Czech producer Unipetrol downgraded on lack of growth potential

15 September 2010 16:38  [Source: ICIS news]

PRAGUE (ICIS)--Raiffeisen Centrobank has downgraded its rating on the stock of Czech petrochemical producer Unipetrol to 'Reduce' from 'Hold' noting its lack of growth potential, it said on Wednesday.

"We like Unipetrol’s restructuring and debt reduction track record and we think that with its specialisation in niche petchem products, the company will be able to tackle future challenges, especially the upcoming Middle Eastern petchem competition, the bank said.

"However, with the strategy of [Polish parent company] PKN Orlen, we see little growth potential other than the organic growth fuelled by the incremental central & eastern (CEE) European petchem demand,“ Raiffeisen added in an analyst report.

Unipetrol enjoyed a good financial position that placed it in a favourable position for acquisitions "but no projects are on the radar screen at the moment", the bank added.

It forecast that the CEE petrochemical market would "continue its way of recovery, albeit not as quickly as before".

Olefin margins were stagnating, but polyolefin margins were performing better, it added.

Thanks to its petrochemical products being denominated in euros, Unipetrol was also benefiting from some depreciation in the Czech koruna, the bank also noted.

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By: Will Conroy
+44 20 8652 3214



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