Recent Macro and Geopolitical Changes Bode Well for Energy Sector

This report is an updated version of the report published on 5 June 2025 at 12:49 PM AEST 

Company Overview

Company Overview: Strike Energy Limited (ASX: STX) is an Australia-based energy and fertilizer company engaged in the exploration and development of oil and gas resources in Australia. Its segments include Producing Assets and Other. Its projects include Perth Basin, Greater Erregulla Gas, West Erregulla, Project Haber, Perth Basin Geothermal, and Walyering. Whitehaven Coal Limited (ASX: WHC) is an Australia-based coal producer that develops and operates coal mines in New South Wales and Queensland. It has three primary segments: open-cut operations, underground operations, and coal trading & blending. Kalkine’s Sector Report covers the Investment Summary, Sector Overview & Supporting Catalysts, Data Insights & Analysis, Financial Metrics, Financial Commentary, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on selected stocks.

Investment Summary

Sector Overview and Supporting Drivers

Australia’s Energy sector is a critical component of its economy, encompassing fossil fuels (coal, oil, gas), renewables (solar, wind, hydro), and electricity networks. The country is a major exporter of LNG and coal, with strong ties to Asian markets. Domestically, there's a growing shift toward decarbonisation, driven by government policies and private investment in renewables. Energy security, transition to net zero, and infrastructure modernisation are key themes.

Sector Catalysts

Index Performance

Investment theme and stocks under discussion (STX, WHC)

After understanding the sector, let us now look at two companies from the Energy sector listed on the ASX. The price potential of the companies under discussion have been analysed based on Price/Cash Flow and Price/Earnings based relative valuation method.

1. ASX: STX (Strike Energy Limited)

(Recommendation: ‘Speculative Buy’ at AUD 0.165; Potential Upside: Low Double-Digit; MCap: AUD 458.70mn)

The stock has witnessed a correction of ~17.07% in last six months, and over the past 12 months, it has decreased by ~12.82%. The stock has a 52-week low and 52-week high of AUD 0.132 and AUD 0.283, respectively and is currently trading below the 52-week high-low average. STX was last covered in a report dated ‘17 January 2025’.

2. ASX: WHC (Whitehaven Coal Limited)

(Recommendation: ‘Hold’ at AUD 5.595; Potential Upside: Low Double-Digit; MCap: AUD 4.59bn)

The stock has corrected by ~12.93% in the last six months, and over the past 12 months, it has declined by ~30.30%. The stock has a 52-week low and 52-week high of AUD 4.260 and AUD 9.080, respectively and is currently trading below the 52-week high-low average. WHC was last covered in a report dated ‘22 April 2025’.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an Indicator nor a guarantee of future performance. 

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 5 June 2025. The reference data in this report has been partly sourced from REFINITIV. 

Note 3: Investment decisions should be made depending on an individual’s appetite for upside potential, risks, holding duration, and any previous holdings. An ‘Exit’ from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

Technical Indicators Defined: - 

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.