The value of Gazprom shares in 2020 will largely depend on the dividend policy of the company, which has long been unsatisfying with investors. First of all, this is the use of any methods and tools that do not allow to pay 50% of the received net profit under IFRS, which reduces the attractiveness of its securities. But, experts say, such a situation cannot last forever and Gazprom has already exhausted all possible tricks to prevent such payments. At the same time, in 2019 it is planned to launch the most capital-intensive projects, due to which the company will be able to reduce its investments from 2020. The combination of these factors, as well as the growth of OCF, can significantly increase its attractiveness for potential investors who are willing to invest in Gazprom shares.
Period of instability
At present, the concern accounts for more than a third of the country's natural gas production and owns at least 10% of the global and 35% of the European markets. Moreover, Gazprom is a monopolist in the field of export, which is its undeniable competitive advantage. According to official data, the volume of assets by the end of 2018 amounted to more than 300 billion US dollars, which means that, despite all the problems and a number of negative factors, the company was actively developing and increasing sales volumes. But, experts explain, the best times for Gazprom are behind us: in particular, we should not expect a repeat of 2008, when against the backdrop of a total increase in oil prices, stock prices rose sharply and the company's capitalization reached 365 billion dollars. And although after that a plan of 1 trillion was set. dollars., the management of the concern was not able to achieve this due to the collapse of oil quotations in 2009. Note that at that time, the capitalization of Gazprom decreased significantly, and in 2012 the cost of one share of the company was less than 100 rubles.
Despite the fact that since the crisis of 2008, the concern managed to stabilize the situation, it will be very difficult to achieve the previous indicators, especially since a large competitor appeared in the Russian market - the Novatek Corporation, which back in 2018 showed good results and, according to certain indicators, even surpassed Gazprom (despite the fact that it has more modest production volumes and not many assets). At the moment, the state corporation is being pulled to the bottom by non-core and unprofitable (and even unprofitable) assets, the content of which takes part of the income received, and the country's authorities do not disdain to use its resources as a “wallet" when money is needed to pay for various projects.
Possible development of the situation
According to experts, answering the question of what will happen to Gazprom shares in 2020, it is necessary to take into account primarily the volume of its capital expenditures, which peaked in 2018-2019. The total amount of expenses for the implementation of large projects for this period will be $ 28-30 billion, which is significantly more than in 2017, when $ 24 billion was spent on these purposes. But it is assumed that this will be a kind of peak, after which capital costs will begin to decline, while the growth in operating cash flow in 2020 will increase to $ 12.7 billion. Even if we omit the large volume of debt payments that Gazprom will have to pay off during this period, we can assume that the company will have enough resources to pay dividends.Due to this, in 2020, investors expect a return on its shares at 9%, and in 2021 - already 14%.
On the other hand, according to a pessimistic forecast, the additional capex for 2019 will significantly worsen Gazprom’s dividend profile and it will not be able to quickly recover to ensure payments to investors. But there is reason to believe that the company will not single-handedly spend all costs and will attract its partners for the implementation of the planned projects in order to share all costs with them. Thus, the concern will remain “with the money” even taking into account the large expenditures of its budget.
Prospects and risks
A global increase in gas consumption and a decrease in production in Europe are increasing the attractiveness of the European gas market for Gazprom. At the same time, such a natural resource gradually regains its lost position in terms of a source of electricity production, which also contributes to an increase in demand. In this regard, it is possible to increase export volumes, increasing its dividend attractiveness for potential investors. American LNG may become the only threat, but in the next few years the countries of the Asia-Pacific and Latin America will remain their area of interest, which can also be used to increase sales.
The forecast for the value of Gazprom shares in 2020 may be adversely affected by oil prices, which will not rise in the next few years. If they decrease, the dividend attractiveness of the concern will decrease, which investors will immediately feel. Another threat to the dividend portfolio may be tax changes: if the government considers it appropriate to use the concern to receive money through high taxes (on property, export duties, etc.), this will adversely affect Gazprom’s investment attractiveness and its share price will immediately drop sharply . In addition, it is possible that public information will appear on the implementation of projects previously unknown to the public, which will require additional capital expenditures.
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