Like Gazprom (OTCPK:OGZPY), which I recently covered here, the shares of oil-focused Russian oil giant Lukoil (OTCPK:LUKOY)
have struggled to make much headway amidst concerns about production
growth, taxation, and geopolitical tensions. That the shares have done
about as well as Gazprom and Tatneft (OTCPK:OAOFY) and better than Rosneft (OTC:OJSCY) isn't much comfort, as valuation multiples remain stubbornly low due in part to investors continue to avoid Russian equities.
A long-awaited production ramp in Iraq is now threatened by insurgency and while a partnership with Total (TOT)
bodes well for the future, the company is still disadvantaged when it
comes to growing production via exploration within Russia. I do continue
to believe that the Street undervalues the cash flow streams that
Lukoil is likely to produce, as well as the comparatively better
shareholder policies here. Multiples can stay low for frustratingly long
times, but I continue to believe that Lukoil is priced to generate
above-average returns for long-term shareholders.
Read more here:
Lukoil Not Out Of The Woods Yet
Showing posts with label Lukoil. Show all posts
Showing posts with label Lukoil. Show all posts
Thursday, July 10, 2014
Monday, September 9, 2013
Seeking Alpha: From Russia With No Love, Lukoil Trading At A Very Low Multiple
It's easy to come up with good reasons to steer clear of Russian
equities. The Russian government has shown itself perfectly willing to
play fast and loose with the rule of law, corruption is still an endemic
problem, and the notion of shareholder rights can be pretty iffy.
Even so, I find that some of best investment returns have come from places where the "conventional thinking" was much too bearish, and so I think it may be with Russia and its second-largest oil producer Lukoil (LUKOY.PK). Although Lukoil does need to bring new fields into production to offset declines in its Western Siberia fields, those developments are underway and the company could surprise to the upside with long-term oil production. With only a 3.5x multiple to 2014 EBITDA supporting a price target 30% above today's price and a 5%+ dividend, Lukoil appears to be meaningfully undervalued even relative to the "Russia discount".
Please read more here:
From Russia With No Love, Lukoil Trading At A Very Low Multiple
Even so, I find that some of best investment returns have come from places where the "conventional thinking" was much too bearish, and so I think it may be with Russia and its second-largest oil producer Lukoil (LUKOY.PK). Although Lukoil does need to bring new fields into production to offset declines in its Western Siberia fields, those developments are underway and the company could surprise to the upside with long-term oil production. With only a 3.5x multiple to 2014 EBITDA supporting a price target 30% above today's price and a 5%+ dividend, Lukoil appears to be meaningfully undervalued even relative to the "Russia discount".
Please read more here:
From Russia With No Love, Lukoil Trading At A Very Low Multiple
Wednesday, May 18, 2011
Investopedia: Petrobras And Brazil's Wall Of Worry
What happened to Brazil? Once one of the darlings of the international investment community, Brazil has not done so well of late. Beset by worries of inflation and increasing government interference, Brazil's markets have lost a little luster.
This is still a high-quality growth emerging market, though, and investors looking to play an eventual recovery in investor interest should give some thought to Petrobras (NYSE:PBR) - one of largest and best-known Brazilian companies.
A Strong Start to the Year
Petrobras got 2011 off to a good start. Net operating revenue rose 9% from last year (and 1% from the fourth quarter), helped by very strong price realizations in the E&P segment, as well as some modest production volume growth. Petrobras is still very much a Brazil play, as less than 10% of the company's oil and gas production comes from outside Brazil.
Gross profit rose 11% from last year, but operating income performance was flat (though up 26% sequentially). Operating income improved significantly in E&P, with 18% annual growth, but the refining business reversed to a loss due to the pressures of higher crude costs and frozen domestic pricing on refined products. The gas and electricity segment was also a strong performer (up 34% from last year), but is relatively small at less than 6% of total operating income. (For more, see Bargains In Brazil.)
To read the full piece, please click the link:
http://stocks.investopedia.
This is still a high-quality growth emerging market, though, and investors looking to play an eventual recovery in investor interest should give some thought to Petrobras (NYSE:PBR) - one of largest and best-known Brazilian companies.
A Strong Start to the Year
Petrobras got 2011 off to a good start. Net operating revenue rose 9% from last year (and 1% from the fourth quarter), helped by very strong price realizations in the E&P segment, as well as some modest production volume growth. Petrobras is still very much a Brazil play, as less than 10% of the company's oil and gas production comes from outside Brazil.
Gross profit rose 11% from last year, but operating income performance was flat (though up 26% sequentially). Operating income improved significantly in E&P, with 18% annual growth, but the refining business reversed to a loss due to the pressures of higher crude costs and frozen domestic pricing on refined products. The gas and electricity segment was also a strong performer (up 34% from last year), but is relatively small at less than 6% of total operating income. (For more, see Bargains In Brazil.)
To read the full piece, please click the link:
http://stocks.investopedia.
Monday, November 15, 2010
Petrobras Stuck In The Middle
At first glance, these should be great days for Brazil's energy giant Petrobras (NYSE: PBR). Not only are oil prices heading higher, but Petrobras has privileged access to some of the largest oil fields known today. Unfortunately for PBR investors, there is a great deal of skepticism regarding management's capabilities, and this quarter will not help ease those concerns.
A Quarter That Does Not Hold Up
At first glance, it would seem that Petrobras had a solid third quarter. After all, net income was up 17% from last year. While revenue was up 14% from last year and up 2% sequentially, EBITDA was up 1% and down 1% for the same respective time periods. A lot of that seemingly strong net income number was fueled by a currency benefit, making it a low-quality beat.
Moreover, some worrying details were in the numbers. Production was up just 1% from last year (and down 1% sequentially), and although this was not a surprise (management discussed this earlier), it marks another entry in this management's history of over-promising and under-delivering on production growth guidance. Even more concerning, though, was the 8% increase in domestic lifting costs (up 1% from the Q2). In other words, the company is not pumping as much as it should, and it's costing more to do it.
Please follow the link for the full piece:
http://stocks.investopedia.
A Quarter That Does Not Hold Up
At first glance, it would seem that Petrobras had a solid third quarter. After all, net income was up 17% from last year. While revenue was up 14% from last year and up 2% sequentially, EBITDA was up 1% and down 1% for the same respective time periods. A lot of that seemingly strong net income number was fueled by a currency benefit, making it a low-quality beat.
Moreover, some worrying details were in the numbers. Production was up just 1% from last year (and down 1% sequentially), and although this was not a surprise (management discussed this earlier), it marks another entry in this management's history of over-promising and under-delivering on production growth guidance. Even more concerning, though, was the 8% increase in domestic lifting costs (up 1% from the Q2). In other words, the company is not pumping as much as it should, and it's costing more to do it.
Please follow the link for the full piece:
http://stocks.investopedia.
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