Rosneft: Major steps towards boosting shareholder value (upgraded to BUY)
Yesterday (1 May), after the UK stock market closed, Rosneft announced that its board of directors has approved a number of new steps in its five-year strategy (approved in late-2017). The key steps include: the launch of a USD 2bn buyback during 2Q18-2020E; total debt reduction; a capex cut; and an additional boost for the FCF through reduced working capital and the further divestments of non-core assets. We have raised our price target (PT) by 22% to USD 7.3/GDR (from USD 6.0/GDR previously) and upgraded the stock to BUY (from Hold) as we incorporate the lower debt and higher FCF into our model on the back of the announced initiatives. Moreover, the stronger macro environment and the better alignment of interests between the controlling and minority shareholders (via a buyback) improve the company’s investment case significantly, which had suffered, until recently, from the uncertainty over the use of cash and the limited returns to minorities.
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.
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