OREANDA-NEWS. September 07, 2010. Rosneft's Board has approved first deputy chief Eduard Khudainatov as its new president, the company reported on Sunday. The 49-year-old Khudainatov, who joined Rosneft in September 2008 as head of capital construction and was promoted to first vice president in January 2009. The appointment ends the long-running speculation about the top job after long-time Rosneft president Sergei Bogdanchikov’s contract expired 29 June. It was not immediately clear what the next step would be for Bogdanchikov, including whether he will retain his seat on Rosneft's board. He owns 0.0012% in Rosneft, reported the press-centre of OTKRITIE Financial Corporation.

View: As we noted earlier, the change of Rosneft president was to some extent predetermined, though we expect it to occur later this year. We have previously noted that Bogdanchikov’s resignation could have a negative impact on Rosneft shares, as in our opinion he is the best president for Rosneft according to his intimate and thorough knowledge of the company’s business processes. At the same time, since the new president comes from within the company, the market response will probably be muted. We believe that investors will be watching Khudainatov initial steps as president with an eye to assessing the future development of Rosneft as an international vertically integrated oil company.

Valuation and Action: The stock trades on a 2010EV/EBITDA of 4.2x, which implies a 30% discount to emerging market peers. We reiterate our BUY rating for Rosneft, and a target price of USD11/share.