Page 186 - RusRPTApr23

challenge to this growth will be logistical (EU oil embargo, OPEC+ constraints), but we incorporate this L-T target into our updated model.
Lower profile may mean lower sanctions risk. The smallest of Russia’s blue-chip traded oil companies, headquartered far from Moscow, and compared to state-owned high-profile companies such as Rosneft and Gazprom Neft, Tatneft may have somewhat lower sanctions risk.
The only Russian oil company to produce full IFRS results. Tatneft has published 1H22 and 2022 IFRS results — albeit without the traditional accompanying MD&A reports — which puts it significantly ahead of its peers, only a few of which have even released headline financial results.
Dividends: Tatneft’s just-released 2022 IFRS results were surprisingly strong, improving the outlook for both 2022 and 2023 payouts. Also, as the only Russian oil & gas company reporting full IFRS accounts, the level of uncertainty around Tatneft’s dividends is somewhat lower than for its peers.Key risks • General oil price and ruble risks. All Russian oil companies benefit from higher oil price levels and a weaker ruble. To the extent the former falls and the latter rises, our Tatneft earnings and dividend expectations would fall.
Few changes to forecasts, largely in line with consensus. Unlike with our other Russian oil company forecasts, our projections for Tatneft’s 2022e-2024e key financial indicators change only modestly. Note the changes in 2022e numbers follow the release of Tatneft’s IFRS results. We are slightly behind the Street on 2023e, but are higher on 2024e, much as we are with the other Russian oil names.
Valuation and recommendation Both pref and ord back to Buy-rated. Our TATN TP rises 33% to Rb610/sh, while our TATNp TP raise 39% to Rb570/sh, mostly due to our weaker ruble assumption. Based on Excess Returns of 55% and 40%, respectively, we upgrade both TATN and TATNp from HOLD to BUY.
● Other
No one has bid for the acquisition of foreign companies’ stakes in Russia’s Sakhalin-1 and Sakhalin-2 oil and gas projects so far, Deputy Prime Minister Alexander Novak told reporters on March 22. Novak said that the government was to value the financial damage on the projects from the foreigners’ quitting them very soon. The shareholders of Sakhalin-1 included Exxon Neftegas Limited, a subsidiary of US company ExxonMobil, with a 30% stake, Russian oil major Rosneft with 20%, Japan’s Sodeco with 30%, and India’s ONGC with 20%. Exxon Neftegas Limited decided to leave the project in March 2022. The shareholders of a previous operator of the Sakhalin-2 project comprised gas giant Gazprom with a 50% plus one share stake, British-Dutch hydrocarbon giant Shell with a stake of 27.5% minus one share, and Japan’s Mitsui and Mitsubishi with the stakes of 12.5% and 10%, respectively. In August 2022, the Russian government established a new, local
186 RUSSIA Country Report Russia April 2023 www.intellinews.com