Hungary MOL stake sell would be costly but positive - analysts


Just last month Hungarian government purchased a 21.2% stake in MOL from Russia's Surgutneftegas. Now there is a talk of a possible sale of these stocks in order to keep budget revenues in 2012 on target. But Hungary has much to lose if it were to sell now, say analysts.

Following Hungary’s economy ministry announcement earlier this week that it may sell part of its stake in MOL to keep budget revenue on target in 2012, The Wall Street Journal provides its analysis of the consequences such potential decision.

The government acquired the bulk of its holding last month, when it bought a 21.2% stake from Russia’s Surgutneftegas. The goal was to ensure the state’s presence on the energy market.

MOL management, which never welcomed its Russian shareholder, appears to be content with the new owner. According to MOL Chairman and Chief Executive Zsolt Hernádi, the appearance of the state in the ownership structure won’t affect the company’s operation.

Analysts are skeptical whether a sale at today’s depressed prices would make sense.

The 21.2% stake has already lost about HUF 50 billion in value since the government acquired it in June, business weekly HVG noted.

“The current share price isn’t favorable for selling a stake in MOL,” said Chief Executive József Molnár.

Yet, even if it may not make much sense from a stock-picker’s point of view, a potential sale would be a welcome windfall for the government’s coffers, says The Wall Street Journal.

“The government seems keener to sell MOL share to create some headroom in a difficult fiscal situation than arbitrarily intervene into the company’s investment plan,” KBC analyst Péter Császár said.

BNP Paribas also welcomed the government’s comments in a note, saying the “statements are another sign that confirms the determination of the government to achieve fiscal consolidation, while retaining a market friendly stance.”

The only question, then, is the possible buyer. An emergency sale would probably go to a friendly buyer who already owns a stake. Such candidates would include Czech utility company CEZ MH B.V., the holder of 7.3%; Oman-based OmanOil Ltd, which has a 7% stake; and United Arab Emirates-based Crescent Pertoleum, MOL’s upstream partner, which holds 5.7%.

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