Russian Oil & Gas: Risk/reward less attractive (Lukoil and Tatneft downgraded to HOLD, Rosneft upgraded to BUY)
We update our valuation of the Russian oil stocks to incorporate our more conservative oil price assumptions. Even though history suggests that the best time to buy stocks is during a crisis, we believe that the stocks do not yet reflect the new reality and do not offer sufficient upside to compensate for the extra risks, with our FY20E expected dividend yield of just 2.6%. Hence, we downgrade Lukoil and Tatneft to HOLD, but upgrade Rosneft to BUY on expectations of stronger capex cuts and additional benefits from a rising share of tax-exempt barrels, falling interest rates, and its reliance on long-term oil supply contracts.
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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