Sector commentary

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Oil & Gas

09/06/2016
Oil & gas macro outlook - Tightening market buffered by abundant inventories
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Oil price volatility remains high, with Brent crude having risen $17/bbl or 51% since our last macro outlook in January 2016. Since then we have seen supply affected by a 1.2mmbpd reduction in Canadian output due to wildfires, combined with underinvestment and instability-driven supply interruptions across OPEC members Venezuela, Libya and Nigeria. Some of these temporary supply effects will reverse over the coming months; nonetheless, we expect the oil market to tighten over 2016. Although record levels of inventory and uncertainty over the sustainability of emerging market demand growth may limit near-term price gains, longer term, we expect prices to rise to c $70/bbl in line with levels required to incentivise non-OPEC supply expansion. Our short-term oil price assumptions remain aligned to EIA STEO forecasts at $43/bbl Brent in 2016 and $52/bbl in 2017.

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Mining

29/01/2016
Mining Research Principles - Finding fundamental value
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Launch of Mining Research Principles Edison prides itself on the quality, consistency and robustness of its research. At the heart of its mining research are principles that ensure that our coverage is insightful, accurate, comparable and relevant to all investors interested in the global mining industry. Today we are publishing for the first time a comprehensive document that takes readers through the processes and principles we apply to our mining research, which in turn ensures our coverage consistently meets the standards investors and companies expect of us. We hope you enjoy reading this important document and we welcome all comments.

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Oil & Gas

27/01/2016
Oil & gas macro outlook - Oversupply short term, lower break-even long term
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The oil markets have been in turmoil now for 16 months, with January 2016 trading the most tumultuous we have seen in years. Crude prices have plummeted to levels not seen since mid-2004 and both slowing Chinese demand growth and Iranian exports are weighing heavily on the market. We align our short-term forecasts to the EIA, which does not expect a reversal in inventory builds until H217. This reduces our forecasts for Brent in 2016 and 2017 to $40/bbl and $50/bbl respectively. Longer term, a fundamental shift in costs is likely to result in a lower break-even for marginal cost producers; this sets the base for our long-term oil price assumption. As a result, we reduce our long-term Brent assumption from $80/bbl to $70/bbl.

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Oil & Gas

15/10/2015
Oil & gas macro outlook - The stage is set for a firming price trend
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The stage is set for a firming price trend. The oil market has been in hefty surplus in 2015. This contributed to light crude prices plumbing six-year lows and falling below long-run marginal costs. However, we believe a market transformation is underway, led by sharp cutbacks in capex and recovering demand. Significantly, US production is now trending decisively down after the resilient showing in H115. We expect this trend to gather pace in the coming months and contribute to declines in non-OPEC output in 2016 and 2017. After a lacklustre fourth quarter, we see scope for firming prices in 2016-17 as evidence of market tightening becomes increasingly apparent. Despite a more cautious stance in October over global supply/demand balance, the oversupply situation is nowhere near as loose as a year ago. In the medium term, shale oil development and the Saudis’ desire to head off competition from renewables will probably keep prices well below the highs of 2011-14.

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Pharmaceutical & Healthcare

09/06/2015
ASCO 2015 – key takeaways
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The annual American Society of Clinical Oncology (ASCO) meeting traditionally provides a snapshot of the most exciting clinical programs and science in the field of oncology, a disease category where around 40% of biopharmaceutical research is focused. After three and a half days of clinical/scientific presentations and conversations with key opinion leaders and community oncologists, you get a great sense of where the treatment of cancer is headed.

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*Multiple Sectors

22/05/2015
ASX Spotlight conference book May 2015
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Edison Investment Research is delighted to be working with ASX on its upcoming Spotlight Conferences in Singapore and Hong Kong on the 26 and 28 May. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation.

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Companies mentioned
Anteo Diagnostics , Otto Energy , Bionomics , See more..., Anteo Diagnostics, Blue Sky Alternative Investments, Dacian Gold, Dorsavi, Dubber, Eureka Group Holdings, IMF Bentham, Martin Aircraft Company, Mincor Resources, Neometals, Skilled Group, TNG, The a2 Milk Company

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Oil & Gas

18/05/2015
Nodding Donkeys - The musings of the Edison Oil and Gas team since March 2015
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Edison’s Oil and Gas team has a great deal of knowledge in the sector, with decades of cumulative experience on the buy side, sell side as well as technical and management roles in industry.

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Oil & Gas

01/05/2015
Oil & gas macro outlook - The market is returning to equilibrium
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Since the 2015 first quarter lows, light crude oil prices have risen by around 30% despite inventories rising to record levels. Rather than inventories, the market has chosen to focus on one of the sharpest drops in the US rig count on record and the potential for a weakening US production trend in the coming months. While the lows for this cycle have probably been seen, we believe the price trend could soften near term reflecting hefty inventories and buoyant OPEC supply. The issue of Iranian exports could also weigh on prices ahead of the end June deadline for a final agreement between the world’s major powers and Iran over its nuclear programme. Looking at the balance of 2015, however, we continue to expect an upward trend in prices as the market returns to equilibrium driven by slowing non-OPEC supply growth and firming demand.

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