OREANDA-NEWS. September 02, 2010. Rosneft President Sergei Bogdanchikov, whose contract expired 29 June, may be resigning in the very near future, according to Vedomosti. Any decision on the replacement or renewal of the president of Rosneft requires a government directive. Although a number of sources in the government confirm such a directive has been prepared, there has an announcement regarding candidates for the position, reported the press-centre of OTKRITIE Financial Corporation.

View: We believe that the resignation of Bogdanchikov as Rosneft President could have a marginally negative effect on Rosneft shares, given his intimate and thorough knowledge of Rosneft and its business processes. Because the prospect of a change in leadership has been circulating in the market some time, we do not anticipate long-term negative impact on the company, especially since this possibility has already been priced into Rosneft shares. In fact, selection of a new president may subsequently become a short-term driver for the stock, though the direction of the movement is difficult to define at this juncture.

Valuation and Action: The stock trades on a 2010EV/EBITDA of 4.1x, which implies a 30% discount to emerging market peers. We reiterate our BUY rating for Rosneft and a target price of USD11/share.