The value of Saudi Aramco in banking research varies by more than $ 1 billion: report

NEW DELHI: Ratings for Saudi Aramco They vary by more than $ 1 billion, according to fund managers who have seen the bank's research, underlining the uncertainty about what could be the largest stock market list in the world.

The fund managers are carefully studying the bank investigation after Aramco announced on Sunday its intention to trade in the Riyadh stock market.

The sources told Reuters that Aramco could offer between 1% and 2% of its shares, raising between $ 20,000 and $ 40,000 million. An agreement of more than $ 25 billion would exceed the record IPO of Chinese e-commerce giant Alibaba in 2014.

However, on Sunday, Aramco did not provide the size of the planned OPV, nor the term, did not identify fundamental investors and did not provide information on a planned follow-up list abroad.

The crown prince of Saudi Arabia, Mohammed bin Salman, has spoken of a $ 2 billion value target for the world's largest oil producer, while banks have provided variable figures.

Bank of America Merrill Lynch estimates Aramco's valuation at $ 1.2 trillion at $ 2.3 trillion, while EFG Hermes has a valuation of $ 1.55 trillion at $ 2.1 trillion, two fund managers who saw the investigation reports told Reuters.

Goldman Sachs, one of the banks that coordinates the IPO, has put the company's valuation between $ 1.6 trillion and $ 2.3 trillion, two sources said.

Bernstein analysts estimated “a fair value range” for Saudi Aramco is $ 1.2 trillion to $ 1.5 trillion.

Our discounted cash flow approach ... suggests $ 1.4 trillion on average, he said.

BOFA Merrill has also used the discounted cash flow model, a valuation methodology that uses future cash flow, according to a fund manager who saw the investigation.

Banks were not immediately available for comment.

Credit Suisse's research offers an equally wide range of value, said the fund manager.

These ranges are always wide, since research analysts want to cover both low and high, so you want to show the sensitivity of the assumptions, an analyst said.

The EFG Hermes research involves an estimated business value to EBITDA ratio for 2020 from 6.9 times to 9.4 times, a price/earnings ratio of 14.5 times to 19.5 times and a dividend yield of 3.9% to 5.3%.