Tatneft

APRIL 2, 2014
RUSSIA > EQUITY RESEARCH > OIL & GAS
FLASH NOTE: 4Q13 IFRS REVIEW
Alexander Nazarov
+7 (495) 980 43 81
Tatneft
Strong FCF, but how will it be used?
Tatneft yesterday reported neutral 2013 IFRS results, with a conference
call scheduled for Friday. Although the income statement numbers were
slightly below expectations, we highlight the very strong FCF. The main
question for Tatneft is the way this FCF will be utilized in 2014 and going
forward, which may lead to a re-rating of the company. So far, we see no
reason to change our NEUTRAL recommendation.
TICKER
Upside
0%
Revenues down 3% QoQ on lower exports
TICKER
TATNP RX
Target price
RUB 104.32
Closing price
RUB 116.24
Tatneft’s revenues in 4Q 13 from crude exports were down 12% QoQ to RUB
69 bln (gross, including export duties). Tatneft reduced the volume of its crude
exports by 9% QoQ to 2.7 mln tonnes, switching to larger domestic supplies,
which were up 39% QoQ to 1.7 mln tonnes. Refined products and
petrochemical sales were broadly flat at RUB 66 bln (gross, including export
duties and excise taxes). Tatneft likely enjoyed higher domestic crude prices
and the trend in 1Q14 may continue.
EBITDA suffered from higher operating and purchasing
expenses
TATN RX
Target price
RUB 200.80
Closing price
RUB 201.14
Recommendation
Recommendation
Downside
NEUTRAL
NEUTRAL
-11%
SELECTED STOCK DATA
No. of ords outstanding, mln
2,178
MCap, $ mln
11,782
Net debt, $ mln (2013E)
EBITDA was down 19% QoQ to RUB 30.8 bln, mainly due to operating and
purchasing expenses. Operating expenses rose 23% QoQ (due to seasonality;
we saw a similar jump in 4Q12), while purchasing expenses grew 1% QoQ,
mainly on higher refined product purchases. Total costs were up 4% QoQ,
which, together with the lower revenues, led to depressed margins. We note
the increase in refining profitability – the refining segment in 2013 accounted for
some 16% of Tatneft’s PBT, whereas in 2012 it barely brought 10%. This trend
may continue in 2014 with the start of the TANECO hydrocracker.
FCF generation very strong – how it will be used?
EV, $ mln
289
12,071
Source: Bloomberg, Gazprombank estimates
Tatneft share price performance vs.
MICEX Index, YTD
110%
100%
90%
Tatneft managed to generate RUB 61 bln in FCF in 2013, up 54% YoY. The
FCF yield was very strong at 14%, we estimate, representing the highest FCF
yield in the Russian O&G sector in 2013. The way in which this FCF will be
utilized is probably the main question for Tatneft in 2014. The company is now
virtually debt-free; together with long-term deposits it shows negative net debt
of RUB 6 bln. Will Tatneft increase the dividend payout or, alternatively, expand
TANECO refinery? In the first case the stock may be re-rated, while in the
second case we do not think the shares will outperform the market. So far, we
see no reasons to change our NEUTRAL recommendation on the stock.
80%
08 JAN 23 JAN 07 FEB 22 FEB 09 MAR 24 MAR
TATNEFT ORD
MICEX INDEX
TATNEFT PREF
Source: Bloomberg
Conference call on Friday
Tatneft management is scheduled to hold a conference call on Friday, April 4.
The main topics of the call will likely be plans for the second stage of TANECO,
the hydrocracker’s first operations and the outlook for 2014.
Tatneft 4Q13 IFRS results, RUB mln
Revenues
4Q13
3Q13
4Q12
QOQ
YOY
120,344
123,389
109,137
-2%
10%
EBITDA
30,784
37,960
26,481
-19%
16%
EBITDA margin
25.6%
30.8%
24.3%
19.9
24.4
17.8
-18%
12%
18,435
23,232
12,808
-21%
44%
EBITDA per barrel, $
Net income
Source: company, Gazprombank estimates
Research Department
1
Copyright © 2003-2014. Gazprombank
(Open Joint-Stock Company)
HQ: 16/1 Nametkina St., Moscow 117420, Russia. Office: 7 Koroviy val St.
