Orlen: who are you calling a refiner? (stays BUY)
We maintain our BUY rating on Orlen, with an updated price target (PT) of PLN 73.3 (from PLN 90.3 previously), offering upside of 37.9%. Orlen is still on course to invest PLN 220bn by the end of the decade, both for growth and as it transitions to a less carbon-intensive business. The result will be a company that generates >PLN 40bn in EBITDA p.a., with upstream first, followed by the power and trade segments. The macro environment can hardly match the recent past, but with the exception of petrochemicals, we believe it will be good enough to maintain strong cash flows and keep leverage below management’s 2.0x net debt/EBITDA ceiling. The end of special royalties will boost upstream massively in 2025E. Management promises a base DPS of PLN 4.5 in 2025E and we expect the yield to be 8-9% in the coming years. Despite its more diverse business model, we are forecasting a P/E of 3.6x and an EV/EBITDA of 2.5x for 2025E vs. a P/E of 7.3x and an EV/EBITDA of 4.6x for its peers.Polski Koncern Naftowy Orlen's activities are divided into three main business segments: the Refining Segment that comprises crude oil processing as well as wholesale and retail trade in refinery products. The Petrochemical Segment that encompasses production and sale of petrochemicals and chemicals. The Retail Segment that comprises of sales at petrol stations. Co.'s basic products include gasolines, diesel oils, light heating oil, Jet fuel, liquid gas, polyetylene, polypropylene, benzene, butadiene, acetone, phenol, glycols, toluen, ortoxylene.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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