MOL - Return To The Integrated Model

• We think it is a good time to add MOL a portfolio as the name is undervalued (+21% upside to our TP) and the results of the Arbitration is approaching (2020H2) where MOL is expected to receive relatively large compensation (theoretical maximum is USD 1 bn vs. our estimate USD 0.4bn equivalent of 180 per share) which we think is not priced in, and could add momentum to share price.

 

• We adjust our earnings and target price for MOL to reflect the changes brought by the COVID -19 environment. Briefly, we expect two years of transitory period (2020 and 2021) before the „normalization” (oil price at 60 USD/bbl and refinery margins at 4-5 USD/bbl). For 2020 we expect significant drop in CCS clean EBITDA to HUF 513 billion -28% y-o-y from HUF 709 bn [2019] as a result of the challenging environment and HUF 728 billion (vs. original guidance of HUF 840bn) for 2021 and a total normalized EBITDA of HUF 880 bn for 2022. As a result of the above mentioned we decrease our 12m ex-dividend TP to HUF 2,500 and upgrade our Recommendation to BUY.