Research Department
Alexey Demkin, CFA
ACTING HEAD OF RESEARCH
+7 (495) 980 43 10
[email protected]
EQUITY RESEARCH
OIL&GAS
METALS&MINING
Alexander Nazarov
+7 (495) 980 43 81
Natalia Sheveleva
+7 (495) 983 18 00 (ext. 21448)
Ivan Khromushin
+7 (495) 980 43 89
Alexey Dorokhov
+7 (495) 983 18 00 (ext. 54504)
MARKET AND EQUITY
TECHNICAL ANALYSIS
Vladimir Kravchuk
+7 (495) 983 18 00 (ext. 21479)
CONSUMER&RETAIL
BANKING
STRATEGY
Andrey Klapko
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Alexander Nazarov
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TELECOMS, MEDIA&IT
TRANSPORTATION&CHEMICALS
Vitaly Baikin
+7 (495) 983 18 00 (ext. 54072)
Mikhail Ganelin
+7 (495) 983 18 00 (ext. 54583)
Sergey Vasin
+7 (495) 983 18 00 (ext. 54508)
Andrey Klapko
+7 (495) 983 18 00 (ext. 21401)
Erik DePoy
+7 (495) 983 18 00 (ext. 54440)
FIXED INCOME RESEARCH
STRATEGY
Alexey Todorov
+7 (495) 983 18 00 (ext. 54443)
CREDIT RESEARCH
Artem Beketov
+7 (495) 983 18 00 (ext. 54074)
Yakov Yakovlev
+7 (495) 988 24 92
Yury Tulinov, CFA
+7 (495) 983 18 00 (ext. 21417)
Ekaterina Zinovyeva
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Sales and Trading
Sanjar Aspandiiarov
EXECUTIVE VICE-PRESIDENT
+7 (499) 271 90 99
[email protected]
Konstantin Shapsharov
Andrey Mironov
MANAGING DIRECTOR, HEAD OF DEPARTMENT
HEAD OF FI, S&T
+7 (495) 983 18 11 | [email protected]
+7 (495) 428 23 66 | [email protected]
EQUITY SALES&TRADING
FIXED INCOME SALES&TRADING
SALES
TRADING
SALES
TRADING
Svetlana Golodinkina
+7 (495) 988 23 75
Maria Bratchikova
+7 (495) 988 24 03
Alexander Pitaleff
Ilya Remizov
+7 (495) 983 18 80
Dmitry Kuznetsov
+7 (495) 428 49 80
Vera Yaryshkina
+7 (495) 980 41 82
Sebastien de Prinsac
+7 (495) 989 91 28
Elena Kapitsa
+7 (495) 988 23 73
Dmitry Ryabchuk
+7 (495) 719 17 74
Nikolay Yukovich
+7 (499) 271 91 04 (ext. 59104)
Stanislav Ponomarenko
+7 (499) 271 91 05 (ext. 59105)
Head of Equity Trading
+7 (495) 988 24 10
Denis Voynikonis
+7 (495) 983 74 19
Artem Belobrov
+7 (495) 988 24 11
Roberto Pezzimenti
+7 (495) 989 91 27
Brokerage Services
Maxim Maletin
HEAD OF DEPARTMENT
+7 (495) 287 63 36
[email protected]
SALES
Alexander Lezhnin
+7 (495) 988 23 74
Anna Nifanova
+7 (495) 989 91 29
Irina Russova
+7 (499) 271 90 68
Grigory Pogosov
+7 (499) 271 90 54
Valentina Sycheva
+7 (495) 988 23 05
TRADING +7 (800) 200 70 88
Olga Trusova
+7 (495) 287 61 00
Irina Gerasimova
+7 (495) 287 61 00
Denis Filippov
+7 (495) 428 49 64
Anton Aleshin
+7 (495) 983 18 89
Timur Zubairaev, CFA
+7 (495) 913 78 57
Vladimir Krasov
+7 (495) 719 19 20
Capital Markets
DEBT MARKET
Pavel Isaev
HEAD OF DEPARTMENT
+7 (495) 980 41 34
[email protected]
EQUITY MARKET
Marina Alexeenkova
Igor Donnio
MANAGING DIRECTOR
MANAGING DIRECTOR
+7 (495) 989 91 45
+7 (495) 983 17 18
Copyright © 2003-2014. Gazprombank (Open Joint Stock Company). All rights reserved
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