Novatek 4Q 19 - Stronger but neutral for the stock, as prices in focus
Today, Novatek published its 4Q 19 results, which slightly exceeded consensus on revenue and EBITDA, but the market missed the net income due to non-cash negative effect from revaluation of Arctic LNG 2 project resulting from changes in long-term pricing forecasts. Net operating cash flow (NOPF) exceed our estimates by 7% on additional interest received and higher than expected positive effect from changes in working capital. Moreover, capex came in below our projects. As a result, free cash flow significantly exceeded our estimates. We treat the financial results as neutral for the stock as we believe the market is more focused on still relatively low gas prices which may have a negative impact on negation with partners on new LNG and conditions.Novatek is an independent gas producer and natural gas producer in Russia. Co. is engaged in the exploration, production, and processing of natural gas and liquid hydrocarbons. Co.'s upstream activities are concentrated in the Yamal-Nenets region, which is a natural gas producing area and accounts for a significant part of Russia's natural gas production. Co.'s three core fields are located in the regions of Yurkharovskoye, East Tarkosalinskoye and Khancheyskoye. Co. maintains natural gas reserves of approximately 1,144 bcm. Co.'s total net proved reserves totals around 8,088 million barrels of oil equivalent (boe).
NOVATEK MICROELECTRONICS CORP. is a Taiwan-based company principally engaged in the research, development, design, manufacture and distribution of wafers. The Company's primary products include flat-panel display drive wafers and system-on-chip (SOC) wafers. The flat-panel display drive wafers mainly include large-size panel drive wafers, light emitting diode (LED) drive wafers, as well as mobile communication portable consumer panels drive wafers. The SOC wafers include liquid crystal display (LCD) panel control wafers, digital set top box and multimedia control wafers, digital still camera control wafers, digital video disk (DVD) player wafers, digital photo frame wafers and image sensor wafers. The Company mainly operates its businesses in Taiwan and the Asian-Pacific regions.
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