Energy Co. Increases Holdings in JV in South Africa
Research Report

Chariot Ltd. (CHAR:AIM) announced it would be acquiring 49% of Neura Group's Etana Energy, according to Auctus Advisors analyst Stephane Foucaud in a December 18 research note. At the same time, H1 Holdings, a Black-owned and managed company from South Africa, will acquire 25% of Etana from Chariot.

Foucaud noted that "Etana holds one of the few electricity trading licenses granted by the National Energy Regulator of South Africa, enabling it to buy and sell electricity through the national transmission grid," and commented that this business dealing will simplify ownership of Etana, allowing Chariot and H1 to be the only shareholders. 

With this transition, Neura will receive US$0.3 million in cash upfront and a further US$0.7 million from Chariot, payable in 2028 and on any further projects. 

Foucaud pointed out that the same goes for the deal between Chariot and H1, which will be completed on a pro rata basis. 

"This increased holding means that Chariot will get a larger split of future revenues, but the trading business also unlocks Chariot’s participation in large renewable energy projects that they are looking to develop in South Africa," he said.

Valuation

With this in mind, Foucaud reiterated his target price of £0.50, which represents an implied total return of 355%. In terms of this evaluation, Foucaud stated, "Our Core NAV for Chariot based on 20% of Anchois 2C resources remains £0.28/sh. Taking FID on the project by YE24 would add £0.05/sh. A success at Anchois East is worth £0.26/sh, and the three onshore well program could add a further £0.12/sh. Our Sum of the Parts valuation stands at £0.51/sh."

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