Jun
24
Rosneft: Target: to enter world’s top three capitalizations- June 24, 2008
Filed Under Bullet-moments, Uncategorized |
This Monday Rosneft issued its financial report of 1Q 2008. According to the report – oil company’s net income upped over 7 times versus similar term of 2007 from 0.358 bn USD to 2.564 bn USD. However the net income of 1Q 2008 has been dropped -13.1% versus 4Q 2007 (2.952 bn USD).
Other financial values of Rosneft also did well. During 1Q 2008 Rosneft’s sales expanded by 99.1% versus similar term of past year and formed 16.368 bn USD, whilst market expected 16.536 bn USD, EBITDA rose 3.25 times to 4.658 bn USD, do remember that general forecast intended the growth of value up 3.2 times to 4.658 bn USD.
When evaluating the nature of company’s sales growth we must note the expanded total cost of sales for extracted and refined goods and oil products at average of 70%, on par with increased oil extraction by consolidated enterprises of the company, in addition to the share of Rosneft in the affiliated organizations, which formed 23.9% or +1.715 mn barrels per day to 2.125 mn barrels per day.
First quarter’s 2008 free cash flow expanded over 29 times, from 113.4 mn USD in 1Q 2007 to 3.352 bn USD in the reported period.
We have corrected our model of Rosneft, adding several changes to it. In particular – our forecast of sales prices on oil & oil products upwards at average of +24%. We have also reviewed the volume of capital investments, increasing it over the post-forecast term at average of +25%.
In Rosneft’s model we have reflected the influence of applying special taxation under mining tax at depleted deposits since 2008, as well as “tax holidays” on new regions, in which company operates, which would be applied starting with 2009. We have also considered future change of mining tax calculation scale itself, set this March by A. Kudrin and supported by premier minister V. Putin to be accepted starting with January 1st 2009 and accepted during the first hearing by State Duma on June 11th.
During the revaluation of Rosneft’s model we have acquired a new fair price of company’s stock, which formed 14.31 USD, instead of previously forecasted 11.33 USD, which now intends 22.73% growth potential. Therefore we confirm “BUY” recommendation on stock of Rosneft.
Rosneft: Target: to enter world’s top three capitalizations- June 24, 2008 (PDF)