PGNiG: Need to wait for LoNGer (downgraded to HOLD)
We have downgraded our rating on PGNiG to HOLD, from Buy, with an updated price target (PT) of PLN 5.77 (PLN 6.54), offering upside of 8.1%, as the company has become a victim of an oversupplied gas market and a spot gas market price crash. We still see the underlying story as a positive one, as a growing domestic market, new upstream projects, and investments in power and distribution should provide growth. We believe that diversifying gas sources and signing hub priced contracts should remove the price risks that have squeezed the trading business. We see the P/E ratio reaching 12.4x in 2019E, before falling to just 8.5x in 2021E as earnings improve. Likewise, our EV/EBITDA is 4.9x in 2019E, falling to just 3.5x in 2021E.Polskie Gornictwo Naftowe I Gazownictwo SA Polish Oil & Gas Co (PGNiG) is an integrated natural gas company based in Poland. Co.'s core activity covers exploration and production of natural gas and crude oil as well as import, storage, trade and distribution of gas and liquid fuels. Co.'s scope of activity includes gas trading and commercial support, as well as operation, maintenance and expansion of its distribution system. Co.'s distribution networks comprises over 100 thousand kilometers of gas pipelines (high, upper-medium, medium and low pressure), which cover primarily industrialized and urbanized areas of the country.
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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