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Mol Drops to One-Week Low as Citigroup Says Sell: Budapest Mover

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Aug. 14 (Bloomberg) -- Mol Nyrt., Hungary’s largest refiner, fell to the lowest level in a week after Citigroup Inc. recommended investors sell the shares, citing challenges facing the company’s production plans.

The stock decreased 0.6 percent to 16,200 forint by the close in Budapest, the weakest level since Aug. 7 and bringing a decline in the past four trading days to 2.4 percent. Mol led a drop on the benchmark BUX stock index, which fell 0.1 percent.

Mol, which has the biggest weighting in the gauge, said yesterday second-quarter gas production in Croatia and Hungary decreased, a day after announcing the sale of a stake in a mature field in Russia. Profit for the three months through June was 20 billion forint ($89 million), missing the 24 billion-forint median estimate of six analysts in a Bloomberg survey.

“Core production assets in Hungary and Croatia continue to mature,” Mukhtar Garadaghi, a London-based analyst at Citigroup, wrote in an e-mailed note today, lowering the shares from neutral. “Mol’s long-term business plans look challenging given little upstream growth in the medium term.”

The oil and gas company said production at the Shaikan field in the Kurdistan region of Iraq is “within closer reach” after approval from the local government, which will help offset the decline of mature fields elsewhere. Upstream operations were “the weakest link” amid lower gas output and declining crude oil prices, according to Peter Szentirmai, a Budapest-based analyst at KBC Securities, a unit of KBC Groep NV.

Four analysts recommend investors buy the shares of Mol, while 12 say hold the stock and three say sell, according to data compiled by Bloomberg.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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