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Please do not conflate tobacco with fossil fuels. The majority of UK citizens go about their daily lives without the need to consume tobacco. Fossil fuels are an essential component of our daily lives and will continue to be essential for at least the next 30 years.
I would prefer that the UK purchases fossil fuels from local sources rather than depending on foreign states (often hostile to the UK) to provide us with our fossil fuel requirements.
Are you in the payroll of Putin or some hostile foreign state, determined to undermine the UK economy by promoting the destruction of the UK oil and gas exploration industry.?
For H1, 2023 Amazon reported net income before tax of $9.9bn which is $300m lower than that of BP for the same period.
However Amazon has a market cap value 13 times higher than that of BP as fund managers now buy stocks on a FOMO basis rather than the underlying business case cash flow valuation basis. Hopefully we will soon revert to a post dot-com crash situation where fund managers start to buy companies with strong valuation fundamentals.
BP reported net income of almost $11 bn for H1, 2023. Not bad for a company with a market cap of only $102bn and compares very favourably with the likes of Tesla which had net income less than 50% of BP for the same period yet has a market cap over 8 times higher.
Fund managers are happy to buy high PE companies like Tesla and Nvda but I sleep soundly buying more profitable single digit PE companies paying a 5% dividend.
For Q1, 2023 Chevron's net income was 20% higher than that of BP. Chevron however have a market cap that is almost 3 times higher than that of BP. BP is extremely under-valued in comparison to it's US peers. The probability of BP receiving a takeover bid from Chevron or Exxon is very high.
What is your source for these production figures.?
According to Fresnillo's most recent production report silver production for 2022 should be in line with 2021 and gold production for FY 2022 is expected to decline by about 15%.
Fresnillo should have very healthy cash flows this year and its SP has a lot of upward potential.
BP is significantly undervalued in comparison to US oil companies such as Exxon and Chevron.
FOR Y/E 31.22.21:
bp revenue $158bn
Chevron revenue $155bn
BP cash flow from ops $23.6bn (10% from Rosneft)
Chevron cash flow $10.2bn.
However Chevron's market cap is almost 4 times higher than BP's.
Wouldn't be too surprised by a takeover bid for BP.
Rosneft accounted for 11% of BP profit for 2021. Given the current supply/demand imbalance it is likely that Brent oil price will exceed $100 per barrel for 2022. The stronger oil and gas prices prevailing in 2022 will more than compensate for the loss of Rosneft income.
The Fresnillo SP has a pleasant habit every 6 years of surging within a 3 month period from low 6 gbp to 20gbp. In 2016 Fresnillo SP reached 20.57 gbp when silver price per oz. annual high was $20 and the average silver price per oz. was $16.8. Do'nt be suprised if history repeats itself. A lot of large pension funds will now start to flock into profitable commodity companies such as Fresnillo.
Even before the Ukrania crisis started, the silver price was expected to rise sharply this year as:
1) Investment demand for physical silver jumped 32% in 2021. Long term charts show that as investment
goes, so goes the silver price with a time lag effect.
2) The gold to silver ratio is currently 80 approx. This ratio is 28% above its 50 year average. Silver, which is far scarcer than gold, is likely to soon see a reversion to the mean ratio.
3) Industrial demand for silver will increase sharply over the next decade as many green technologies require silver. E.g. The Silver Institute project a 13% jump in photovoltaic demand for silver in 2022 (and triple by 2020).
If silver can break the $28/oz barrier its next big resistance is $40/oz.
In 2016 when silver and gold averaged $17 and $26 per oz respectively the SP had an annual high of £20. In H12021 silver prices are 50% higher than 2016 prices. This company has very strong fundamentals with a projected book/operating cash flow of less than 4 and gross profit margin on its primary product of 170% in 2021.
I surmise that SP is due to:
1) impact of teenage scribblers such as the UBS analyst who rated share as a sell with price target of £7, citing concerns that production may be slightly less than expected, but conveniently overlooking fact that silver prices have appreciated 68% this year.
2) parasite wall street hedge funds taking short positions and underming confidence in the SP
3)loss of position in the MSCI index
4) possible intraday manipulation of SP by an opportunistic hedge fund, triggering stop losses by weak hands.
I strongly believe that the SP has strong upside potential.
In order to maintain my sanity I am now ignoring daily price fluctuations and instead will liquidate my holdings when either of the following limits is achieved:
1) SP price limit - £29
2) time limit- 3 years
3) silver price limit- $21