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Xebec 4Q21 schedule, plus Vodafone & macro trading update ?3
09:22 04-Mar-22
This morning's jobs reports did bring big numbers: 678K added vs 422.5K expected and the unemployment rate falling to 3.8%. The participation rate and employment population ratio edged up by 1 and 2 tenths of a percent respectively. Wages went nowhere, though, and Brent & WTI are at $114.11 & $111.48, with American natural gas is at $4.86. That's despite the dollar briefly strengthening beyond €/$1.19. The market is simply risk-off ahead of the weekend and after a NATO post meeting press conference that ruled out a no-fly zone over Ukraine and said Georgia & Bosnia may be at risk. So, in a word, the strategy outlined below is very much alive and I would use any dips at all to strengthen positions in my preferred energy names.
On 3/3/22 10:03, Esekla wrote:
Xebec has officially scheduled its fourth quarter report for the morning of March 17th. The average of 7 analyst estimates is for Xebec to earn two Canadian cents per share from CAD43.7M of revenue, declining to CAD40.6M this quarter. For those who don't have access to XBC on the Toronto Stock Exchange, XEBEF shares are currently difficult to purchase at many brokerages. Thus, I see the transition to American reporting and listing as paramount. I will seek more color if I attend in person, but will not make a final decision on whether or not to do that until I get details on the state of manufacturing capacity which were projected when I tipped this scheduling.
Also discussed in that note was the denouement of Vodafone in India. The company published further details noting the current realization of $189M and almost twice that on the way. However, almost all of that will have to be immediately pumped back into Vi to shore up its finances, and anything that is not (about $79M by my calculation) will be held in reserve and not available to Vodafone until November 19th. I see little pricing power for the company in its core continental Europe market over that time frame due to the extreme food and energy inflation that will be caused by the Ukrainian war.
To that end, I am sticking by my strategy of preferring natural gas along with North American yield and M&A, noting that it is far less vulnerable than Europe. Germany has just opposed a hydrocarbon embargo of Russia and oil dropped in response. However, the IEA has proposed a plan to reduce E.U. Russian gas imports by over a third. The main points are maximizing storage and alternative sources, including bio-fuel, accelerating renewable development and limited rationing. Such moves would be undoubtedly positive for New Fortress, Xebec, Golar and Kinetik. I'll also note the continued appeal of renewable stocks like AMSC and even GGPI, with Polestar teasing a concept convertible yesterday. I'll also note that the $26.50 current price on EBIX looks attractive even though delay and India's geopolitical stance look ever more risky.
Across the pond, ahead of tomorrow's jobs reports, weekly claims came in at 215K, which is 10K below estimates and the lowest this year. Yesterday's ADP report shows small businesses suffering at the expense of larger ones, though. I think both of these are more important than the administration's fudged and trailing data and that slowdown is probably behind the projection that Powell made in testimony yesterday for a quarter point hike on the 16th. That was no surprise to me, and I see current job numbers as success in the hidden agenda to erode American purchasing power and force voters back into jobs. Nonetheless, I still think inflation will eventually pressure the administration and thus the Fed, probably just ahead of the midterms unless we see something (else) shocking first.