All Reports

15.09.10
STRATONOMICS: SEPTEMBER
Over the past three months MSCI Russia has lagged most emerging markets (+9% vs 12% for MSCI EM). MSCI Russia was the fourth worst-performing emerging market index over the period, as energy names continued to weigh on the Russian index. Given that commodity prices have shown resilience amid dollar strength since YE09 (providing moderate support to the rouble) we argue that Russia has the potential to outperform when risk appetite returns. At a 12M fwd P/E of 6.2x (the lowest in the EM universe) valuations are also supportive: all sectors with the exception of consumer staples currently trade at a...
13.09.10
GLOBALTRANS: 1H10 Results Underline our BUY Rating
An international peer group comparison using our updated forecast shows that Globaltrans currently trades at 20-40% discounts to its global peers on EV/EBITDA and P/E ratios for 2010-12E. At the same time, Globaltrans offers an above-average revenue growth outlook and strong EBITDA margins, according to our forecasts. We believe these high discounts are not fully justified and hence support the upside potential derived from our DCF model. ...
02.09.10
WBD: Underperformer with Good Reason
We downgrade our WBD target price 10% to $18.5/ADR (implying 2% downside potential) on the back of weak 2Q10 financials and our more conservative outlook on the company's profitability. Lower profitability is likely to be caused by a continuously increasing milk price. Although the stock has underperformed the sector over the past 12M, our opinion is that it is an underperformer with good reason. Furthermore, WBD does not look cheap vs its peers: it currently trades at 3-40% premiums to its EM peers on a 2010 P/E basis....
01.09.10
RUSSIAN GEOPHYSICS: Let's Get Geophysical
With this report we extend our coverage of Russia's oilfield services industry to incorporate the geophysical market. In our view, oil field depletion and growing demand for new oil and gas reserves have the potential to drive the geophysical market towards a new growth phase. We also argue that the current stable oil prices provide the bedrock for the geophysical market's expansion as oil companies regain the confidence to resume exploration investments following the crisis. Meanwhile, we believe we are witnessing early signs of a return to M&A activity in the geophysical space which, in our opinion, has the potential...
31.08.10
MACROECONOMICS: CBR Remains on Hold amid Inflation
CBR on hold as expected: As we and consensus had anticipated, the Central Bank of Russia (CBR) has today (31 Aug) kept the refinancing rate unchanged at 7.75%. Renewed inflation pressure: Lower inflation over the past two years has allowed for a reduction in the refinancing rate from 13% in Mar 2009. That said, we believe signs of renewed inflationary pressure, stemming partly from the recent heat wave and forest fires that have had an adverse effect on food prices, influenced today’s rate decision. In addition, our view is that inflationary pressure will build as the economy recovers from the...
31.08.10
ELECTRICITY DISTRIBUTION: Longer-Term RAB Rates of Return Clarified
Federal Tariff Service (FTS) proposes longer-term regulatory RAB rates. Last week the FTS published on its web site draft orders for regulatory rates of return on regulatory asset bases (RAB) until 2015. These regulatory rates of return are applied to the Federal Grid Company (FSK) and electricity distribution companies (MRSKs). Longer-term regulatory rates of return set at 10-11%. The FTS’s latest orders propose rates of return for MRSKs, which are due to introduce RAB from 1 Jan 2011, as well as for the fourth and fifth years of RAB regulation for FSK and the MRSK regional branches that adopted...
31.08.10
MACROECONOMICS: CBR Remains on Hold amid Inflation
CBR on hold as expected: As we and consensus had anticipated, the Central Bank of Russia (CBR) has today (31 Aug) kept the refinancing rate unchanged at 7.75%. Renewed inflation pressure: Lower inflation over the past two years has allowed for a reduction in the refinancing rate from 13% in Mar 2009. That said, we believe signs of renewed inflationary pressure, stemming partly from the recent heat wave and forest fires that have had an adverse effect on food prices, influenced today’s rate decision. In addition, our view is that inflationary pressure will build as the economy recovers from the...
