AOI Swedbank REC: Strong Buy as of Sept 26th
COMMENT OIL SECTOR
Published on Friday, September 26, 2014
Africa Oil's shares have taken a beating in recent days. Swedbank believes that there are two main reasons for this. The latest resource update was slightly weaker than expected, and a reinstated capital gains taxes in Kenya. Swedbank had already taken the height of this in his latest analysis and recommendation is Strong Buy with a target price of 70 kronor persists. =Cad $10.77
Africa Oil confirmed yesterday in a press release that Kenya has decided to introduce a new tax law, which, among other things, affect the country's oil industry. Some parts of the new law involves improvements to Africa Oil, it is especially utfarmningstransaktioner which Africa Oil completed a number of times before. But the capital gains tax looks to be unexpectedly high for companies operating in the oil sector. While the capital gains tax generally end up at 5 percent is capital gains taxation of interests in oil licenses to 30 to 37.5 percent.
According to the press release discussing Africa Oil along with other oil companies operating in Kenya with the Kenyan authorities amendments to the law so that they are not likely to put a spanner in the continued development of the oil industry in Kenya, an industry that is still only in its infancy.
- When Swedbank in its latest analysis of Africa Oil esteemed company, we took the height of a possible capital gains taxes by setting the target price lower than Africa Oil's net asset value. It is also important to remember that the capital gains tax only becomes relevant if Africa Oil choose to sell some of its assets in Kenya. And we still think that Africa Oil will provide long-term investors very high returns, says Teodor Sveen Nilsen, analyst
Swedbank's vision of Africa Oil
· After the recent pricing shares valued at less than the oil company actually found. All exploitation assets, keep in with the bargain.
· Highly skilled management team and a strong track record.
· Is the long term a takeover candidate.
Recommendation: Strong Buy
Price Target: 70 Swedish crowns
= Cad $10,77
