OTKRITIE FC Forecasts Rosneft 3Q09 US GAAP
OREANDA-NEWS. Rosneft should release its 3Q and 9M09 US GAAP financials on 25 November. While we expect a 23% revenue growth QoQ on the back of higher crude and refined product prices, we forecast Rosneft’s EBITDA to grow only 5% QoQ and net income to be essentially unchanged on 2Q09, owing to higher export duties, the impact of a stronger ruble, and a forex loss that we estimate at US 350m., reported the press-centre of OTKRITIE Financial Corporation.
We forecast the company’s 3Q09 EBITDA at US 3.74bn, with a net income of US 1.60bn on total revenues of US 13.42bn. It remains unclear, however, whether Rosneft would make any provision against a RUB5.28bn (US 182m) fine imposed by the Federal Antimonopoly Service in October 2009. Thus we have not included any one-off provisions in our 3Q09 forecasts. Consequently, the actual bottom line figure could appear below our forecasts, should Rosneft make any FAS-related provisions in its 3Q09 US GAAP financials.
View: Overall, we do not expect a visible share price reaction to the 3Q09 results. We believe the majority of investors anticipate a major profitability improvement next year owing to the ramp-up of the Vankor field output, which will be combined with an export duty exemption.
Valuation and Action: Rosneft trades at a premium to its Russian peers and to other GEM oil peers (2010E P/E of 11.9). We find this premium justified given the company’s growth potential and the tax benefits (export duty exemption for the Vankor field). We have a BUY rating and a target price of US 10.77/share.
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