Stock Exchange Review: OMV Petrom

Newsroom 27/02/2012 | 10:15

OMV Petrom posted great results for the full year of 2011. Sales grew by 21 percent from RON 18,616 million to RON 22,614 million and net profit attributable to stockholders rose by an impressive 71 percent to RON 3,757 million, from RON 2,201 million the previous year.

These positive results were “the result of high investment efforts, effective cost and operational management but also supportive crude prices,” said Mariana Gheorghe, CEO of OMV Petrom.

At the price of 0.4115 OMV Petrom has a Price-Earnings Ratio of 6.18 (P/E is a valuation ratio of a company’s current share price compared to its per-share earnings) and a Price-to-Book Value of 1.10 (P/BV is a ratio used to compare a stock’s market value to its book value), making it quite a cheaply valued share price when you compare it with similar companies from the same geographical area:

Company

P/E

P/BV

  • OMV Petrom

6.18

1.10

  • Mol Hungary

7.90

1.23

  • Lukoil

4.16

0.70

  • OMV Austria

8.38

0.84

  • Hellenic Petroleum

15.37

0.66

 

The chart graphic on a weekly scale suggests that it is still fighting to get out of a downtrend that started at the beginning of 2006. Until this big downtrend line switches to the upside I don’t advise investors to get exposure to OMV Petrom, no matter how strong the fundamentals or the outlook are. When the price breaks this big downtrend line will signal the all-clear for buyers and the price will probably ultimately reach a new all-time high of over 0.64.

CHART Weekly Scale

On a daily scale we can see a chart formation called double bottom, which as the name implies is the bottom of a previous downtrend where a new uptrend has begun. Also the momentum indicator MACD shows a big positive uptrend, typical of forceful bull markets.

CHART Daily Scale

Next week I expect the markets to continue their upward momentum, as long as the Greece saga appears to be taking a pause after a deal was struck between Greek officials and the international lenders. The Romanian markets will therefore correlate with the international ones and continue their positive momentum. It will also be interesting to see the full results of Erste Bank on Wednesday, knowing they will be predominantly negative, and what the outlook for the next period will be.

Important economic data this week

Tuesday 28 Feb

  • US – Durable Goods Orders (for January)
  • US – Consumer Confidence (for February)

Wednesday 29 Feb

  • ROM – Full year 2011 results from Erste Group Bank
  • EU – Consumer Price Index (for January)
  • US – Preliminary GDP  (for the 4th quarter)
  • CHINA – Manufacturing Index (for February)

Thursday 1 March

  • ROM – International Reserves (published by BNR)
  • EU – Manufacturing Index (for February)
  • GB – Manufacturing Index (for February)
  • US – ISM Manufacturing Index (for February)
  • US – Personal Spending and Personal Income (for January)

 

Vasile Szakacs, Stock market analyst, trader and owner of www.consultantabursa.ro, which provides consultancy services for Romanian stock market investments

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