MOL - Offers Value But No Short Term Trigger
Offers value but no short term trigger
- We update our forecast to reflect the current commodity environment which led us to increase MOL’s 12m-ex div. target price to HUF 3,240 and lift our recommendation to BUY from Neutral. MOL is expected to generate record CCS EBITDA of HUF 1,591 bn in 2022 on the back of cheap ural and high oil price. Share price implies a strikingly low 1.98x adj. P/E’22 and 3.6x P/E’23 (vs. LT avg. of 7-8x P/E) and 2.2x and 2.6 x EV/EBITDA (vs. LT avg. of 4.5x EV/EBITDA) for ’22 and ’23 respectively. The extra cash generated could be close to HUF 800 per share in this year.
- Albeit, MOL is in a cash cow mode currently, investors seek the answer to how long could this environment last? We assumed fast normalization of the KPI’s but calculated that MOL could make extra ca 400 – 500 HUF EPS p. a. if current environment persists (B/U @ 25 USD/bbl, and oil price @ 100 USD/bbl). At the same time MOL’s share price in USD has fallen close to 2008 lows while the company could benefit from the weakening FX.
Loss on Hungarian fuel price cap could climb to USD 0.6 bn (or an equivalent of loss of 15 USD/bbl in refining margin of the HU operation) in 2022 which could easily be offset by the current estimated refining margin of > 40 USD/bbl (B/U + strong diesel crack
Magyar Olaj-Es Gazipari is an integrated oil and gas enterprise based in Hungary and active in central and eastern Europe. Co.'s core activities include: exploration and production of crude oil, natural gas and gas products; refining, transportation, storage and distribution of crude oil products in both retail and wholesale markets; importation, transportation, storage and wholesale trading of natural gas and other gas products; and the production and sale of olefins and polyolefins. TVK, the petrochemical affiliate of Co., is an olefin and polyolefin producer in Hungary.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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