Analysts on Surgutneftegaz shares' investment attractiveness

On February 27, the Board of Directors of Surgutneftegaz has decided to recommend the shareholders' meeting scheduled for March 20 to approve 2002 dividend payments worth RUR0.032 per common share and RUR0.096 per preferred share. As it was earlier expected, the volume of the dividends has been minimized. It was decided to allocate 3.4 percent of the net income, which was lower than last year, analysts say.

Next year the company will have to allocate 7.2 percent of the 2003 net income, in accordance with the recently adopted amendments to the law on joint stock companies, which could be $123m or about $0.017 per preferred share. Investors doubt that the company will comply with the amendments and rumors have appeared about a possible unification of a shareholder capital, experts say.

The announcement of the dividend volume practically has not influenced the dynamics of quotations of the company's shares today, although on the eve of this event there was some speculative growth. The conversion of preferred shares to common shares is currently unlikely to happen. However Surgutneftegaz managers disappoint analysts with taking no effort to eliminate glaring contradictions with minority shareholders, which is due to the large amount of treasury stock (40 percent of the capital). The lack of the company managers' economic interest in enlarging the capitalization decreases the investment attractiveness of its shares and promotes a considerable underestimation of the real price, which is $0.49 per common share, experts concluded.

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