SEPTEMBER 9, 2021 8:00 AM

Puma Energy improves balance

buy

Puma (- / B1 / BB-) reported strong Q2 results. Sales volumes were up 16% yoy and 12% qoq. EBITDA for the quarter was $ 97 mn, up by $ 68 mn in 2Q20, but decreased by 21% qoq ($ 123 mn) due to the time lag between higher oil prices and higher retail prices in regulated markets, as well as unfavorable conditions for bitumen trade. Operating cash flow for the quarter was $ 136 million and net free cash flow was positive at $ 4 million after accounting for cash interest ($ 35 million), leases ($ 40 million) and capital expenditures ($ 57 million).

YTM

5%

RISK

- / B1 / BB-

DURATION

2.8

The company paid off the outstanding portion of its $ 530 million three-year loan at the end of April through an additional share issue of $ 500 million to current shareholders, which reduced net leverage to 1.8x from 2.5x at the end of the previous quarter. Cash and cash equivalents at the end of the second quarter were $ 481 million and the company's liquidity position will be improved after the sale of the Angolan business for $ 600 million is completed by the end of September.

We note that Puma's balance sheet continues to improve, thanks to the efforts of major shareholder Trafigura to put the subsidiary's business on a solid and autonomous footing. The main risks for Puma are reduced support from Trafigura and an increase in the incidence of COVID19, which leads to reduced sales and lower cash flow. Among the issuer's Eurobonds, we distinguish an issue with maturity in 2024 (ISIN - XS1696810669). The bonds offer a dollar yield of almost 5% with a duration of 2.8 years.

Puma Energy Holdings Pte. Ltd. operates as a holding company. The Company, through its subsidiaries, owns and operates storage facilities, as well as refines, distributes, and sells petroleum products, lubricants, and aviation products. Puma Energy Holdings serves customers worldwide.  Puma’s largest shareholder is commodities trader Trafigura. Trafigura will control about 93% of Puma shares after deals to buy out other shareholders and loan to equity conversions are completed (expected by year end).