30.08.10
SBERBANK: 2Q10 IFRS Results: Is the Bottom in Sight?
Sberbank's 2Q10 results revealed fairly strong downward pressure on NIM (-100 bpts QoQ), which together with diminished trading gains resulted in earnings dropping 52% QoQ to RUB20.8bn. The brightest element of the numbers was fee income, which rose 22% QoQ and 31% YoY. We cut our 2010E earnings estimate from RUB161bn to RUB114bn, keeping our 2011-12 forecasts almost unchanged. For 2010E we expand the YoY decline in NIM to 150 bpts (from 100 bpts previously) and increase the provisioning charge from 3% to 3.5%. Over 2011‐12E, we project NIM losing another 25 bpts, and we keep provisioning charges small but...
24.08.10
FESCO: Lucky Sale
In this note we increase our FESCO target price to incorporate its poor 2009 IFRS results as well as the company’s recently announced sale of its 50% stake in National Container Company (NCC) for $900mn. NCC controls port container terminals in St Petersburg, Novorossiysk and Ilyichevsk. In our view, this transaction will have a strong positive effect on FESCO’s 2010 financials. The company will record a more than $400mn gain from the investment’s disposal, on our estimates, which will also shift FESCO from a position of significant debt to being cash positive. Incorporating these changes into our DCF model provides...
19.08.10
VOZROZHDENIE: Set for a Recovery from a Low Base
Vozrozhdenie yesterday (18 Aug) posted 2Q10 IFRS earnings of RUB121mn, 10-11% ahead of our and consensus forecasts of RUB109-110mn. We highlight four key positives in the numbers: 1) Healthy loan growth (+7.5% QoQ), outpacing both the sector (+4.7% QoQ) and the bank’s own deposit base (-1% QoQ). 2) Non-interest income strength: net fee income was up 18% QoQ and 5% YoY. 3) The NPL ratio improved from 11.1% of gross loans in 1Q to 10.6% in 2Q, despite a significant volume of previously restructured loans maturing in 2Q, some of which were ultimately classified as non-performing. 4) A zero effective...
16.08.10
MACROECONOMICS: IP Growth Slows for a Second Month in July
Industrial production grew 5.9% YoY in July, Rosstat reported today (16 Aug). This was sharply down on June’s 9.7% YoY and May’s 12.6% YoY growth. Additionally, the July figure was well below the Bloomberg consensus estimate of 8.2%. In terms of sectors, the slowdown in July was due to respective decelerations in mining (from a 4.4% YoY increase in June to only +2.7% in July) and in manufacturing, which slowed to 8.0% YoY from 14% YoY in the previous month. The extension of basic services (electricity, gas, and water) strengthened somewhat in July, up 2.5% YoY from 2.3% YoY in...
29.07.10
UTair: Come Fly with Us in Russia
UTair has the most extensive domestic route network in and the highest flight frequency, with the potential to build on its number-three ranking in terms of domestic turnover. Among Russian airlines, UTair is the most exposed to the domestic passenger market which, in our opinion, holds significantly more attractive growth prospects in the medium term than the very competitive international airline market. The Russian domestic passenger market is currently marked by low population mobility on airlines but high mobility on railways. However, we believe that given ’s vast size, domestic airlines’ turnover has strong growth potential, noting that it...
19.07.10
MRSK NORTH CAUCASUS: Catching Up
MRSK North Caucasus (MRKK) meets investors on 7 July. We understand that this is the first time the company’s senior managers have ever met with the investor community. A utilities top pick. Despite the lower target price, we still see potential upside of 222% at current market quotes – one of the highest in our coverage universe. The stock is trading at an EV/RAB 2010E of 0.15x, and EV/EBITDA 2012E of 1.6x, which makes it the cheapest stock in the electricity distribution sector. Even EV/EBITDA 2010E (showing the company’s profitability under the “cost plus” approach), is only 2.4x, among the...
