OREANDA-NEWS. November 18, 2009. Bashneft released its 9M09 RAS financials, posting strong QoQ results for Q309, but a 30% YoY decrease in revenue, reported the press-centre of OTKRITIE Financial Corporation.

View: The company’s 9M09 dollar-denominated revenue fell 30% YoY to US 2.2bn, while COGS dropped 28% YoY to US1.8bn. Net income sank to US 281m (-34%), and the net margin amounted to only 13%, remaining almost unchanged YoY.

The main reason for the weaker financials as compared to the year-earlier period is the lower price of crude oil. Since Q2 the company also includes in its RAS financials the revenue from oil product sales. Bashneft has commenced tolling operations along with Bashkir refineries (owned by AFK Sistema), which added c.38% to Bashneft’s total revenue. As a result, all Bashneft’s financials at least doubled QoQ in Q3. The company’s revenue/bbl amounted to \\$33.7 in Q3, while Surgutneftegaz posted only US 30/bbl in 3Q09.

Valuation: Bashneft’s 2010 P/E amounts to 3.1x, and the stock trades at a 39% discount on P/E to Tatneft and at a 52% discount to oil majors.

Action: This news is neutral for Bashneft’s stock price.