Iran Opening Beckons Peugeot to BAT as Western Brands Entice

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Iran Oil Refinery

Iran Oil Refinery

The end to Iran’s international isolation is attracting more than just energy firms.

Carmakers, aircraft and tobacco producers also make the list of companies that analysts from Natixis Securities SAS to Jefferies LLC say may invest in the nation if the April 2 agreement with world powers results in an end to penalties over its nuclear program.

While Total SA, BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp. all have assets and expertise that could be of use to Iran, holder of the world’s largest gas reserves and fourth-biggest oil reserves, there’s more to the $370 billion economy than hydrocarbons.

The country’s 77 million consumers have been starved of most Western products for more than 10 years as the Islamic Republic failed to convince the U.S. and the European Union that its nuclear program is for peaceful purposes.

Here are 12 stocks that analysts say investors should keep an eye on as Iran is brought back into the international fold:

* Boeing Co. (BA US): The company was granted a short-term license in April 2014 to export jet parts to Iran after lobbying the U.S. government. The shares have gained 16 percent in the past 12 months.

“The Iranian fleet of civil transport is very old and would obviously benefit from modern Western technology,” Howard Rubel, a New York-based analyst with Jefferies, said by phone on Thursday.

* British American Tobacco Plc (BATS LN): Iran is the largest tobacco market in the Middle East, according to BAT, which already sells locally made cigarettes in the country.

“Multinationals, such as tobacco companies, are poised to benefit from the lifting of sanctions to the extent that they stimulate economic activity and enable consumers to purchase consumer goods,” Kenneth Shea, a Princeton, New Jersey-based analyst at Bloomberg Intelligence, said by e-mail on Friday.

* BP (BP US), Eni SpA (ENI IM), Royal Dutch Shell (RDSA NA), Statoil ASA (STL NO), Exxon (XOM US): Iran’s oil minister, Bijan Namdar Zanganeh, has sought to entice the crude and gas giants to invest since Iran first stuck an accord with global powers in November 2013.

Many projects that major oil companies started in Iran prior to sanctions weren’t completed, paving the way for a renewal of investments, according to London-based Bloomberg Intelligence analyst, Philipp Chladek.

“European companies such as BP that have a long storied history in Iran are likely to take the first crack at coming back into the country,” Gianna Bern, an energy consultant who teaches international finance at the University of Notre Dame in Indiana, said this month. “Although some may be wary initially.”

* Daimler GY (DAI GY): The world’s largest truckmaker is waiting on the outcome of talks to determine its future plans in Iran after shutting down its Tehran office four years ago.

As part of its pullout from the Islamic Republic, the German automaker in 2010 abandoned a 30 percent stake in a diesel-engine venture with Iran Khodro and halted deliveries of three-axle trucks.

“We appreciate the recent political framework agreement with Iran,” Silke Mockert, a spokesman at the company, said by e-mail on April 16. “Our future plans will depend in particular on the outcome.”

* Peugeot SA (UG FP) is in talks with local carmaker Iran Khodro to form a joint venture that’s poised to start operations should the nation’s isolation end. Car sales in Iran are set to reach record levels in 2017, Jean-Christophe Quemard, executive vice president for Middle East and Africa, predicted in December.

For a sense of how big of a boon a return to Iran could be, Georges Dieng, a Paris-based equities analyst at Natixis, says Peugeot got about 13 percent of its annual sales from the country before suspending operations in 2012.

* Renault SA (RNO FP): Tension over the nation’s nuclear program forced Europe’s third-largest automaker to halt exports to Iran about two years ago.

The partial lifting of sanctions in November 2013 allowed Renault to resume shipping kits that its Iranian partners assemble. The Clio hatchback and Captur compact SUV could be rolled out once penalties are lifted entirely, a person familiar with the matter said this month.

A revival in car sales “should benefit the two French carmakers as they have solid historic positions,” Dieng of Natixis said in an e-mailed report on April 7, referring to Renault and Peugeot. That would allow Renault to recover part of an 828 million euro ($899 million) writedown incurred by sanctions by the end of 2014, he said.

Renault shares have advanced 60 percent this year.

* Schlumberger Ltd. (SLB US): Oil-services companies like Schlumberger will be “the first beneficiaries of ending sanctions,” Rob West, an equities analyst at Redburn Europe Ltd in London, said in an e-mailed note on April 7.

The Houston, Texas-based company said in April 2013 it was winding down its work in Iran after getting $98 million in revenue and $56 million in profit from work with the country during the first quarter of that year.

* Total (FP FP): The French oil company may be among the first crude majors to benefit from the removal of sanctions, which would allow it to resume construction of a 2 billion cubic-feet-a-day liquefied-natural gas export facility, Bloomberg Intelligence said in December.

Total will “of course” consider re-entering Iran, Chief Executive Officer Patrick Pouyanne said on April 13.

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