Gazprom is one of the largest energy corporations in the world. This is a truly gas giant, which owns vast resources – about 72% of natural gas in Russia and more than 17% of world reserves. The activities of the corporation are focused on the extraction, refining, and transportation of oil and gas. The gas transmission network with a length of more than 168 thousand km allows uninterrupted supply of fuel to European countries.
The corporation conducts the exploration and production of hydrocarbons not only in Russia, but also participates in the development of deposits abroad. Currently, the largest projects are carried out in Venezuela and the Bay of Bengal.
Ordinary shares of PJSC Gazprom
Shares of Gazprom are the most liquid and popular securities of the Russian stock market. Under the ticker GAZP, they are traded on the Moscow Stock Exchange. The company’s depositary receipts are listed on the world’s largest exchanges – Frankfurt (FWB), London (LSE), Singapore (SGX).
The securities of the corporation are among the “blue chips” of the Russian stock market, their share in the RTS and MICEX indices is the highest. Daily turnover of transactions is more than 3 billion rubles.
Gazprom shares evoke the stable interest of numerous domestic and foreign investors and speculators. Experts believe the stock of the corporation is greatly undervalued, and therefore of interest to invest in the long term.
Dynamics of stock prices of PJSC Gazprom
Initially, the securities of the gas giant were traded only on the St. Petersburg Stock Exchange. The first deals were recorded in 1997, starting with the price of 3 rubles 59 kopecks. On the MICEX, the company’s shares have been traded since 2006.
The beginning of the two thousandth is associated with the entry of large investors and insiders to the market. Their active interest pushed the price of GAZP up, as a result of which the securities of the company went up in price and from 2003 to 2006 they “flew up” from the level of 20 rubles to 358.75 rubles.
GAZP stock chart since 2006, M, (MOEX)
Next was the downward correctional movement. To previous highs at 350 – 360 rubles. The action came back in 2008. During this period, the company’s capitalization amounted to more than $ 330 billion. USA.
In May 2008, GAZP prices began to plummet — the global financial crisis provoked a “mass flight” of investors, who were rapidly selling their assets. In October 2008, the stock was already trading at 80 rubles each. It was not just a decline, but a fall!
Analysts attribute the next rise in the value of Gazprom’s papers to the opening of a new depository in 2011. Then the price reached 243 rubles. It did not go higher, and the stock did not rise anymore to these price levels.
For the last five years, the paper has been trading in the lateral range of 120 – 160 rubles, and most of the time the price has moved within 130 – 150 rubles, and investors have been looking forward to the end of this protracted outset.
The action tried to break up twice in February 2015 and April 2016, but then returned to normal values.
In the summer of 2017, the double bottom reversal pattern was formed. After that, the share price rose in January 2018 to 151.65 rubles, then there was a correction to the levels of 135-140 rubles. Until July, the price was in the range of 135 – 150 rubles. In September, its upper limit was overcome, then the quotes rose above 160 rubles.
After exiting the formation, the GAZP shows a steady growth, and investors ask the question: “Will the paper succeed in reaching the pre-crisis price level and recoup the losses”?
Since the beginning of 2018, the share price has increased by 23%.
Investors’ dividend dynamics continue to attract shares of the company in terms of the potential growth of dividend income.
Dynamics of changes in dividends per share of Gazprom from 2000/2001 to 2018
Stock returns have a positive trend. The average yield of Gazprom securities in 2012 – 2013. amounted to 3%, in 2015 it rose to 5.5%, in 2018 this figure is planned at the level of 6%.
Analysts and experts consider the gas giant’s securities to be an attractive long-term investment instrument in terms of undervalued securities and dividend growth potential.
Geopolitics influences investor sentiment
Experts point out that the geopolitical factor and the threat of sanctions still weigh heavily on Gazprom shares, so most analysts consider buying only after the price reaches the upper limit of the five-year side range and overcome 170 rubles.
Analysts consider the improvement of the market situation in China and the EU and the expectations related to the implementation of the Nord Stream and Nord Stream 2 projects to be the most positive fundamental factors for the asset. The increase in gas supplies to European countries should lead to an increase in company revenues. The success of this project will be the main driver for the growth of Gazprom stock quotes. However, there is serious US pressure to freeze Nord Stream 2.
Many investors are cautious about the purchase of securities of the corporation due to new projects falling under US sanctions.
Such a project on the sanctions list is the development of the giant Yuzhno-Kirinskoye field on the Sakhalin shelf. The reserves of the field are estimated at 711 billion cubic meters of gas and 111 million tons of condensate. Start of production is scheduled for 2023. When implementing the project, it was planned to use foreign equipment, but the sanctions would not allow the main suppliers of such equipment from the EU and the USA to participate in the supplies. The sanctions imposed on the field will force to change the planned gas monetization schemes, a part of which should be supplied to the domestic market, a part should be liquefied together with Shell. Now Gazprom is actively negotiating the supply of this gas to China.
Factors affecting the price of Gazprom shares
The value of a corporation’s shares is influenced in different directions by factors of both an external and an internal nature.
Factors that could have a negative impact on the price of Gazprom shares:
– the overall situation on the Russian securities market;
– geopolitical factor – a conflict situation with Ukraine, as a result – sanctions; US policy aimed at ousting Russia from the European market;
– frozen project “South Stream”;
– The situation in the global commodity markets;
– . a drop in gas consumption due to the introduction of energy-saving technologies, the use of alternative energy sources;
– increase in consumption of shale gas produced in the United States;
– the fall of the national currency, due to the crisis processes in the economy.