Lukoil Billionaire CEO Buying Spurs Share Gain: Russia Overnight
OAO Lukoil (LUKOY), Russia’s second-largest oil company, climbed to an eight-week high in New York after the crude producer said billionaire Chief Executive Officer Vagit Alekperov bought $498 million of shares since late June.
American depositary receipts added 0.2 percent to $62.31 in New York after the stock gained 0.6 percent in Moscow, leaving the ADRs at a 0.1 percent discount. Lukoil has surged 12 percent in the past month in Moscow as Alekperov bought shares, compared with a 9.9 percent gain for OAO Rosneft, the world’s largest oil producer, and an 8.4 percent advance for OAO Surgutneftegas. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. rose 0.6 percent to 93.09.
Alekperov bought the stock from June 28 to July 18 using a company he controls, Lukoil said in statements yesterday. The purchases demonstrate his confidence that Lukoil is poised for growth after its valuation fell to a three-month low relative to Russia’s benchmark Micex index (INDEXCF) June 24, according to Alexander Kornilov, an oil and gas analyst at Alfa Bank in Moscow.
“It’s good for Lukoil sentiment,” Kornilov said in an e-mailed response to questions. “He has very strong faith about the bright prospects for his company, and valuations are attractive.”
RTS stock-index futures (VEA) were little changed in U.S. hours yesterday.
Alekperov, 62, is the world’s 73rd-richest man and owns more than 20 percent of Lukoil’s shares, according to data compiled by Bloomberg. Partner Leonid Fedun owns about 10 percent and the company holds about 11 percent of its own shares.
Lukoil is trading at 4.4 times estimated earnings, or 18 percent below the valuation of the Micex gauge. That compares with a multiple of 3.8 on June 24, representing a 22 percent discount.
The Russian government has increased control over the oil and gas sector since President Vladimir Putin came to power in 2000. State-run Rosneft became the world’s largest oil producer in March when it closed a $55 billion share and cash deal to buy TNK-BP, formerly the country’s third-largest oil producer.
Rosneft management expressed interest in taking over Lukoil and OAO Bashneft in meetings with bankers prior to buying TNK-BP this year, Vedomosti reported on June 25, citing people it didn’t identify.
“It is possible that Mr. Alekperov sleeps better at night knowing that there are fewer stray shares for a potential predator to buy,” Chris Weafer, a senior partner at Moscow-based consultancy Macro Advisory, said by e-mail yesterday.
Andrei Gaidamaka, a senior vice-president at Lukoil, and Olga Vasilchenko, a senior manager for investor relations, didn’t return requests for comment sent by e-mail after normal business hours in Moscow.
Seventeen of the 20 analysts surveyed by Bloomberg recommend buying Lukoil’s Moscow-listed shares, which on average are forecast to gain 20 percent over the next year, data compiled by Bloomberg show.
Futures on Russia’s dollar-denominated RTS Index rose less than 0.1 percent to 137,380. The RTS Volatility Index, which measures expected swings in the stock futures, decreased 1.3 percent to 23.35. The Market Vectors Russia ETF (RSX) slipped 0.1 percent to $27.18 yesterday.
The benchmark Micex Index increased 0.1 percent to 1,417.34, while the dollar-denominated RTS Index (RTSI$) was little changed at 1,379.88.
Crude for September delivery rose 0.3 percent to $107.23 a barrel on the New York Mercantile Exchange. Brent oil for September settlement gained 0.3 percent to $108.42 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia main export blend, advanced 0.1 percent to $108.98.
United Co. Rusal (486), the world’s largest aluminum producer, dropped 1 percent to HK$2.86 in Hong Kong trading as of 11:37 a.m. local time. The MSCI Asia Pacific Index slipped less than 0.1 percent.
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