with new supply coming onboard within just a few years.

Spain also has a hand in this. The reason Algeria cut off Morocco from its gas in the first place was because of its ownership dispute with Morocco over the Western Sahara region. Spain recently sided with Morocco over the issue. So neither Morocco nor Spain are receiving any gas from the Maghreb pipeline (which stretches from Algeria through Morocco and into Spain and Southern Europe).

My conclusion to all of this;

Sound energy will probably supply the domestic and industrial market within Morocco.

But it will be Chariot who is the more likely to supply all of the Moroccan power stations and also put gas back into the Maghreb pipeline and feed Spain too.

A windfall tax isn't going to happen.
It would have to be levied across the entire sector which would be wholly counter-productive as it would strip out investment capital from going to where it's needed most.
BoJo has already stated that a windfall tax will take away desperately needed investment from from
a) finding & developing gas fields outside of Russian
and
b) will cancel the investment these energy majors are plowing into green hydrogen and renewable projects
So it's a no from the government.

Keir Starmer will make soundbites about needing a windfall tax which will whip up the braindeaded far left, but those with rational minds understand that if we are to transition to a clean energy future, these majors will need to be well-capitalised in order to make the pivot.

looks likely this week.

casapino,
Not sure how you can disagree with the pandemic effecting profits, but okay.

Here's a good explainer video on why the P/S is a good ratio for valuing a stock which you plan to hold over the long term.

Generally, over the course of 10 years, if you buy an established stock with a P/S ratio of 1 or lower - you tend to outperform other stocks over the same 10 year period.

https://www.youtube.com/watch?v=dDQ4BU0w6e8

casapinos,
Revenue is money made by and from the business.
Profit is what is left after costs have been deducted.

Normally I would agree with your 'Revenue is vanity & profit sanity' comment, but one simply has to isolate covid as a black swan event that disrupted RR's ability to make profit in the way it normally would.

Pandemics are hardly frequent reoccurring events, they are once-in-a-lifetime phenomena.

People are flying again, thus engine maintenance schedules will come back and (unfortunately) the war in Ukraine has upped defence spending which is RR's other big division next to civil aviation.

Last week I flew for the first time in over 2 years. The plane was packed.
I have another holiday booked at the end of May.
Planes are back in the sky and people are travelling again.
All of these planes need to be maintained and serviced.

Not sure why anyone would pay too much attention to EPS or the P/E ratio when looking at the post-covid financials of this company.

A lot of planes were literally grounded for the best part of 2 years and Rolls Royce's largest division (Aerospace) wasn't profitable because of that.

So while a P/E of 56 may appear high on the surface, when you take into account Covid as a rare exceptional black swan event that happened across the world and stopped us all from travelling to different countries, you quickly come to the conclusion that the low profit that has created this high p/e multiple is no indication of a failing company, but because of a rare black swan event (pandemic) which is now (hopefully) behind us.

In the case of RR. I think the Price to Sales ratio (P/S) is more revealing in terms of showing how much exceptional value is on offer if you buy this stock now.

The P/S ratio for RR. is just 0.6. Which means the entire market cap of this company is valued at just 60% of the revenue it earns in 1 year. or in other words; you're paying 60p for every £1 Rolls Royce makes.

When RR's civil aerospace division becomes profitable again (instead of being a drain on cashflow) the P/E ratio will reduce.

On top of aerospace sales coming back, you also have increased defence spending and the new SMR division too.

A P/S ratio of 0.6 therefore looks very very good value here.

Zak says 40p+ in the next 4-6 weeks acccording to TA.

If/when the CPR drops, I think we'll be over 50p.

Corporate bonds are a safer investment for banks than buying stock, for several reasons;

Bonds have a guaranteed annual yield.
There's reduced volitility compared to stock.
Bond holders have greater rights to underlying company asset(s) than shareholders.
Fixed income funds are not able to buy stocks, only bonds. The fixed income market is x10 the size of the stock market.

In essence, bonds are a steadier, safer & more secure form of investment than stocks.
But if the company is successful, it's the stock that receives all of the upside.