WOOD Flash – Novatek’s FY18 results and conference call takeaways - fast delivery, reiterate BUY
Novatek reported strong results on 20 February, broadly matching our high expectations. Net income (adjusted for FX losses and other one-off items) increased 49% yoy in 2018 (+39% in USD terms). FCF (adjusted for increased working capital and growth capex) was USD 3bn (+9% yoy). During the conference call, the company announced plans for increased capex for 2019E, to RUB 185bn, which we interpret as a signal of the faster execution of current projects which, as a result, are returning cash back to Novatek earlier than expected. We also heard reassuring messages on the Yamal LNG development, which we estimate can deliver at least 1mtpa more LNG than its nameplate capacity, as well as confirmation of good progress on the Arctic LNG 2 project. We have a BUY rating on the stock, with a PT of USD 220/GDR, and our higher capex assumption broadly matches the announced better monetisation of near-term and mid-term projects.
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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