19.07.10
STRATONOMICS: JULY
Equity markets are again gripped by heightened global risk aversion. With the pall over Europe’s banks yet to disappear, renewed concerns over growth in China and the US have led to a re‐emergence of fears of a double‐dip recession. Though MSCI Russia has risen 5% over the past month, elevated worldwide unease means that the Russian market is at risk of being excessively punished – given that Russian equities tend to be some of the first stocks offloaded by investors. We thus continue to favour a defensive stance towards Russian shares (utilities, food producers, telecoms, and pharmaceuticals) until more...
13.07.10
KAZAKH BANKING: 1Q10 Results and Near-TermDrivers
For the three Kazakh banks we cover, 1Q10’s IFRS results revealed diverging paths. In this report we discuss each bank’s current circumstances and what we anticipate over the next few months. Halyk Bank: Net interest margin (NIM) and RoE recovery. Halyk was the only bank in its CIS peer group to see a strong positive NIM dynamic in 1Q10, and management has guided for further improvements, as the bank optimises its funding structure and eliminates excess liquidity. The bank’s early repayment of Samruk-Kazyna’s $400mn deposit in June is one such example. Halyk Bank’s annualised RoE for the quarter was...
08.07.10
RUSSIAN GAS: Top Line Driven
“The value of natural gas to society has never been higher, given its green potential; but its value relative to oil has never been lower.” (Michael Stoppard, IHS CERA). Never before has the gas market been as dynamic and attention-grabbing: The consequence of a technological breakthrough in the extraction of shale gas, coupled with an oversupply of liquefied natural gas (LNG) on the back of declining global gas consumption, is the lowest ever price (relative to oil) for gas. We see this overexcitement about shale gas, and the oversupply in the global market as temporary, creating very enticing investment...
05.07.10
Everything You Always Wanted to Know about Russian Utilities
Presentation: Everything You Always Wanted to Know about Russian Utilities...
01.07.10
ELECTRICITY DISTRIBUTION: RAB Delayed; Buy on the Dips
1 July deadline for another round of RAB introduction missed. The government stated in Jan 2010 that 22 electricity distribution companies’ (known as MRSKs) regional branches should transfer to RAB tariff regulation from 1 July. However, Interfax cited a Federal Tariff Service (FTS) representative yesterday (30 June) as saying that “The FTS’s management board has not considered questions related to the approval of regional authorities’ decisions to transfer distribution grids to RAB”. An undisclosed Interfax source added that the relevant government bodies are currently evaluating two options: either postponing the deadline for RAB introduction for several months, or shifting...
30.06.10
BASHNEFT: A Fresh Look on the Preferred Shares
We raise our target price for Bashneft's preferred stocks by 16.1% to $29.5 per share from $25.4 and upgrade our rating from HOLD to BUY. We are increasing our valuation on the back of substantial dividends paid for 2009: RUB109.65 ($3.5) per common and preferred share, implying dividend yields of 10% and 14%, respectively (as of the record date of 21 May). Bashneft is yet to formalise its dividend policy, though its dividend payout for 2009 totals 221% of its 2009 net income. We believe that going forward Bashneft will continue to pay generous dividends as we expect the...
29.06.10
AvtoVAZ. Cash for Clunkers: The Ideal Prescription
In this note we revise upward our target price for AvtoVAZ to incorporate our views on the automaker’s ambitious business expansion plans until 2020 and promising developments in the Russian passenger car market during the first few months of 2010. AvtoVAZ has been the major beneficiary of the Russian “cash for clunkers” programme and so the state’s recent decision to allocate the scheme another RUB10bn from the federal budget bodes well for further additions to AvtoVAZ’s revenues. We have significantly revised our DCF model for the company, extending it until to 2020, and factored in AvtoVAZ’s major development targets as...
