Golar LNG Limited

GLNG Details

Golar LNG Limited (NASDAQ: GLNG) provides Liquefied Natural Gas (LNG) infrastructure for liquefaction, transportation, regasification, and downstream commercialization. The firm buys, owns, operates, and charters LNG carriers, Floating Liquefied Naturel Gas (FLNG) vessels, and Floating Storage Regasification Units (FSRUs), as well as manages external vessels under third-party management contracts. GLNG has nine LNG carriers, one FSRU, and three FLNGs in its fleet as of March 31, 2021.

Increased Capacity Utilization of FLNG vessel: GLNG announced on July 20, 2021, that it reached an agreement with Perenco Cameroon and Société Nationale des Hydrocarbures (SNH) to improve capacity utilization of the FLNG Hilli Episeyo (Hilli), one of the company's vessels. This will increase Hilli's capacity by 200,000 tons of LNG in FY22, increasing the total utilization to 1.4 million tons. Under the agreement, Perenco and SNH will also drill and appraise 2-3 additional natural gas wells in FY21 and upgrade upstream facilities in FY22 to further production from FY23 onwards.

New CEO Appointment: On May 13, 2021, the company appointed Mr. Karl Fredrik Staubo as the new Chief Executive Officer (CEO). Mr. Staubo was serving as the CEO of Golar LNG Partners LP since May 2020; the firm was recently sold to New Fortress Energy (NFE). He has also served as GLNG's Chief Financial Officer (CFO) since September 2020.

Q1FY21 Results: The company reported a slight increase of 2.67% in total revenue to USD 125.83 million in Q1FY21 (ended March 31, 2021) compared to USD 122.56 million in Q1FY20. Net income increased to USD 63.10 million, compared to a net loss of USD 91.25 million in Q1FY20. The net income attributable to the company’s shareholders was USD 25.36 million in Q1FY21 vs. a net loss of USD 104.25 million reported in Q1FY20. As of March 31, 2021, the company had cash and cash equivalents of USD 149.94 million, with a total debt of USD 2.37 billion.

Key Risks: The extremely technical work associated with FLNG conversions can only be undertaken by a small number of contractors with the necessary skills. Hence, switching contractors for any reason might increase expenses and cause delays in the company's delivery schedules. Furthermore, because of the places where GLNG operates (for example, Cameroon), many of its existing and prospective future projects face greater political and security concerns than operations in other parts of the world.

Outlook:

GLNG FY21 Focus Areas (Source: Q1FY21 Results Presentation, May 2021)

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

GLNG Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: GLNG's share price has fallen 16.65% in the past one month and is currently leaning towards the mid-band of the 52-week range of USD 5.67 to USD 15.12. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 39.40. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 13.94. Considering the company’s capacity utilization initiatives, decent financials, high leverage, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 11.41, down 0.18% as of July 26, 2021, 2:52 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

NETGEAR, Inc.

NTGR Details

NETGEAR, Inc. (NASDAQ: NTGR) provides consumers, companies, and service providers with high-performance networking technologies and internet-connected products. The business is divided into two segments: 1) Connected Home and 2) Small and Medium Businesses (SMB). Consumers are the key feature of the Connected Home category, offering Wi-Fi mesh systems such as routers, smart gadgets, and subscription services. Business networking, LAN, security solutions, and cloud-based services are all part of the SMB category, concentrated on home-based, small to medium-sized enterprises. NTGR operates in the Americas, Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC) regions.

Partnership to Add Non-Fungible Tokens (NFTs): On July 6, 2021, NTGR revealed that Async Art NFTs had been included in its Meural Smart Canvas platform's art library. Async Art is the world's first programmable crypto-art platform, allowing artworks to change with a change in ownership or public data points. The Async channel on the Meural platform would exhibit the unique approach of automatically reflecting each artwork's growth through time.

Launching New Products to Improve Wi-Fi Performance: NTGR introduced the latest Insight Managed Wi-Fi 6 AX6000 Tri-band Multi-gig Access Point (WAX630) on June 29, 2021. WAX630 is suitable for situations with wide areas requiring Wi-Fi access to many users, such as schools, community colleges, mid-sized manufacturing facilities and company office premises, etc.

6MFY21 Results: The company reported a 22.88% rise in net revenues to USD 626.74 million during 6MFY21 (ended June 27, 2021) compared to USD 510.02 million during 6MFY20 (ended June 28, 2021), primarily due increase in revenues from the Connected Home segment. It reported a significant increase in net income to USD 40.79 million during 6MFY21 vs. USD 1.81 million during 6MFY20. As of June 27, 2021, the company stood with cash and cash equivalents (including short-term investments) of USD 335.32 million with no outstanding debt.

Revenues by Region (USD Million, Source: Investor Overview, July 2021)

Key Risks: Best Buy Co., Inc., Amazon.com, Inc., Ingram Micro, Inc., Tech Data Corporation, and AT&T sell a significant portion of the company's goods through traditional and online shops to end-users. NTGR's accounts receivables are frequently concentrated among a limited number of customers. If these retailers/distributors fail to pay the company on time, it may negatively influence its cash flow and operations.

Outlook: NTGR forecasts market growth to decrease by around 20% in H2FY21 compared to H2FY19 levels. NTGR anticipates the SMB segment to be supply-constrained in Q3FY21, with sales of about USD 285 to 300 million and a GAAP operating margin of 2.1% to 3.1%. In addition, it estimates its GAAP tax rate to be around 27.5% in Q3FY21.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

NTGR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: NTGR stock fell by 12.38% in the past six months and is currently leaning towards the mid-band of the 52-week range of USD 27.17 to USD 46.38. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 35.20. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 42.48. Considering the company’s market dominance, solid margins, strong balance sheet, current valuation, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 34.89, up 1.57% as of July 26, 2021, 12:27 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.