According to FUNDER website data,
182 mutual funds hold shares in Zen in the amount of NIS 61.11 million
Funds that hold significant holdings in the stock – for the full list of holdings
In addition to this data, Tower (!) Bond Opportunities Holds shares in Zen Missing Amounting to 0.2% of the fund
The following is a change in the holdings of mutual funds in the Zen share according to FUNDER-MVF data
We leave the recommendation for the BZN share on “Buy” and update the target price at 1.05 shekels. The recommendation continues to be based on the economic gap between the share price (and the European sector) and the representative profitability of the industry. Signs of recovery with the onset of the spring season, thanks to the positive effect of moderation of morbidity and vaccines.
The refining industry is completely dependent on the horizon of the global exit from the epidemic. Covid 19 The delay in tourism and air traffic is reflected in the subsequent decline in demand for diesel and jet fuel. Meanwhile, although this injury is still significant, there has been an improvement in reference intervals. The reasons for this are: global economic recovery, strong demand for petrochemical products and a tight supply of oil.
The price of oil at this stage maintains the relationship between pricing and real demand for commodities because of OPEC’s regulatory policy. Thus, the commodity price is rolled into products, and not cut at the distilleries, which are the real buyers of oil.
Note that the price of the stock, as well as our target price, still expresses the fragility of all these trends, but we believe that the pricing of the sector does not yet express economic equilibrium even in a world that is moving from fossil energy to renewable energy.
The advantage of the BZN share stems from the pricing: in our opinion, the downside is a field despite the risks. In our estimation, although there is no significant discount here, we assume that the company will move with the sector.
Change in sectoral structure in Q4: The EBITDA of the last quarter met our expectations with a stronger internal distribution in favor of the polymer segment, which presented EBITDA of 36 m d. The refining segment, which was merged in the fourth quarter with Gadiv (Aromatics), presented a neutralized EBITDA of 1 m d following the merger. According to an average of 9 months, it can be assumed that Gadiv contributed at least c. 8.3 m in the quarter.
CAOL (polymers) presented results that were similar to the second quarter, and better than in the previous quarter – with EBITDA of c. 36 m.
What to expect in the 1st quarter 2021: The increase in the Azeri reference margin supports the chances of returning to the profitability of the refining segment (even without the effect of Gadiv) and presenting a positive neutralized EBITDA of approximately 10-14 m (according to the old report). It should be noted that despite the decrease in standard deviations in the price of oil, BZN is once again making considerable efforts to reduce exposure to raw material inventories, after the sharp rise in oil prices. The company is not taking risks now,
The year that was: Despite the turbulent year last year for the industry, the offset EBITDA reported for 2020 was 121 m (2.5% – against our expectations).
The petrochemical sectors, as expected, contributed the positive result, while the refining sector deleted most of it in the consolidated report. It should be noted that polymer ranges are at peak intervals today. At the annual level, the polymer segment recorded an EBITDA of 122 m d, and the aromatics segment (which was merged into the refinery in the 4th quarter) recorded an EBITDA of 25 m d in 9 months and at an annual level, probably at least 33 m d.
It should be noted that the loss of the refining sector was due to the effect of the Covid 19 epidemic on air and land traffic, and was intensified by unprecedented volatility in oil prices in the first half of the year.
For the entire year, the average profit margin was about 3.4, but the low efficiency – of 80% on average, hurt profitability. Fixed expenses decreased during 2020 by about 9% due to the company’s efforts (and thanks to the tax benefit), but still stood At about $ 3.3 a barrel, in addition, at the height of the global crisis, the goal of the world’s refineries was to “sell inventory at all costs” so as not to “get stuck” and stop operations.
Thus appeared a negative oil price, resulting from a lack of demand and filling of storage sites. In this situation, the refineries have almost completely given up on optimization, in order to allow for ongoing operations.
Cash flow forecasting model Sets a target price of about NIS 1.05 with an upside of about 41%. The model is based on the assumption of an average margin of 4 d in 2021 (with a refining efficiency of 84%) and 4.5 in the representative year.
According to the market approach The EV / EBITDA multiplier derived from our forecast for 2021 – 12X does not cut an upside against the median of the comparison group. We believe that the share price will move in coordination with the comparison group.
The Bottom Line: The BZN share still reflects a value of a cyclical slump, with the global refining industry functioning contrary to economic rationale with the buds of recovery. We recommend the BZN share with the “Buy” recommendation with an upside of about 41%.
Segment reporting change: The company has so far reported in three operating segments: fuel refining, polymers, aromatics. Our surgery was
Based so far on the aforesaid form of reporting. Therefore at this point we convert the reported results to the previous segmental structure.
Source of data: Company reports, Leumi Capital Markets forecasts
Weighted AZ interval from the beginning of 2021
The source of the data is Bloomberg
The chart above shows that the average Azeri margin levels recorded in March-July 2020 have been unprecedented in the last decade. The gap between oil and physical supply and Ace contracts and especially Nymax was unprecedented in the industry’s beginnings. Based on the assumption of a gradual and slow improvement in global GDP, we believe that these margins are at low levels.
According to the market approach, BZN trades at a discount to the comparison group. Shown as 0 ..
The multiplier for the second year, embodies a moderate upside and represents in relation to cyclical improvement. It should be noted that the differences in neutralization and configuration, the mix of exports and gaps in the reporting dates make it difficult to compare the performance of the last 12 months. In addition to that, we. We see a large part of a certain diversity in the mix of activities, including access to solar energy, communications and more. It should be noted that on the face of it, the results of the first quarter were affected by the neutralization model of BZN more than by the other refineries in the comparison group.
** Investment in refineries is a risky investment due to the volatility that characterizes the refining margins, which are what determine the profitability of the company. Since the onset of the COVID 19 crisis, refining margins and oil prices have recorded a volatile volatility that could negatively impact investment.
The Bottom Line
The cash flow forecasting model results in an upside for 41%. This upside is based on a relatively moderate long-term forecast and a discount rate of 9.5%. We recommend Bazan with a “buy” recommendation and a target price of NIS 1.05.
Documentation of recommendations
