Raiffeisen reduces the price target and recommends "Sell" for Conpet shares

Raiffeisen Bank changes the recommendation for Conpet shares (COTE) from "Hold" to "Sell" and lowers the price target for the oil product transporter's shares to 80 lei in the next twelve months, 9% below yesterday's first-part market quote of the stock market meeting, of 80 lei, according to the latest analysis report published on the BVB Research Hubportal, signed by Daniela Popov.

In the previous analysis, published in March, Raiffeisen estimated a price of 85.6 lei for Conpet shares. "Our downgrade for Conpet is mainly the result of: (i) a decline in transport volumes, especially in 2025 as a result of maintenance work at the Petrotel refinery and (ii) higher than previously estimated cost inflation" , the report states.

Raiffeisen updated its forecast for fiscal year 2024 based on rates approved by the regulator in December 2023. "The tariff of the internal transport subsystem increased by almost 9%, in annual dynamics, to 128 lei per ton, to compensate for the decrease in volumes, while the tariffs of the import subsystem decreased by an average of 5%, in annual dynamics. For domestic crude oil transport, we expect a further decline in volumes of around 7% per year. For the transportation of imported crude oil, we see a 28% increase compared to last year, but starting from a lower base due to the shutdown for maintenance at the Petrotel and Petrobrazi refineries".

Under these conditions, Raiffeisen expects Conpet's revenues to increase by 9% in 2024 compared to last year, up to 588 million lei. "Despite the increase in revenues on the back of higher tariffs (for domestic crude oil) and volume effects (for imported crude oil) we expect a slight decline in profitability due to higher operating costs, which leads us to estimate a profit net of 61 million lei for 2024 (-1% in annual dynamics)".

For 2025, the Raiffeisen team estimates a decrease in import volumes due to maintenance work at the Petrotel refinery.

"Although we are considering adjusting tariffs to counterbalance the effects of volumes and cost inflation, we estimate that Conpet's revenues will increase by only 1%, net profit reaching 62 million lei (+1% per year). However, we expect a volume recovery in 2026 as import volumes recover, leading to stronger growth in both revenue (+5% y-o-y) and net profit (+7%) per year)", the document states.

The Romanian State, through the Ministry of Energy, has 58.72% of the shares of the carrier of petroleum products, whose market value is almost 780 million lei.