Neste (NESTE.HE): Equity Discounting Peak Margins through 2030; Transferring Coverage

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Neste (NESTE.HE): Equity Discounting Peak Margins through 2030; Transferring Coverage

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23 Jul 2026 00:00:00 ET │ 19 pages

Neste (NESTE.HE)

Equity Discounting Peak Margins through 2030; Transferring

Coverage

CITI'S TAKE

We continue to view Sum-of-the-Parts as the most appropriate valuation

methodology and believe the current share price implies: (1) a valuation

Sell / High Riskmaterially above underlying replacement-cost economics and (2) the equity

is discounting a Renewable Products (RP) margin materially above Visible Price (22 Jul 26 18:30) €33.18

Alpha (VA) consensus 2027-30E. We expect margins to moderate from Target price €18.40↑current highs but anticipate a refining environment slightly more supportive

than pre-Russia-Ukraine. We are c. 12% below consensus RP margin from from €12.10

2028 and think sustained high prices present policy risk on mandates. We Expected share price return -44.5%

also transfer coverage of Neste to Kate O’Sullivan from Alastair Syme. Expected dividend yield 0.6%

Expected total return -43.9%2Q Preview, Record Margins — We forecast a record 2Q RP sales margin of $1,100/T,

driven by strength in global product cracks. Good asset availability ahead of the 2H Market Cap €25,522M

Porvoo turnaround should drive Neste's strongest quarterly performance. US$29,092M

Equity Discounting Peak Margins through 2030 — In our view, the current equity

value discounts an RP Sales Margin near current levels (1,050 $/T 2Q VA consensus)

through 2030E. This theoretically generates c. €13 B of cumulative FCF to bridge

replacement value to current Enterprise Value. By contrast, consensus forecasts a Price Performancematerial decline – with RP Sales margin averaging c. $580/T 2027-30E.

(RIC: NESTE.HE, BB: NESTE FH)