29.06.10
COMSTAR-UTS. Demoted by MTS: No Longer Driven By Its Fundamentals
MTS Treasury ADRs will not be used for the MTS-Comstar swap. MTS intends to issue new local shares for this swap and consequently, the mobile phone operator’s 68mn treasury shares in the form of ADRs will remain untouched on its balance sheet. MTS is unable to issue new local shares under its ADR programme, as under Russian legislation, the proportion of a Russian company’s shares traded on foreign exchanges may not exceed 35%. Downgrade from BUY to HOLD. We see no reason to adhere to our DCF approach for setting Comstar's target price (TP). We decrease our 12-month TP...
24.06.10
INTEGRA: Work in Progress
Following the announcement of a weaker-than-expected 2010 order book we have downgraded Integra's fair value to $4.30 per GDR from $5.68. At the same time, we remain upbeat on the company's prospects and hence reiterate our BUY rating on the stock....
22.06.10
RUSSIAN BANKING: Financials ARE Leading the Recovery;Where Is The Most Value Left?
This report follows up on our Stratonomics: June (11 June 2010), which highlighted Russian Financials as the sector that is likely to lead in a recovery. Since 8 June 2010, MSCI Russia Financials’ growth, as well as the share-price performances of the names in this note, have been consistent with our view: the Russian stock market has seen healthy increases in the past two weeks, and blue chip financial shares have been leading the charge. With this note we seek means for investors to obtain the best exposure to the current recovery via Russian financial sector stocks. The two...
21.06.10
KAMAZ: Rev the Engine
In this note we revise upward our fair value for KAMAZ to incorporate the truck-maker’s better-than-expected FY09 IFRS results and a recovery in the broader Russian vehicle market. On the back of our increase in fair value to $2.36 per share we upgrade KAMAZ to HOLD....
16.06.10
RUSSIAN EQUITY STRATEGY: Russian Oil Stocks: Underweight the Heavyweights
Dispelling the notion: A common concept is that Russia is all about oil and gas. While undeniably true when it comes to economic activity, we use this note to show that when it comes to equities, Russia has over the past decade been anything but a pure product of the oil and gas industry. An investor who purchased oil and gas stocks listed on the RTS Index would have seen a 440% return over the past ten years. While many would not quibble at this, it is interesting to note that the overall index has rallied 620% over the same...
15.06.10
SOLLERS: Shifting up a Gear
In this note we revise upward our fair value for Sollers to incorporate management’s positive guidance for 2010 as well as a broader recovery in the car market. We also take into account the company’s weaker-than-expected FY09 IFRS results, released on 4 June. As a result of these adjustments, our 12M fair value for Sollers increases by 4% to $27.20 per share from $26.06 previously. Our new 12M fair value offers more than 60% upside potential and considering also the company’s strong growth prospects we reiterate our BUY rating. ...
11.06.10
STRATONOMICS: JUNE
Banking stocks have underperformed in most countries during the recent correction (since 14 Apr), and Russian banks have been some of the most beaten‐down names in the Russian stock universe (see Chart of the Month). Our opinion is that the sell‐off in Russian financials was unjustified given the sector’s relatively strong fundamentals (see page 1 for additional information), and Russian banks’ very limited exposure to the troublesome south of Europe. During the 2008‐09 sell‐off, Russian Financials was the worst affected sector, regardless of its negligible association with sub‐prime. That said, when the market recovered Banking was the best‐performing sector...
10.06.10
AEROFLOT: Taking Rosavia on Board
In this note we revise downward our fair value for Aeroflot to incorporate the company’s worse-than-expected FY09 IFRS results, released on 3 June, positive developments in the Russian passenger airline sector and the prospective consolidation of Rosavia’s airline assets....
08.06.10
RUSSIAN UTILITIES: Transition to RAB: Rising Uncertainties
Government officials plan to lower electricity grid companies’ tariff growth in 2011. On 3 June Interfax reported Minister of Economic Development and Trade Elvira Nabiullina as saying that the government plans to lower the tariff growth rates for FSK and electricity distribution companies (known as MRSKs). Nabiullina commented that FSK’s tariff growth in 2011 may total 15%, down from the previously established 31%, and that the government will take “similar” decisions with regards to the MRSKs. The minister noted that revisions to tariff growth will involve prolonging the RAB transition period (from three to five years, we understand) as...
