Suday share tips: Green Dragon Gas, British Land, Land Securities, Braemar Shipping
Updated : 16:11
Green Dragon Gas was a 'buy' tip for Midas in the Mail on Sunday. Yes, oil prices is tumbling and China's growth is slowing, but gas prices are more stable and this Chinese gas producer is expected to enjoyed rocketing revenues and profits in the coming years from its gigantic acreage of exploration property. Focused on a chemical-fee extraction of coal-bed methane, Green Dragon won a battle with state-owned giants in 2014, with Beijing confirming the London fully listed company's rights to the licences.
By the end of last year, the company's well were generating at at an annual rate of 12bn cubic feet but less than a fifth of them were connected to the national gas pipe network. By 2018, Green Dragon is forecast to generate roughly 50bn cubic feet a year. China's government incentives for domestic producers, plus an extra premium for coal-bed methane extraction, mean the price the company receives for its gas is way above the cost of production. In 2016 it is expected to break even for the first time, with profits of around $23m.
Shares in listed property companies such as Land Securities, British Land, Great Portland Estates and Workspace, look cheap, according to the Sunday Times' Inside the City column. Most of them have sizeable discounts to their portfolio valuations. Several of the company chiefs have admitted they cannot do much to prevent this discount, which has arisen despite robust financial results, solid demand for their buildings - perhaps more to do with global macroeconomic worries such as about oil and a hard landing for the Chinese economy.
Discounts have stretched to around 20% even for the largest and best diversified as the wider market angst has knocked the FTSE 100 for six since 2016 began. Listed real estate companies generally are jostled about as the market moves, with high liquidity of shares in Land Securities and British Land adding to the volatility. Only if a stock market correction turned into a crash and caused repercussions in the economy would it create real problems for these companies.
Braemar Shipping shares are worth buying, said Questor in the Sunday Telegraph. British shipbrokers are reeling from China's slowdown, which proves a major drag on global trade. The Baltic Dry index, measuring shipping rates for dry commodities –and watched as a proxy for Chinese demand, capsized to a 30-year low on Friday of 354. While dark days for ship brokers, the dry bulk business represented only 5% of Braemar's turnover in the first half of the year.
The oil price may have collapsed but the ending of the US oil export embargo and Iran's emergence has raised demand for oil tankers, and hence also prices and profits for Braemar's tanker broking arm, which by revenue is a quarter of the group. Profit more than doubled in the first year on sales up by almost a quarter, which is expected to just about continue in the second half, helped by a £56m order book.
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