Tatneft: Opportunity in crisis (upgraded to BUY)
We have upgraded Tatneft to BUY (from Hold), and raised our price targets (PTs) for the GDRs and the preferred shares to USD 50 and RUB 560, respectively. Even though the latest fiscal changes reduce our valuation by 30%, the better progress at the TANECO refinery, the lower capex and our reduced WACC (to 12%) more than offset the negative tax implications. Moreover, with the stock down 23% in just over two months, we believe that the market is already discounting the extra fiscal burden, but not giving full credit to the rising diversification of the business, management’s strong commitment to shareholder returns and its track record so far, as well as its strong balance sheet, with c.USD 1bn of net cash, which allows the company to potentially launch a buyback and reduce its cost of capital further.
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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