First half earnings (EBITDA) guidance of $390-410m was ahead of UBS’ prior forecast of $324m, due to higher realised refining margins and higher fuel volumes (ex-jet).
The broker explains total fuel volumes (ex-jet) are now above pre-covid levels. Strong diesel demand in regional Australia, particularly from agriculture and resource industries, has offset weakness in lockdown-affected metro fuel sales, notes the analyst.
UBS sees asymmetric upside for the group to benefit from improving refining margins and improving transport fuel demand as travel restrictions ease. Buy retained. Target rises to $2.45 from $2.35.
Sector: Energy.
Target price is $2.45.Current Price is $2.07. Difference: $0.38 – (brackets indicate current price is over target). If VEA meets the UBS target it will return approximately 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
