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Shell (LSE:SHEL) Weighs Malaysia Asset Sale On A View It Still Looks Undervalued

Simply Wall St · 3d ago

Shell (LSE:SHEL) is weighing a sale of a majority interest in its Shell MDS gas to liquids business in Malaysia, a potential US$1b deal that could reshape part of its Integrated Gas portfolio.

At a £35.51 share price, Shell has seen firm momentum build, with a 30-day share price return of 6.96% and a 90-day gain of 15.74%. The 1-year total shareholder return of 40.24% and 5-year total shareholder return of 200.35% point to a strong longer term payoff profile compared with the recent move.

Scan other energy heavyweights showing similar price momentum and capital allocation shifts with our hand-picked 9 high quality undervalued stocks.

Shell’s reshaping of its gas to liquids assets and the sharp share price run raise a practical choice. Is it better to step in at £35.51 or wait for a cooler entry before valuation does the talking?

Most Popular Narrative: 4% Undervalued

On the most followed narrative, Shell screens modestly cheap, with a fair value of £37.05 against the latest £35.51 close. This puts the focus squarely on how its gas heavy strategy and cash returns story play out from here.

Shell's significant and growing investment in LNG, highlighted by the start-up and ramp-up of LNG Canada and new projects in Egypt and Trinidad & Tobago, is described as positioning the company to benefit from steadily rising global energy demand and LNG's role as a transition fuel. This is described as a potential driver of long-term top-line revenue and a possible support for future earnings as Shell's LNG portfolio expands and gains more trading flexibility in key markets.

See why 200 investors see Shell as 4% undervalued.

Result: Fair Value of £37.05 (UNDERVALUED)

Still, Shell’s weakness in chemicals and the strain of heavy buybacks on future financial flexibility could reverse the current undervalued narrative if conditions tighten.

Find out about the key risks to this Shell narrative.

Next Steps

Sentiment around Shell is mixed, with clear upsides and real concerns. Act while the data is fresh and weigh both sides with the 2 key rewards and 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.