Serica Energy PLC (LSE: SQZ)

Serica Energy PLC (LSE: SQZ) is an FTSE AIM UK 50 index listed United Kingdom-based oil and gas company. The Company has exploration and development activities based in the United Kingdom, Ireland, Namibia and Morocco, and an economic interest in an oilfield offshore Norway.

Investment Rationale – SELL at GBX 265.34

• Profit Booking: SQZ’s stock price is hovering above the R1 level suggested in the previous report published on 08 February 2023. Therefore, it is presenting a profit booking opportunity.
• Higher Cash Cycle Days: The Company’s cash cycle of 64.50 days during H1 FY22 remained significantly ahead of the industry median of 29.10 days, illustrating a lower operational efficiency when compared with the industry.
• Overvalued Multiple: On a forward 12-month basis, SQZ’s Price/Cash Flow per share remained higher than the median of the Energy sector.
• Macroeconomic Uncertainties: SQZ's performance is susceptible to higher energy costs, economic recession, volatile equity markets, high levels of inflation, and rising interest rates.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and higher cash conversion cycle days than its industry median, a "SELL" recommendation on Serica Energy PLC has been given at the current market price of GBX 265.34 (as of 20 February 2023, at 9:25 AM GMT).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 20 February 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.

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