PGNiG: Clouds clearing, time for PGNiG (stays BUY)
We reiterate our BUY recommendation on PGNiG, with a revised 12M price target (PT) of PLN 7.60 (down from PLN 7.83), offering 21.8% upside. Although the last two sets of quarterly results were disappointing, particularly in the trading segment, we expect a seasonal recovery in 4Q17E, and remain bullish on the prospects for the Polish gas market in general. We see the E&P segment benefiting from higher oil and gas prices, but remaining low enough to support growth in demand. The company has a very strong balance sheet, so it has the ability to invest significantly and continue to pay dividends. Its valuation ratios look reasonably cheap, with a 2018E EV/EBITDA of 4.2x vs. 4.5x for the integrated oil and gas companies and 8.1x for utilities, with a historical three-year average of 5.2x for PGNiG.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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