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13/11/2008 Possible investment in Repsol
These months we are seeing that Sacyr-Vallehermoso needs to sell the participation that maintains in Repsol of 20% dices its problems of liquidity. Its interest is not to obtain a bulky yield with the operation but to receive what invested in the acquisition to 20€ by action.
Gazprom the Russian giant has been interested and seems that it would be arranged to pay that amount, but it is good investment for the others?
- It is an error to think that if somebody payment 20€ by action by the package of Sacyr-Vallehermoso the quote of Repsol is going to stay in those numbers because it is an operation behind the market that does not force the purchaser to send a takeover on Repsol.
- The potential revaluation is of a 33.77% that is an important number, but does not have because to be sufficiently attractive, mainly if preferred stocks of Repsol of $25.00 of Noun quoting exist to $19.95 (25% of potential revaluation) and with a payment of dividends of approximately 9.5%, for more details you can read the following article Preferred Actions or Participation, those great ones forgotten.
- Repsol does not quote low because the company is not going to have benefits, but because it has risk of losing some of its main businesses since it has already happened in Ecuador and they are threatening from Argentina. If this happened, the company would be seen seriously affected. The activity of an Oil one has two legs:
- Extractive. As Repsol has important operations in Latin America have the prime risk of they nationalize which them with the consequent potential loss and of risk that demands the market (for that reason it quotes more loss than other companies of his sector).
- Marketing. One is basically the fuel sale. If an economic crisis takes place, less fuel is consumed reason why the sales could be reduced).
Sights all these questions, we think that in case of wanting to invest in Repsol the best route it would be to do it through the Preferred stocks before mentioned or but would be better option to less make it in other set out companies to Latin America like Total, Shell, British Petroleum or the own Gazprom.
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