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Xebec executive hires and more commodity news +3

10:17 19-May-21


Xebec has appointed a COO, as expected from the quarterly report.  Jim Vounassis was most recently COO at Bombardier Transportation, which was purchased by Alstom at the end of January to catalyze its transition towards sustainable mass transit, particularly hydrogen fuel cell trains.  I note that CDPQ, which is backing Xebec's growth, is also Alstom's largest shareholder.  Xebec also hired a new VP of Global Operations, and while I find the GE lineage less impressive, his awards and recognition for turning poorly performing business units around certainly seems applicable.  Though these steps will take time to show results, I continue to see XBC/XEBEF as undervalued, with the rebate rate remaining above 10%.

Though hydrogen and ammonia look to be the future of fuel, further evidence that Nord Stream 2 will see completion underscores the importance of natural gas for the near term.  That brackets the opportunity for Golar, making extra Hilli trains a this year or never question ahead of tomorrow's quarterly report.  I see European and Asian import prices as supportive of the effort and India could represent an opportunity for new development.  Elsewhere in Africa, Shell is looking at following up it Tunisia decision by abandoning Nigerian onshore operations entirely, which should be no surprise given all the trouble it has seen there.  Long term, I think this will only contribute to the destabilization of Africa and the Middle East, and leaves a niche of Golar's offshore focus.  That said, American utilities still look like the safest returns on capital in this environment and PPL just announced its next 41.5 cent dividend with a June 9th ex-date, representing over 5.6% temporary yield.  I note that's comparable to the yield on VOD, even at current prices around $18 and probably less risky given the company's continued need and underwhelming effort to buy back shares.

Hydrocarbons aren't the only commodity in focus, either.  Taiwan is experiencing a heat wave and drought, which represents a potential opportunity for Energy Recovery.  I still wouldn't touch ERII even at recently decreased prices, but I think the media's attention to the semiconductor industry is another factor putting unrealistic pressure on HIMX, which is once again trading below $11.  Markets are very concerned about rising treasury rates again, but I see the dollar stabilizing, albeit at higher rates, and am prepared to take advantage of these opportunities.