| Liran Lublin, Director of Research Department, IBI Investment House
After the close of the fourth quarter of the year, the picture regarding the operating environment and results for 2021 of Zen (TASE 🙂 in the quarter becomes clearer.
Polymer margins in the fourth quarter continued the contraction trend, but are still at high levels compared to the multi-year average. Polyethylene and polypropylene margins fell to $ 1,288 and $ 1,110 per tonne, respectively. rate EBITDA Quarterly of about $ 50 million in the fourth quarter.
As mentioned, the abnormal margins of the second quarter continued to shrink, although in the first days of the first quarter there was a slight increase in the polyethylene margin. Carmel Olefins (CAO) for the fourth quarter will be a test of the company’s ability to hedge the high margins of the beginning of the year. The renovation.
The fuel sector, however, continues to show an impressive recovery even in the fourth quarter of this year. Recall that in the third quarter Zen enjoyed a contribution of $ 0.5 per barrel in the refining margin for compensation from Energian, and nevertheless presented a surplus margin of $ 3.5 over the reference margin (excluding the compensation contribution). During the fourth quarter of the year, the reference margin (Azri Bloomberg) was $ 7.9 per barrel and distillate margins continued to rise (mainly DSL).
We estimate that the increase in the margin will have a material impact on the results of the segment that is expected to be presented EBITDA Neutralized quarterly of $ 80-90 million.
It is possible to produce a rough forecast for the results of the first quarter coming out of the margin environment on which there are already indications:
| Azri Bloomberg | Ural Bloomberg | gasoline | Diesel | Polypropylene | Polyethylene |
Average Interval Quarter 4 2021 | 7.9 | 7.7 | 11.4 | 13.3 | 1,110 | 1,288 |
Average Interval Quarter 3 2021 | 3.8 | 2.7 | 13.4 | 8.2 | 1,246 | 1,388 |
In summarizing the two main segments of BZN, we estimate that the company will present EBITDA Higher than $ 130 million in the fourth quarter and will close the year with EBITDA Of about $ 470 million.
| Dividend
In light of our estimates of BZN’s results for the fourth quarter and for the entire year, and in accordance with the published dividend policy, we believe that BZN will be able to distribute a dividend of NIS 80 million for 2021, which yields a dividend yield of 8% on the current share price.
| Looking ahead: The strategic plan is becoming a bit clearer
During 2021, some of the short-term performance of the BZN (relative to the excellent results presented) was attributed to the slightly vague strategic plan presented by the company’s management. Introducing the program for the first time.
Here are the main numbers from the presentation of Kaul:
Bazan’s strategy
It is difficult to say whether the improvement in the stock’s performance since the beginning of December is attributed to the improved refining margins or whether it is a decrease in the risk premium that the market gives to future investments but it is clear to us that despite the stock increases.
The author is the director of a research department at IBI Investment House and has no personal interest in the review. This review is not a substitute for investment marketing that takes into account the data and special needs of each person.