Research Notes

Salavatnefteorgsintez is one of the largest oil processing and petrochemical concerns in Russia with leadership positions as domestic producer of butyl alcohols and plasticizers, as well as one of the biggest manufacturers of styrene and styrene copolymers. Despite the rally in the company's common shares since early 2005, Salavatnefteorgsintez still remains undervalued.

• Deep crude and gas condensate processing are fully integrated at Salavatnefteorgsintez.

• Consolidation of all work cycles at one facility makes it possible to optimize corporate costs and produce value-added products using in-house raw materials.

• The controlling stake in the company, held by the Property Ministry of the Republic of Bashkortostan, is under trust management of Gazprom, which ensures its "political" support in raw material procurement issues.

• The current favorable environment on the petrochemical and chemical products market is expected to continue, thereby enabling the company to improve in its financial performance in the future.

• The company's broad-scale investment program presupposes aggressive expansion and full upgrade of its production facilities which should produce a positive impact on its financial indicators.

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Anastasia Sarapultseva

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