RD KMG reported about the termination of use of the services “KazMunaiGas — Conversion and Marketing” (“KMG CM”) as the sales agent and began to sell oil products independently since January 1, 2017. It should be noted that this expenditure item in 2016 constituted 5 407 million KZT (the agency fee). In our opinion, the company refused services” KMG PM” for the purpose of an expense optimization that in general is a positive signal.
Also, RD KMG reported some operating rooms and financial performance for January, 2017. An oil supply to the domestic market in January constituted 31% while for all 2016 the share of deliveries constituted 40.4%. Forecasts of the company concerning an oil supply to the domestic market following the results of 2017 remain and the company expects to deliver 33% of the total amount of implementation of OMG and EMG. In January the net revenue from sale of oil products constituted 58 409 KZT/ton (+37.9%) for ANPZ and 55 733 KZT/ton (+7.7%) for PNHZ.
The amount of a net money for January 31, 2017 constituted 1 163 billion KZT (97% of a money and financial assets are denominated in US dollars), having increased by 6.5% in relation to the end of 2016. Counting on one share a money constitutes 17 026 KZT.
Our opinion: The appeared operational data from RD KMG, in our opinion, are positive. RD KMG independently began to sell now oil products, thereby optimized a part of expenses which constituted about 5.5% of a net profit of the company (in annual terms) following the results of 2016. Also preserving plans of rather internal deliveries and increase in a net income on ton of implementation of oil products are positive events for activities of the company. Nevertheless, we leave our basic scenario, in view of stabilization of oil quotations, and also due to the lack of confirmation concerning the termination of growth of operating expenses higher rates. In case of change of the forecast of oil prices and operating expenses which confirmation of decrease in speed can be seen by results of 1 quarter we can review our assessment and the target price.
JSC KAZMUNAIGAS EXPLORATION PRO (KMG.IL)
Our target price according to common and preferred shares constitutes 19 100 and 9 550 KZT.
