leadf
logo-loader
viewSan Leon Energy PLC

San Leon Energy rated a ‘buy’ as Panmure highlights near-term cashflows and long term upside

A price target of 59p suggest substantial upside to the current share price of 26p.

San Leon Energy PLC -

Stockbroker Panmure has begun its coverage of San Leon Energy PLC (LON:SLE) with a ‘buy’ recommendation and a 59p price target, suggesting more than 100% upside to the current price.

Analyst Ashley Kelty, in a note, highlighted San Leon’s low-risk and value-creating model.

“In our opinion, San Leon offers investors exposure to Nigerian production and development assets, with a clear path to near-term cashflow and significant longer-term upside,” Kelty said.

“Through investing indirectly in companies in Nigeria rather than directly in the assets, San Leon reduces the risk profile, whilst retaining greater upside.

READ: San Leon - strong financials and outlook

“Near-term cashflow is secured through loan note repayments, with dividend income anticipated beyond that.”

Kelty pointed to the ongoing development of the OML 18 and Oza oil fields as catalysts for near-term growth, whilst noting the benefits of San Leon’s investment strategy that utilises lending rather than equity.

“With a relatively small amount of capital deployed, attractive returns are realized whilst having more influence and control than would be the case as a minority joint venture partner,”

“The current share price has been impacted by the negative sentiment towards the oil sector, and we believe investors fail to appreciate the longer-term potential of San Leon.

“With a portfolio built up at low cost, and attractive near-term returns (as evidenced by the special dividend paid earlier this year), we see potential for a re-rating.”

Interim results in September showed a company with a strong financial position and outlook.

In 2020 to date, the company with investments in Nigerian oil assets received US$41.5mln in payments from operators, via loan note arrangements. Some US$88.7mln of future loan note payments remain.

With US$35.6mln in cash at the end of the half-year - US$22.6mln by September 18, 2020, after US$6.8mln was put in escrow – the company said it is positioned to invest and grow further.

Quick facts: San Leon Energy PLC

Price: 23.15 GBX

AIM:SLE
Market: AIM
Market Cap: £104.15 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of San Leon Energy PLC named herein, including the promotion by the Company of San Leon Energy PLC in any Content on the Site, the Company...

FOR OUR FULL DISCLAIMER CLICK HERE

Market Report: FTSE kicks December off on the front boot as Moderna seeks...

FTSE 100 started December on the front ‘boot’ after Moderna requested emergency approval for its COVID-19 vaccine to the US authorities. London’s main index jumped 68 points to 6,336 in early trading. Topshop owner Arcadia Group has called in administrators, putting 13,000 jobs at risk. The...

4 days, 4 hours ago

2 min read