WOOD Flash – Gazprom: Investor Day – possible upside for 2018E FCF
Gazprom held its annual investor in London today (8 February), following a similar event in New York earlier this week (6 February). The company did not address key investor concerns over the low returns from its investment programme and, consequently, the relatively low returns to shareholders (which is not surprising for us); however, the guidance on export prices and volumes, as well as the moderate capex plans, were ahead of both our and the consensus estimates. We see 15% and 23% upside risks to the consensus and our net income estimates, respectively, should Gazprom’s macro expectations materialise. We believe that the market is underestimating the value of Gazprom’s core assets by not looking beyond 2018E; hence, we rate the stock a BUY, with a USD 6 price target (PT), although we admit that its other peers offer more attractive returns. Our top picks in the sector are Tatneft (BUY, USD 65 PT) and Lukoil (BUY, USD 70 PT).
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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