My 3c on HZN is below. I personally believe that today was an opportunity to enter HZN, which is one of the highest FCF yields on the ASX, below for the why. Personally I hold 10% of portfolio here already at much lower entry, but still considering adding...
FA Front:
- Reasonable to forward estimate FY23 NPAT of around A$40-A$60M, with upside
- Reasonable to forward estimate FY23 FCF of around A$70-$90M, with upside
- So FCF yield is around 35%-45% on the current SP of 12.5c (~A$200M MC)
- It's one of the highest FCF yields on the ASX (Money back in cold hard cash in just over 2yrs)
Macro Front:
- America has been draining its SPR (stupidly), it needs to replenish this, especially given geopolitical instability
- SPR release has been a primary downward pressure on oil price
- Government are supporting energy prices through printing money (inflationary), or by providing price relief, this impact is inflationary also as it acts to alleviate the pressure from increasing price on demand.... support demand = support price
- OPEC reducing output, largely cause they making $$$ and clearly against the US SPR releases, and why wouldn't they be!!!
- Western world almost supportive of all out warfare in Europe (disgusting) = supports demand
- All the above bodes well, but cannot forget that..... there is a possibility of a big market shock because of the Western worlds debt shock, but the balance lies IMO in the former side of the argument
Geopolitical Front;
- Don't like Beibu being off mainland China, this is a real geopolitical risk
TA Front:
- Clear supply zone at 16c which is a massive resistance level. I had hoped the HZN break this and turn it into a support zone in the last 3mnths since the announcement of the divvy/capital return
- It would have been nice for chart to drop from 19c to 16c on the 3c return...
- Trading smack on the 200d SMA, expect it to bounce back up to around 14-16c range - if not, not nice. Long term trend in tact.
(20min delay)