Petkim: Stop STARt (stays HOLD)
In this report, we maintain our HOLD recommendation on Petkim, with a new price target (PT) of TRY 4.0, offering 9% upside. The long-awaited STAR refinery is now providing lower cost feedstock to the plant, the full benefits of which we expect to see in 2020E. Oil prices have slipped from recent highs, bringing a boost to short-term margins. However, an unabated appetite for capital expenditure in the sector is bringing more than 10mt of new ethylene capacity onstream in 2019E, with more to come in the following years. The outlook for local demand is weak, in our view; and, while Turkey has stabilised, risks remain. Despite a stated wish to pay a regular dividend, no cash was distributed from the 2018 earnings, due to management’s worries over leverage.
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.
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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.
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