Russian oil companies get a big boost
Investors should hold on to shares of major Russian oil companies because they’re undervalued and may benefit from earnings upgrades through next year on the basis of record crude prices.
By Agencies |
MOSCOW: Investors should hold on to shares of major Russian oil companies because they’re undervalued and may benefit from earnings upgrades through next year on the basis of record crude prices, JPMorgan Chase wrote.
The US bank initiated coverage of the Russian oil industry with a “positive” view. OAO Rosneft, Russia’s biggest oil producer, and OAO Gazprom Neft were rated “overweight”, meaning investors should hold the shares in higher proportion than is represented in international equity indexes.
OAO Lukoil, OAO Surgutneftegaz and OAO Tatneft were given a “neutral” recommendation. “We believe Russia’s oil sector is undervalued and can deliver earnings surprises,” JPMorgan analysts Nadia Kazakova and Andrey Gromadin in Moscow wrote in a research report.
Russia’s major oil companies are trading at an average of 10 times their estimated 2007 earnings, compared with 12 times earnings for European oil producers and 13 times earnings for US oil producers, the bank said. The enterprise value, or approximate take-over value, of Russian oil companies works out to $3.70 per barrel of proven oil reserves, compared with an enterprise value of $19.50 per barrel of reserves for the world’s biggest oil companies.
The US bank initiated coverage of the Russian oil industry with a “positive” view. OAO Rosneft, Russia’s biggest oil producer, and OAO Gazprom Neft were rated “overweight”, meaning investors should hold the shares in higher proportion than is represented in international equity indexes.
OAO Lukoil, OAO Surgutneftegaz and OAO Tatneft were given a “neutral” recommendation. “We believe Russia’s oil sector is undervalued and can deliver earnings surprises,” JPMorgan analysts Nadia Kazakova and Andrey Gromadin in Moscow wrote in a research report.
Russia’s major oil companies are trading at an average of 10 times their estimated 2007 earnings, compared with 12 times earnings for European oil producers and 13 times earnings for US oil producers, the bank said. The enterprise value, or approximate take-over value, of Russian oil companies works out to $3.70 per barrel of proven oil reserves, compared with an enterprise value of $19.50 per barrel of reserves for the world’s biggest oil companies.
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