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Royal Dutch Shell plc

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Following the strong first-quarter results, we are upgrading our investment thesis on Royal Dutch Shell to a 'Hold'. The integrated behemoth's upstream unit swung to a Q1 profit from a year-ago loss thanks to steady oil price recovery during the period and production contribution of BG assets. The Hague-based supermajor was also able to reduce operating costs and progress on its large divestment program. Importantly, the Anglo-Dutch company generated a surge in cash flows, allowing it to cut debt and cover its cash dividend. However, with oil falling below the psychologically-critical $50 threshold again, Shell's near-to-medium term revenue outlook remains cloudy. Hence, we advise investors to wait for a better entry point before buying shares in Europe's largest oil company.

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