Post by
MLEWICKIMBA on Jul 16, 2024 1:51am
Happy to see 4 buck close -- But TVE remains undervalued!!!
1. There is this thinking that 900M CAD is a lot of debt but in fact its not the debt but the interest costs that the market thinks is a problem. Its not a problem!
2. TVE has good credit arrangements and now pushed out until 2027.
3. TVE has almost AMERICAN LIKE Interest Costs at about 7.5%.
4. TVE only requires about 12-14 days of sales to cover their annual interest cost. Okay ATH is 7 days. but TVE is catching up and due to their lower per barrel of production costs at $37.00 but going to $36.00, I expect progress each future quarter just like the last three quarters.
5. Also each time they pay down debt it is an indirect return of capital and the balance sheet value improves.
6. Getting 60% return of capital means a lot considering what I believe is a profound underestimate of TVE FCF in 2024. SEE POINT #7.
7. I am estimating FCF at 375M to 425M CAD.
Summary:
This means that TVE can rapidly increase buybacks and further debt repayment the next 5 months.
STOCK is Undervalued.
4.50 is fair this month.
ML