The financial viability of MOL’s strategy 2030 and its effect on shareholder value

Abstract

THE AIM OF THE PAPER

In my paper, I examine the expected effects of MOL's 2030 strategy on the company's shareholder value. Will MOLGroup be able to generate a suitable corporate value, if a shift in fossil era comes, or cannot deal with the upcomingfuture?

METHODOLOGY

I took into consideration the relevant literature and international standards. What always common is that the DCF method is the most methodologically appropriate. Within the DCF method I chose the ECF model, because the shareholder value directly derives from it.

MOL's 2030 strategy mentions four investments that are essential for shareholder value: development of refineries, plastic and artificial rubber factories and expansion of the Fresh Corner chain. It also underlines that electric cars could repress the sale of conventional fuels. I am therefore examining the effects of these strategy elements and the growing number of electric cars individually, as well as collectively on the shareholder value, at the present value 2017.

MOST IMPORTANT RESULTS

 According to my analysis, the possible shift in the use of fossil fuels will not affect the implementation of the strategy,the effects of investment projects and the fact of spreading e-vehicles, together have an increasing impact of 2.93% on shareholder value. However, contrary to MOL's expectations, individual projects will not all be reimbursed by 2030,reimbursement can only be stated with an attention to the whole strategy.

RECOMMENDATIONS

 My testing method can be generalised within the industry, since in developed economies oil companies face the same trends, only company-specific parameters need to be correctly inserted. For projects that are not reimbursed at MOL until 2030, it is recommended to define a longer time frame.