RBC bearish on Viva Energy on likely normalising refinery margins

Waypoint REIT

24/11/2022 24:11

** Analysts at RBC initiate coverage on Australian fuel
supplier Viva Energy  VEA.AX  with "sector perform" rating and a
price target of A$3.25
    ** RBC has a "more bearish outlook" vs market on VEA's
refinery business, with refining margins seen normalising down
more quickly and contribution from Coles Express to remain lower
for longer
    * Forecasts a 66% drop in refinery EBITDA from 2022 to 2023,
driven by rising Chinese refined product export quotas
    ** Sees recovery in VEA's retail fuels business in 2023
after retail fuel gross margin fell to about 12.4 Australian
cents per litre in 1H22
    ** Expects 2023 dividend of 17.7 Australian cents per share;
VEA paid full year dividend of 7.3 AU cps last year
    ** VEA down 1.4% to A$2.73 as at 2346 GMT
    ** Seven of 12 analysts rate the stock "buy" or higher, and
five rate it "hold"; their median PT is A$3.25x – Refinitiv data
    ** VEA up 17.9% this year, as of last close, vs a 2.9%
decline in the ASX 200 benchmark index  .AXJO  
 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))