WOOD Flash – Tatneft: 2Q18 results – stronger earnings, although higher capex is a small concern
Tatneft has reported stronger-than-expected 2Q18 IFRS results, with net income beating both our and the consensus estimates by 7% and 8%, respectively. However, the company also increased capex 17% yoy (14% ahead of our estimates), although its spending dynamics remain within the full-year guidance of up to RUB 99bn. We rate Tatneft a BUY, with a USD 80/GDR price target (RUB 671/preference shares). We believe the market may not be giving full credit to Tatneft’s TANECO refinery (+USD 1bn of additional EBITDA upon expansion, on our estimates), overestimating the capital intensity of its upstream operations and underestimating its upstream growth potential (capable of growing 3-5%, in our view).
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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