Austrian banking group Raiffeisen on Dec. 2 reduced its target price on Czech petrochemicals group Unipetrol following on the heels of a Unipetrol investor and analyst day held earlier this week, but upgraded its recommendation from “reduce” to “hold.”
“After the correction of the stock during the past weeks, we now see the stock fairly priced for the time being,” Raiffeisen Centrobank analyst Phillip Chladek said in a note to clients. “After applying only minor changes to our valuation models, we reduce our target price from CZK 215.00 to CZK 210.00.”
Unipetrol, which is majority controlled by Poland’s PKN Orlen, reported third-quarter 2010 results above market expectations, and gave a “quite positive guidance” on the refining margin for the remainder of the year, he said.
However, the climate for refining in the coming years is uncertain, Raiffeisen Centrobank noted.
“[This], combined with the little visibility regarding the intentions of the management in terms of how to use the company’s available funds, we currently see the stock’s upside limited, despite the rising profitability,” Chladek said.
What is clear, according to Raiffeisen Centrobank, is that 2011 will not be a boring one for Unipetrol.
“The company’s future profits will be subject to several triggers. We included impacts such as a new CO2 tax (we forecast CZK 380 mln), one-off income of CZK 250 mln (our estimate) from the sale of redundant emission certificates, shutdown costs in 3Q 11 that we see at CZK 400 mln,” Chladek said.
For these and other factors (higher lignite cost, cost reductions, new power plant) Raiffeisen Centrobank’s expect more clarity after the publication of Unipetrol’s new strategy toward the middle of 2011.
