Despite Brent price breaking record highs, Hungarian retail fuel demand kept growing rapidly in 1Q06, according to Mr Varro, MOL’s Chief Economist cited by Reuter’s. MOL estimates first quarter gasoline consumption to have risen between 4-6%, while diesel demand grew faster by roughly 12-14 % in Hungary. MOL's chief economist noted, that the average Hungarian consumer can buy far more petrol now than five years earlier, due to VAT and excise tax cuts as well as real wage increases, resulting in a low price elasticity for fuels.
We see the trends in line with our estimates, thus we consider the news as neutral. We reiterate our Buy recommendation on the stock and our fair value estimate of HUF 29,033 per share.