Nice write up. Agree, number of Polish stocks far too cheap to resist at present, in particular Orlen and JSW.
Though Orlen is a somewhat different beast with less upstream and more downstream operations than say other SOE's like PBR or CNOOC, the current value multiple is severely below what it should be. SOE's are often a good place to find value when the market gets overly pessimistic on them.
Thanks for sharing your idea! Interesting view from you see this as a quasi monopoly while common sense will tell stay away from goverment companies. Now they bought Polska press 😳 capital allocation? To get the downside rigth with those cyclicals is quite hard. They always look cheap before thinks get ugly. It´s hard landings versus oil supply deficit. Wouldn´t it be a more conservative approach to anker to 2019 numbers?
No, this is because the mergers changed the company and made the company to what it is today. In 2019 the company was way smaller and different the now. But if you want you can easily apply another 50% margin of safety.
Yes the government is in there, but this has also positives.
I stay invested as long as the upward trend holds and the dividends are flowing.
Thank you for the article, I enjoyed it. Im going to continue to research Orlen. I would be interested to read your breakdown or thoughts on the other company you mentioned also, Petrobras.
Profits come from refining, petrochemicals and retail (gas stations). Operational they expand their network of gas stations and the refining business is doing pretty well.
how sustainable is that 35 billion 2022 act/64 billion forecasted earnings? apparently at least 8 out of 35 billion was once-off merger impacts + there must be a ton of ukraine war/peak business cycle impact.....
I think it is pretty substantial, since there will come a lot of cash flow from improvements in efficiency and scale. Even if cash flow is 8 billion lower I don’t care since valuation is still ridiculous.
Yes, they have E&P operations. As a result of the merger with PGNiG & LOTOS they have production fields in Norway, Poland, Canada, Lithuania & Pakistan. The company has:
1) 1.3 Billion BOE in 2P reserves
2) 74% gas & 26% oil
3) They produce 150k BOE per day
- Poland is responsible for 57% of reserves & 47% of production.
- Norway is responsible for 27% of reserves & 40% of production.
- Canada is responsible for 12% of reserves & 8% of production.
- Lithuania & Pakistan are responsible for are responsible for 3% of reserves & 3.5% of production.
The company is mainly a refiner of crude products. The company has a network of gas stations in Eastern and Central Europe. Withe the gigantic cash/cashflow they have Orlen has become very influential in Europe. They buy out competitors or other companies in different geographic locations. Norway will become big for them.
In a press report it was said that they’ll become among the 5 biggest players in the Norwegian shelf.
Nice write up. Agree, number of Polish stocks far too cheap to resist at present, in particular Orlen and JSW.
Though Orlen is a somewhat different beast with less upstream and more downstream operations than say other SOE's like PBR or CNOOC, the current value multiple is severely below what it should be. SOE's are often a good place to find value when the market gets overly pessimistic on them.
Exactly my thesis. JSW is dirt cheap too
Thanks for sharing your idea! Interesting view from you see this as a quasi monopoly while common sense will tell stay away from goverment companies. Now they bought Polska press 😳 capital allocation? To get the downside rigth with those cyclicals is quite hard. They always look cheap before thinks get ugly. It´s hard landings versus oil supply deficit. Wouldn´t it be a more conservative approach to anker to 2019 numbers?
No, this is because the mergers changed the company and made the company to what it is today. In 2019 the company was way smaller and different the now. But if you want you can easily apply another 50% margin of safety.
Yes the government is in there, but this has also positives.
I stay invested as long as the upward trend holds and the dividends are flowing.
Ex dividend date is August 9th !
I saw a recent Financial Times headline about the stock and did a short tear sheet thread about it the other day: https://emergingmarketskeptic.substack.com/p/pkn-orlen-russian-oil-sanctions-bite-27m-a-day/comments
I will add a link to your lengthier piece in the comments section...
Thank you for the article, I enjoyed it. Im going to continue to research Orlen. I would be interested to read your breakdown or thoughts on the other company you mentioned also, Petrobras.
I have touched Petrobras in my write up ✍️ on Brazil around 3 weeks ago . I appreciate the support.
where does the profit comes from and what are the operational perspectives? its kinda missing.
Profits come from refining, petrochemicals and retail (gas stations). Operational they expand their network of gas stations and the refining business is doing pretty well.
how sustainable is that 35 billion 2022 act/64 billion forecasted earnings? apparently at least 8 out of 35 billion was once-off merger impacts + there must be a ton of ukraine war/peak business cycle impact.....
I think it is pretty substantial, since there will come a lot of cash flow from improvements in efficiency and scale. Even if cash flow is 8 billion lower I don’t care since valuation is still ridiculous.
Yes, they have E&P operations. As a result of the merger with PGNiG & LOTOS they have production fields in Norway, Poland, Canada, Lithuania & Pakistan. The company has:
1) 1.3 Billion BOE in 2P reserves
2) 74% gas & 26% oil
3) They produce 150k BOE per day
- Poland is responsible for 57% of reserves & 47% of production.
- Norway is responsible for 27% of reserves & 40% of production.
- Canada is responsible for 12% of reserves & 8% of production.
- Lithuania & Pakistan are responsible for are responsible for 3% of reserves & 3.5% of production.
The company is mainly a refiner of crude products. The company has a network of gas stations in Eastern and Central Europe. Withe the gigantic cash/cashflow they have Orlen has become very influential in Europe. They buy out competitors or other companies in different geographic locations. Norway will become big for them.
In a press report it was said that they’ll become among the 5 biggest players in the Norwegian shelf.
[ Sorry for the long essay :) ]
Thank you 🙏