According to the justification, the negative situation of the Hungarian budget and the unsatisfactory political relationship with neighboring countries can have a negative impact on Mol, as a result of which the company faces high special taxes and crude oil transit costs.
According to Erste’s estimate, Mol is expected to pay 1.2-1.3 billion dollars in special taxes at home this year, after last year’s 1.7 billion dollars, while according to expectations, net EBITDA before special taxes may fall from last year’s 7 billion dollars to 4.1 billion dollars back,
the results of which the company will be taxed more this year than last year.
Erste notes that although the profitability of Mol’s core business has been increasing since the second quarter, the Ukrainian and Croatian governments, in addition to the Hungarian government, are now taking a larger share of Mol’s profits through crude oil transit revenues.
In addition, they added that it is unlikely that the existing relationship will improve, since the company hardly has any influence on the transit fees, and from the political side, Hungary cannot remedy the situation.
What’s more, this situation may deteriorate further with the slowdown of economic growth and the prolongation of the Russian-Ukrainian war.
According to Erste’s expectations, Mol will pay HUF 175 next year after this year’s record HUF 354.26.
Mol’s shares are down 0.6 percent today, and up 5.9 percent this year. Erste’s updated target price of HUF 2,870 is about 4.1 percent higher than the current exchange rate.
Mol is followed by several large analyst houses, the average target price is currently HUF 2,967, which is 7.7 percent higher than the current level.
Cover image source: Portfolio/Ákos Stiller