Polcolorit: Troubles over valuation of Ukrainian acquisition
According to the daily Puls Biznesu, Polcolorit has troubles reaching price agreement in negotiations regarding acquisition in the Ukraine. This has been confirmed by the CEO. Despite promises the acquisition has not been closed by the end of September. Apparently Polcolorit submitted its offer in August which was rejected by the target. Potential partner was supposed to submit a counter offer but so far this has not been done.
Our view: We believe the news could have some negative trading impact. In the beginning of the year the management planned the acquisition to be closed by the end of August, now it looks like it may not happen even by the end of this year, despite negotiations with more than one entity, which should work in favor of Polcolorit. Moving production to the eastern markets was a key point of the strategy presented by the new management in the beginning of the year. Polcolorit intends to pay for the acquisition with its own shares, which, given problems with company's financial results, in our opinion, could be a problem for the potential partner.
CEE Oils: Brent reached record high on Friday
Crude oil traded near US$ 84 a barrel for WTI in New York after rising to a record last week as tensions on the Turkey-Iraq border added to concerns about the adequacy of global supplies. Turkish lawmakers vote this week on allowing military attacks within a year against Kurdish rebel bases in the north of Iraq, which has the world's third-largest oil reserves. Additionally global fuel inventories fell below the five-year average last month, a period when they usually rise, the International Energy Agency said Oct. 11.
Our view: Current YTD average for Brent amount to 67.9 US$/bbl versus our forecast of 68.5 US$/bbl for the full year 2007. Until now we are quite comfortable with our forecast as we believe that speculations geopolitical tensions and low crude inventories levels will keep the high speculation premium in the crude price. Since tensions on the Turkey-Iraq border put in danger the Brent supplies, we might see the usual price differential between WTI and Brent blends to squeeze in the coming weeks. The rising crude price is positive for such upstream exposed CEE Oils as (49 EUR, -1,61%), Petrom, (28 405 HUF, 0,37%), INA and (6 PLN, 2,25%).