MOL’s petrochemical arm TVK will hold its annual general meeting on April 20 in Budapest, the company announced yesterday. The management has not yet reached a decision regarding its dividend proposal; a major factor to consider is TVK's HUF 65bn (USD 300m) long-term debt, the CEO of the company told the press. Also on the agenda are the conversion of shares owned by employees into ordinary stocks, amendments to the articles of association and the appointment of new executive board and supervisory board members.
In 2006, TVK is focusing on efficient operation of its increased capacities and increasing margins in a rather unfavorable business environment. High oil prices are expected to cut significantly into the profitability of European petrochemical companies in 2006 as naphtha fuelled ethylene crackers on the old continent became less competitive than ethane-based technologies in the Middle-East and the US due to fast rising crude oil/distillate prices but slower increasing ethane prices. We keep our Hold recommendation on the stock with our price target of HUF 5,300.