Analyst research gives wide range for Aramco valuation: sources

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[DUBAI] Analysts provided wide valuation estimates for Saudi Aramco, ranging between US$1.2 trillion and US$2.3 trillion, fund managers who have seen research notes said, as the oil giant kick-started its initial public offering (IPO) on the local bourse. Read more at The Business Times.

Bank of America's research is based on the discounted-cash-flow model, a valuation methodology that uses future cash flow, according to one fund manager who saw the research."These ranges are always wide as research analysts want to cover both low end and high end so you want to show sensitivity of assumptions," one analyst said.

EFG Hermes research implies a 2020 estimated enterprise value to Ebitda ratio of 6.9 times to 9.4 times, a price-to earnings ratio of 14.5 times to 19.5 times, and a dividend yield of 3.9 per cent to 5.3 per cent. Aramco's long-awaited announcement on Sunday did not disclose the number of shares to be sold, pricing or the date for a launch.

Sources have told Reuters Aramco could offer 1-2 per cent of its shares on the Riyadh exchange, raising as much as US$20 billion to US$40 billion. A deal over US$25 billion would top the record-breaking one of Chinese e-commerce giant Alibaba in 2014.

 

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