OREANDA-NEWS. August 21, 2009. Based on 1H 09 RAS results, we believe that Bashneft is likely to be the main profit center of Sistema’s Ufa group in 2009. We suggest switching from preferred shares in the Ufa refineries to Bashneft prefs.

Bashneft’s RAS figures for 2Q 09 and 1H 09, reported yesterday, revealed that the company’s net profits rose by 151% q-o-q in 2Q 09 to RUB 2.23bn, driven by a higher Urals price. In contrast, Novoil, Ufaneftekhim and Ufa Refinery announced significantly poorer earnings in 2Q than in 1Q 09.

It appears that Sistema, which controls the Ufa energy companies, has chosen Bashneft as the primary profit center for the group. Consequently, as a dividend story, we think Bashneft preferred shares are more attractive than those of the Ufa refineries.