WOOD Flash – Rosneft: 2Q18E preview – solid earnings recovery expected (due on 6 August)
We expect Rosneft to report very strong 2Q18E results on 6 August, with net income potentially reaching RUB 225bn (a 230% yoy gain) and FCF of c.RUB 200bn, driven primarily by improved macro conditions. In our view, the results should provide strong evidence for our positive investment case on Rosneft, which is one of our top picks in the sector. As the most sensitive company to stronger oil / a weaker RUB, Rosneft is the biggest beneficiary from the current macro conditions, which we see as sustainable in the mid-term. Moreover, Rosneft should see its earnings normalise over the next 18 months, as two major accounting effects disappear next year, with the first improvement expected already in the 2Q18E results. We reiterate our BUY and USD 8.5/GDR price target (PT) on Rosneft, and we expect a significant earnings upgrade after the results.
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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