MOL' FCF generation looks as resilient as it gets - Earnings Reviews from Concorde Securities Ltd. (Hungary)

MOL has presented its new earnings and production guidance for the years between 2019 and 2023. Accordingly, MOL expects clean CCS EBITDA at USD 2.2-2.4 bln for 2019-21 (10% higher than earlier) and USD 2.4-2.6 bln for 2022-23 based on crude oil price of USD 60-70/bbl and refining margin of USD 4-5/bbl on average by 2023.

MOL indicated that base dividend may increase at a rate of 8-10% in the forthcoming years from HUF 85 paid for 2017. Special dividend payments, if any, will depend on forward-looking capex and balance sheet strength. We expect base dividend to amount to around HUF 95 a share for 2018, while also suggesting a similar amount of special dividends as was paid for 2017 (ca. HUF 40) resulting in a total dividend of around HUF 135. Although the management does refrain from guiding explicitly any dividend yield target, they have suggested an increase in base dividend which seems in line with the applied level of cost of equity. Share buybacks are not a priority for MOL to channel distribution to shareholders, either, while current treasury shares might be further cancelled in minor steps or used to finance inorganic E&P reserve replacement transactions.