KazTransOil stock plunges by 7%

After quarterly results

KazTransOil stock dropped by 7.34% to $1.27 following a decrease in the company’s net profit, according to Kazakhstan Stock Exchange (KASE) data.

Over the first nine months this year, the consolidated revenue of KazTransOil (KTO) plunged to $53.6 million, a 49% drop from the same period last year. However, the consolidated proceeds of the company increased by 1.4% to $382.5 million.

Daniyar Orazbayev, an analyst from Freedom Finance Global believes that the reason the stock dropped is the Q3 financial results. The company reported its revenue decreased by more than 40% in Q3. It will affect payouts in dividends because they strongly depend on net income.

“We also have seen a decrease in cash flow, which is another limiting factor for dividends. However, according to the company’s report, it is capable payoff paying much more in dividends than it paid this year. For example, MunaiTas and Kazakhstan-Chinese Pipeline, which are partly controlled by KTO, have paid the company $16.1 million in dividends, while KTO paid out $21.2 million in dividends for 2021,” the analyst said.

This year the KTO stock is going through a zone of turbulence. On April 18, KASE reported a 7.75% ($1.85) plunge in the stock. This decrease was linked to the recommendation of the KTO board to pay out $107.7 million in dividends ($0.05 per share). The board also suggested keeping the remaining $86.4 million within the company as the level of salaries went up and service companies ask more for their services.

For comparison, in 2020 KTO spent $108.1 million for dividends (or $0.28 per share).

The biggest KTO shareholder is KazMunayGas (90%). The remaining 10% of the stock belongs to minority shareholders, who have bought KTO shares through the so-called People’s IPO.

On November 7, Ernar Zhanadil, executive director on development and privatization in Samruk-Kazyna, said that the holding is neither going to increase its share nor delist KTO.

“There is no plan for KTO delisting. But we also won’t increase our share in the company. We have carefully reviewed the company and do not see any potential problems for KTO shareholders. The company will stay on the KASE listing and will operate as usual,” he said.

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