BPT fell over 4% yesterday after delivering weak 1H21 results, unfortunately as holders a few things concerned us:
1 – Underlying earnings -5% on this time last year thanks to a lower realised Oil price and it was a miss to expectations by around 3%.
2 – Earnings flowed through to lower operating cash flows which fed into higher net debt, one of the reasons we liked BPT over and above others was their net cash position and the optionality into a depressed energy market this afforded them. This reasoning took somewhat of a hit today.
Our initial inclination was to move away from BPT given the soft underbelly of this result, however the stock has seen shorts increase to 3.25% of late plus the stocks down ~7% in 2021 compared to Santos (STO) which is up 10% leading me to question how much is already built into the price…..at this stage I will give BPT a little time especially as we remain bullish the sector. We are not married in any way to this position and if in doubt it will probably be cut. Today will be key to see if it embraces strength in the Oil price overnight.
MM is cautious BPT following 1H21 result
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