Page 14 - FSUOGM Week 49
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       Russia's Gazprom could cut stake



       in oil arm Gazprom Neft in SPO





        RUSSIA            RUSSIA'S natural gas giant Gazprom could  stake sale would have to be much stronger than
                         cut its stake in oil major Gazprom Neft after the  simply index inclusion," Sberbank CIB believes.
       Gazprom has long been   recovery in the oil sector, Interfax reported citing  Other reasons could be reducing financial
       reluctant to discuss   the CFO of Gazprom Neft, Alexei Yankevich.  leverage.
       reducing its holding in   "Gazprom Neft's free float is currently 4.2%   "Should Gazprom try to sell some of its >95%
       Gazprom Neft.     and market capitalisation is $20bn," Sberbank  stake in Gazprom Neft, it could work out posi-
                         CIB reminded on December 2, noting that an  tively for minority shareholders of both compa-
                         increase in the free float would be positive for  nies," BCS Global Markets wrote on December
                         the company's valuation.             2, noting MSCI index inclusion and more inter-
                           The analysts at Sberbank CIB currently  est in Gazprom's valuable liquids business as
                         assume a 2 percentage point equity premium  main benefits.
                         for low liquidity in their Gazprom Neft valua-  "However, judging by the quick reaction of
                         tion model, and removing this premium would  the company’s press service [that stressed the
                         increase the company's fair value by around 25%,  plans were only hypothetical], it appears that
                         they argue.                          although the question may arise occasionally in
                           VTB Capital (VTBC) on December 2  a hypothetical manner within the two compa-
                         notes  that  the  operational  interconnec-  nies, it is probably not in the companies’ active,
                         tions between the two companies have been  near-term plans," BCS GM adds.
                         growing in recent years, with Gazprom Neft   Gazprom Neft posted $7.3bn in revenues in
                         preparing to increase its oil production at  3Q20 under IFRS, with Ebitda of $1.75bn ($2bn
                         Gazprom’s gas assets.                with joint venture contributions) beating the
                           While Gazprom has always been reluctant  expectations by 22%. Net profit of $0.4bn was
                         to discuss reducing its 96% holding in Gazprom  17% above the consensus forecasts.
                         Neft, inclusion of its shares into equity indices   As reported by bne IntelliNews, previously in
                         that require at least 10% free float is the main rea-  the second quarter the company's results were
                         son for selling the stake, according to Yankevich.  stable, but the cash flow disappointed the inves-
                           "However, we think that the justification for a  tors. ™



       P14                                      www. NEWSBASE .com                      Week 49   09•December•2020
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