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What are MM’s thoughts on Karoon (KAR) following Brazil’s tax?

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Question asked 04/03/2023

What are MM’s thoughts on Karoon (KAR) following Brazil’s tax?

Hi James and Team Lynas was hit with a fall of 7.2%, a casualty of Tesla’s investor day as Elon Musk flagged moves to remove rare earths from electric motors. Also Karoon Energy slipped 3.8%, hit by a “temporary” crude oil export tax by the Brazilian government. What's your current view on LYC and rare earths being removed from electric motors? Do you have any interest in Karoon if it continues to fall below $2 or is it best left alone given the crude oil export tax may not be so temporary? regards

Answer

Hi,

Short and sharp on Lynas given there was an earlier question on this one – we see the stock as oversold on these concerns.

Karoon (KAR) announced a $US22-35m tax hit on the back of Brazil’s new tax. Once taxes are in place it becomes very difficult to remove them and see Karoon as a risk not worth taking here. We are neutral energy here, though more positive in the medium term and we see better risk reward in other stocks in the sector.

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Karoon Energy (KAR)

LAST UPDATED 03/03/2023 14:28

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