Executive Summary

Renergen released its financial statements for the six months ended 31 August 2024 on 31 October 2024. We note the
below highlights and remaining concerns:
1. Even though revenue increased by 8%, losses for the period increased by 63%. This is due to expenses ramping up
quicker due to less capitalisation and increases relating to higher operational activities.
2. There were 2 388 tonnes of LNG produced during the period, in line to the 2 386 tonnes produced in 1H24.
Delivering its first container of helium to its customer remaining a key priority for management.
3. We hope to see details soon regarding the Nasdaq listing due to it being a crucial funding requirement and creating a
risk of potential share dilution. As per the 8 March 2023 circular, the listing was expected to occur during the third or
fourth quarter of 2023. However, we are pleased to see that Standard Bank of South Africa was appointed as a joint
underwriter of the Nasdaq IPO indicating some potential progress being made.
We maintain our intrinsic value at R7.8 as the one year of discounting was offset by us extending our forecast by a
year due to the delays.

Analyst thesis

1. The company has access to a unique asset through its higher than peers’ concentration helium reserves combined with
plans for material future growth. Growth could potentially benefit from higher gas prices relating to risks of gas
shortages in South Africa.
2. Currently, we see the price as expensive considering the material risks which include:
a. The complexity of exploration and development of gas fields (operational risks) with operational success becoming
crucial as debt gets utilised (debt covenants).
b. The capital intensiveness of exploration and development of gas fields requires significant capital with the risk of
dilution enhanced with the current lower share price.
c. Catalysts of operational success or maximum production capacity can only be verified by FY27.
d. The going concern risk regarding management’s main assumption which depends on obtaining the relevant funding
and successful completion of phase 2.
3. Steps towards successfully completing management’s EBITDA guidance of between R5.7 billion and R6.2 billion (not
expected before financial year 2027), would serve as potential catalysts and would increase our bull case probability
(currently 10% on the bull case). These include obtaining the required funding and reaching production volume
guidance.

Results

Table 1: 1H25 Results summary

Valuation

Table 3: Valuation

Table 6: Valuation multiples

Source: FactSet