Erste prefers PKN Orlen, OMV as EMEA oil & gas face 2023 earnings decline

Turkiye Petrol Rafinerileri AS

16/09/2022 14:39

** Erste Group says EMEA oil and gas stocks face lower
earnings after 2022 record highs, weighed by deteriorating
environment and state intervention, though sector fundamentals
remain robust
    ** The broker sees Brent crude averaging $80/barrel in
2023-2024, with 10-40% lower refining and petrochemical margins
    ** European gas prices should remain at EUR 150/MWh next
year, it says, but could gradually decline from 2024
    ** Erste's top picks are Poland's PKN Orlen  PKN.WA  on its
low valuation following merger with PGNiG and Lotos Group, and
Austrian OMV  OMVV.VI  on a "very attractive" valuation after
recent stock weakness (both rated "buy")
    ** It cuts MOL  MOLB.BU  to "hold" from "buy", noting "very
good" Q1-Q3 margins, but poorer market environment and risk of
further taxation could push earnings down in 2023-2024
    ** Erste also sees high risks for OMV Petrom  ROSNP.BX 
("hold") and Romgaz  SNG.BX , which it cuts to "hold" from
"buy", as "Romanian politicians would like to share the public
burden of high energy prices with these two producers"
    ** It cuts Tupras  TUPRS.IS  and NIS  NIIS.BEL  to "hold"
from "accumulate", saying majority of Tupras's upside is already
priced in, while NIS's recent action to avoid buying Russian
crude from Nov. 1 could lower its earnings potential

($1 = 1.0044 euros)

 (Reporting by Tristan Chabba)
 ((Tristan.chabba@thomsonreuters.com))