The swap deal between Gazprom and Rosneftegas in which the latter will exchange minority stakes in 72 regional gas distributors (RGD) for a 0.89% share in Gazprom may be finalised at the beginning of 2012.
From an investment perspective, we suggest sticking with the stocks that:
- Offer a strong financial performance, creating a greater chance of a valuation upgrade
- Provide more attractive valuation ratios vs their peers
- Offer high upside potential relative to the earlier Nov 2008 valuation
We favour Vladimiroblgas, Rostovoblgas, Kalugaoblgas, Kostromaoblgas, Belgorodoblgas and Tveroblgas, which delivered a solid financial performance in 2007-10, feature relatively low valuation ratios and offer more than 100% upside potential vs the Nov 2008 estimates.
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