BUCHAREST (Romania), September 1 (SeeNews) – Austria's Raiffeisen Centrobank (RCB) on Tuesday downgraded to ‘Reduce’ from 'Hold' its recommendation on the shares of Romania's top oil and gas group, Petrom, and cut its target price to 0.24 lei ($0.081/0.057 euro) per share from 0.30 lei.
”Weak refineries and insufficient help from upstream prompt us to reduce our profitability forecast (19% average EBITDA margin instead of 21% previously). Despite lower capex and hence lower financing needs, the fair value drops from 0.30 lei to 0.24 lei, which we pronounce as our new price target,” RCB said in a statement.
Blue-chip Petrom's shares traded 0.4% down at 0.252 lei on the Bucharest Stock Exchange by 1003 GMT on Tuesday.
”As OMV is currently predominantly occupied with its expansion in Turkey, we also see no upstream acquisitions for Petrom at the moment. Consequently, we forecast a visible profitability improvement only after the commissioning of the first power plant,” the bank said.
RCB reduced its expectations for Petrom based on the group’s unconsolidated results under the Romanian Accounting Standards because the reduced profits from Romanian upstream activities are no longer able to catch up to level out the refining losses.
“We believe that the situation is unlikely to improve as Romanian gas demand will stay low and the refinery modernization will not be pursued in the initially planned form due to the persisting weak outlook. Financial gains from international operations and hedging contracts are of little help. Profits from the power business and new oil fields will come to the rescue, but not before 2012,” RCB added.
(1 euro = 4.223 Romanian lei)