ASX:BPT
Beach Energy Ltd
Investment Summary
The fund managers believe that Beach Energy Ltd (BPT) is undervalued despite facing some challenges, such as issues with its contractor, Clough. They first invested in 2021 when the share price had fallen significantly, viewing it as a strong opportunity based on its low valuation relative to earnings. While the company has seen fluctuations in its share price, including a peak and subsequent dip, the managers remain confident in its long-term growth potential, particularly from its Liquified Natural Gas (LNG) joint venture. In their opinion, despite the global shift toward renewable energy, demand for oil and gas, especially in non-OECD countries, will continue to grow, making Beach Energy a compelling investment. They maintain that the company’s low valuation, trading at 6.6x 2024 earnings, presents a solid investment opportunity.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Collins St Asset Management
Date
30 June 2023
Price
$1.35
Medium
Quarterly Report
Commentary
Collins St Value Fund continues to hold Beach Energy Ltd, maintaining the view that the company remains undervalued. The fund initially invested in 2021 when Beach’s share price had declined 45% due to a minor 4% production downgrade. At that time, shares were acquired around $1.10, reflecting a valuation of approximately five times earnings, with strong growth prospects—particularly from its joint venture to export Liquified Natural Gas (LNG) by late 2023. While Beach has seen some positive performance since, setbacks such as the collapse of its major contractor, Clough, have created volatility. Despite peaking above $1.80, shares have since retraced to around $1.40. Collins St Value Fund believes that market sentiment often misprices oil and gas stocks, overlooking the ongoing global demand for traditional energy sources. Even as renewable energy gains traction, oil remains the world’s most widely used commodity, with non-OECD nations expected to account for 55% of annual oil consumption by 2030. Trading at just 6.6 times projected 2024 earnings, Beach continues to represent an attractive investment opportunity in the fund’s view, with its long-term fundamentals remaining intact.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.