Bankinter | Recomendation Buy and Objective Price 17,4€/share. The rise in oil prices and growth opportunities will drive the share price. Repsol will be driven by exogenous (the sharp increase in oil prices benefits it directly – Brent YTD +39%) indigenous factors.
(i) Positive results for Q119, despite advancing maintenance stoppages in its refinery system and production cuts in Libya and Venezuela. (ii) High production levels.
(iii) Strong business diversification, progressively moving towards ever cleaner energy. (iv) Generius shareholder remuneration (6%), and (v) trading at more attractive rates than its rivals (PER 2019 5.8X compared to average 11.7X for comparable companies.
As for valuation: we adopt a conservative approach and include in the valuation the principal risks it faces (Libya and Venezuela, crude price volatility and the possibility that Sacyr will reduce its holding).