Mensajepor HerrX » Lun Dic 15, 2014 2:07 pm
Vean esto, como vengo diciendo, el foco de los analistas esta en el FCF (dree cash flow) y deuda:
There are two fresh takes on Petrobras (PBR) out Monday, from JPMorgan and Credit Suisse.
Let’s hear the more optimistic case first. JPMorgan’s Daniel Sensel and Marcela Nagib reiterated an Outperform rating on Petrobras’s bonds today, writing that after underperforming of late, they are already pricing in a potential downgrade. However, they write that the fact that Petrobras on Friday released a summary of its third-quarter results—but not its financial statements, as it is still assessing the impact of the Lava Jato investigation on some of its assets—is likely going to overshadow what they call “good operational results.”
A couple of highlights from the note:
On the positive side (in our view), the company has a plan to minimize the issuance of incremental debt in 2015. The company mentioned that the executive officers approved an action plan to maintain the cash level and the liquidity of the company. The initiatives mentioned include (1) the securitization of receivables, (2) a reduction of the capex plan, (3) revision of the company’s pricing strategy, and (4) the continuous reduction of costs. The goal is to “assure positive free cash flow next year, considering crude oil prices of around $70/bl and a BRL of 2.60, thus eliminating the need for additional financing in the capital markets next year…”
4Q14 results could be better, as Petrobras implemented a price readjustment for gasoline and diesel on November 7. Gasoline prices increased by 3%, while diesel prices increased by 5%. This was the first price increase since the company increased diesel prices by 8% and gasoline by 4% in 2013. After the domestic price increase and the steep decline in international crude prices, gasoline prices in Brazil are around 20% higher than international prices, which should help the refining business to generate positive free cash flow. We estimate that the refining business lost approximately $30 billion between 2011 and 2013 as Petrobras is a net importer of products and was selling these products at a loss.
Also today, Credit Suisse’s Andre Sobreira and Vinicius Canheu assumed coverage of Petrobras with a Neutral rating. They note that the fact that the company will be free cash flow positive and will not need additional financing in 2015 were two of the big takeaways from Friday’s truncated release. Although they note that the price of oil has a complex effect on the stock’s fortunes, overall they believe that keeping these two promises will be the first step toward regaining investors’ trust—but the company has broken many promises before.
Some highlights from the note:
The way (to free-cash positive). $10bn worth of receivables, a $40bn capex budget of which c.10% ($4bn) are in the smaller divisions, and another 10% ($4bn) in exploration show that, theoretically, free-cash positive could be achievable. PBR also mentions “product pricing strategy,” but with domestic diesel and gasoline (the meaningful sources of revenues) 25-30% above intl levels, we see that as a less likely way. No mention of a dividend policy ($3.5bn/year – 60% to the PNs, 40% to the ONs), the better value reference for investors at this point, could create uncertainty. We find the preferred dividend more protected, with a current yield of 9.6%.
Leverage and value. With debtholders “owning” 70% of Petrobras (Petrobras $150bn enterprise value is c.$105bn net debt, c.$45bn market cap), finding a value reference for the PBR equity becomes increasingly more challenging, and the equity investment case becomes increasingly more dependent on de-leveraging. EV/EBITDA multiples look high but become less meaningful – the equity can move significantly and the multiple would not change much. The earnings base is so low now that the degree of precision to forecast those earnings decreases – the PE multiple can move meaningfully with slight changes in the outlook. These are all more reasons for investors to need further details/confidence on the way to free-cash positive and sustainability of the dividend.
Complex. Contrary to expectations (another promise broken), PBR decided not to file its unaudited financial statements due to ongoing developments related to the “Lava Jato” investigations. This all illustrates that any resolution and potential implications are more complex and probably further out than previously thought. Resolution of the investigations and complete confidence in the financials are crucial to bring long-term investors back to the case. PBR managed to obtain a waiver for the financial reporting covenants, and now has until 31st January 2015 (vs 31st December 2014) to release unaudited financial information for the third quarter.
