OMV Petrom: Honey, I’m Tougher than the Rest (upgraded to BUY)
We have upgraded OMV Petrom to BUY, from Hold, with an updated 12M price target (PT) of RON 0.36 (from 0.30), offering upside of 16.8%. We believe that the past few months have highlighted which companies are best-placed to deal with a disastrous pandemic, and OMV Petrom has shown itself to be tougher than the rest, in our view. Despite the low prices for oil, the very low prices for gas and the weak downstream margins, the second quarter beat bottom-line expectations handsomely. With a war chest of RON 5.1bn in net cash, OMV Petrom is also “richer than the restâ€. We expect a big chunk of this to be spent on Neptun, following the final investment decision (FID) in 2021E, but an acquisition in Bulgaria could be followed by more in this buyer’s market. Retail has offered up better margins to counter the lower volumes; however, even here, Romania is almost back to normal demand. Our revised multiples look much healthier: our projected P/E for 2020E is 11.1x and our EV/EBITDA is 3.32x.
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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