Enterprise Products Partners L.P.

EPD Details

Enterprise Products Partners L.P. (NYSE: EPD) is a master limited partnership (MLP) that transports natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals to producers and consumers in North America. It makes money by selling natural gas liquids (NGLs) and other related products and offering midstream services such as gathering, processing, transportation, fractionation, storage, and terminaling.

Latest News:

• Dividend Declaration: The firm declared a dividend of USD 0.45 per common share on October 12, 2021, which was paid on November 12, 2021, to shareholders of record on October 29, 2021. This payout is 1.1% higher than the one declared for Q3FY20.

9MFY21 Results:

• Upsurge in Revenues: The company reported an increase of 46.05% in total revenues to USD 29.44 billion during 9MFY21 (ended September 30, 2021) compared to USD 20.16 billion during 9MFY20, primarily due to a USD 8.93 billion increase in marketing revenues.
• Progress in Net Earnings: EPD reported an increase in net income to USD 3.69 billion during 9MFY21 vs. USD 3.52 billion during 9MFY20.
• Leveraged Balance Sheet: As of September 30, 2021, the company had cash & cash equivalents of USD 2.21 billion and total debt of USD 29.53 billion.

Key Risks:

• Geographic Concentration Risk: The Gulf Coast, Southwest, Rocky Mountain, Northeast, and Midwest areas in the US are EPD's primary markets. As a result, independent oil and gas businesses and other pipelines and wholesalers operating in these areas account for a large amount of its trade receivables. As a result, any changes in regulatory, economic, or other conditions in these regions could harm the company's cash flow and sales.

Outlook:

• Capital Expenditure Estimates: EPD expects growth capital investments linked with sanctioned projects for FY21 and FY22 to be around USD 1.7 billion and USD 800 million, respectively, as of November 02, 2021. However, given the projects now in development, growth capital expenditures for FY22 could wind up being in the range of USD 1.0 – 1.5 billion. According to current estimates, sustaining capital expenditures for FY21 is expected to be around USD 440 million.

Valuation Methodology: EV / EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

EPD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

EPD's share price has fallen 16.86% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 19.28 to USD 25.69. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 36.07. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 26.42.

Considering the company's market dominance, robust dividend yield, strong top and bottom-line performance, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 21.15, up 0.33% as of December 10, 2021, at 11:11 AM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Fortuna Silver Mines Inc.

FSM Details

Fortuna Silver Mines Inc. (NYSE: FSM) is a precious base metal miner operating in Argentina, Burkina Faso, Mexico, Peru, and Côte d'Ivoire. The firm owns and operates the open pit Lindero gold mine (Lindero) in northern Argentina, the underground Yaramoko mine (Yaramoko) in southwestern Burkina Faso, the underground San Jose silver and gold mine (San Jose) in southern Mexico, the underground Caylloma silver, lead, and zinc mine (Caylloma) in southern Peru, and is developing the open pit Séguéla gold mine (Séguéla) in southwestern Côte d'Ivoire.

Latest News:

• Exploration Updates: FSM presented a summary of its exploration efforts in Latin America and West Africa on December 09, 2021. The steady pace of exploration across the portfolio's principal holdings continues to produce highly encouraging findings, with 12 drill rigs turning across the portfolio. Highlights include 16.5 g/t gold over 6.3 meters from drill hole SGRC1366 at Séguéla's growing Sunbird Prospect, and 0.6 g/t gold and 0.18% copper over an estimated width of 68 meters from surface intersected in drill hole ARD046 adjacent to the Arizaro Project, which returned 93 g/t silver, 4.83% lead, and 7.81% zinc over an estimated actual width of 20.48 meters from nearly 900 meters below the surface and where it remains open.

Q3FY21 Results:

• Rise in Revenues: Total revenue increased by 94.84% YoY to USD 162.57 million in Q3FY21 (ended September 30, 2021) from USD 83.44 million in Q3FY20, owing to gold sales from the Yaramoko and Lindero mines.
• Fall in Net Income: FSM's net income fell to USD 0.21 million in Q3FY21, compared to USD 13.09 million in Q3FY20.
• Cash and Debt Position: The company had USD 136.26 billion in cash and cash equivalents (including short-term investments) as of September 30, 2021, and USD 219.15 billion in total debt (including lease obligations).

Key Risks:

• Metal Price Risk: For every +/-10% fluctuation in Silver, Gold, Lead, and Zinc prices from September 30, 2021, the company's sales will be affected by USD 1,118, USD 537, USD 459, and USD 333, respectively. As a result, any adverse price movement may harm the company's financial position.
• Regulatory Risk: FSM is a metal mining firm governed by several federal and state laws. As a result, tighter rules or non-compliance with mandatory legislation could harm the company's profitability.

Outlook:

FY21 Production Guidance (Source: Q3FY21 Earnings Presentation, November 12, 2021) 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FSM Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

FSM's share price has fallen 55.00% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 3.12 to USD 9.85. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 29.57, indicating an oversold zone. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 4.00.

Considering the correction in the stock price in the past nine months, strong top-line performance, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 3.24, down 1.22%, as of December 10, 2021, at 1:01 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.