Home \ Investor Centre \ Press Releases \ SacOil shares have potential for re-rating

<< Back to

SacOil shares have potential for re-rating

SacOil shares have potential for re-rating

Edison Investment Research sees potential for SacOil Holdings’ (LON: SAC, JSE: SCL) stock to re-rate upon further announcements on operating success in Nigeria or the democratic Republic of Congo.

The research house said in a note that the shares trade at a substantial discount to its core net asst value of 19 pence for SacOil. The stock currently stands at 4 pence.

“The discount is likely to persist while current market conditions are not favouring risky junior plays. However, imminent funding issues have been eased,” it said.

Edison referred to the US$25 million equity credit line funding facility with Yorkville Advisers which the company secured in October, and the farm-out deal with Total in March.

SacOil’s 50 percent owned subsidiary Semliki SPRL sold Total a 60 percent stake in Block III, which is in the Albertine Basin in the DRC. SacOil retains a 12.5 per cent stake in Block III.

The farm-out allowed SacOil last week to report a 657 percent year-on-year rise in headline earnings for the first half, at the top end of its 640-660 percent rise forecast announced only shortly before the results statement.

The group made headline earnings of 38.7 million Rand for the six months to August 31 2011, compared with a loss of R6.95 million a year earlier.

“Our fundamental assumptions remain unchanged, but we have revised earnings to reflect the strength of the South African rand. Overall, our 2013 EPS estimate rises by 3 percent. The step change in the 2013 forecast assumes full operation of the Greenhills manganese plant, the exchange rate movement as well as the reduced external funding need,” Edison said.

Source: Proactive Investors


for news updates



If you are in any doubt as to what action you should take, consult your CSDP, Broker, Banker, Legal Adviser, Accountant or other professional advisers immediately.

Or visit our Shareholder Information page for more information regarding your shareholding and share certificate.