02.06.10
RUSSIAN UTILITIES: Generators Unappealing: Rebalance To Distribution
Long-term capacity market rules and price parameters released. In Apr 2010 the government published two decrees establishing the methodology and price parameters for the long-term capacity market for generation companies. These new regulations, which will come into force from 1 Jan 2011, are crucial to generation companies’ future revenues and profits. We suggest switching from generation to distribution. Our lack of enthusiasm for the generation segment means that we recommend that investors seeking exposure to the Russian utilities sector rebalance their portfolios towards distribution stocks....
02.06.10
COMSTAR-UTS: 1Q10 US GAAP Results
Excluding one-offs, in line with consensus. Comstar has reported its 1Q10 numbers with OIBDA of $179mn; 12% above consensus and 10% above Aton’s estimate. Net income was $60mn for the quarter vs the consensus forecast of $40mn and Aton’s $34mn estimate. If we exclude the $19mn reversal of previously accrued option expenses, OIBDA would be $160mn and in line with consensus, with net income of $46mn. Comstar reported $49mn (RUB1.5bn) of depreciation and amortisation expenses for 1Q, lower than the $57mn (RUB1.7bn) seen in 4Q09. This was also the result of a one-off – the write-off of MGTS’s analogue equipment...
02.06.10
URALKALI: What Does The Future Hold?
In this short note we present our analysis of the potential implications for Uralkali as a result of the anticipated sale of Dmitry Rybolovlev’s controlling stake in the potash producer. Our view is that irrespective of who buys Rybolovlev’s stake, we have serious doubts that Uralkali’s minority shareholders will be given an option to tender their shares. We hold this opinion despite Russian law dictating that a new shareholder whose stake exceeds 30% is obliged to offer a buy-back option to the relevant minority shareholders. We explain our rationale below....
31.05.10
CONSUMER GOODS AND RETAIL: They’ve Dropped; Let’s Shop
After a stellar performance during the first four months of 2010, the Russian market was finally overwhelmed by concerns about the European debt crisis, driving investors from emerging market equities into perceived safer assets. For the Russian consumer sector, the market contraction since 15 Apr 2010 has returned stock valuations to levels last seen at the beginning of 2010, with some names tumbling even lower. We therefore argue that consumer names are currently an attractive investment tool for increasing exposure to a market recovery. Our BUY list includes: Magnit, Dixy, Veropharm, Cherkizovo, and M.Video. We anticipate our BUY-rated stocks will...
31.05.10
X5 RETAIL GROUP: Slowing Down
We have reduced our fair value for X5 GDRs to $31/GDR from $35.8 (-13%) and assign a SELL rating to the stock. The share price is down 10% over the past month bringing its 2010E EV/EBITDA multiple to 10.6x, a 10% premium to EM peers. In our view this is a fair reflection of the retailer’s slightly higher margins than its peers in combination with our more upbeat outlook on its EBITDA growth. We, however, find it increasingly difficult to see any potential upside for the stock from current levels....
27.05.10
RUSSIAN EQUITY STRATEGY: Stuck In the Middle
Risk aversion remains high. 2010 has been marked by heightened risk aversion. From the west comes Europe’s sovereign stresses; from the east, concern surrounding ’s fiscal tightening aimed at cooling its galloping economy. This has recently culminated in a sharp correction in global markets where Russia, stuck in the middle, has again, has been one of the worst affected nations (the MSCI Russia is down 24% since 15 Apr compared to a less severe -16% for the MSCI EM). While we expect global markets to remain volatile near term and that will likely suffer more than others in a...
25.05.10
GAISKY GOK: 2009 RAS Financials Exceed Expectations
We have analysed Gaisky GOK’s (GGOK) FY09 and 1Q10 results, which were published in a report dated 13 May 2010. The results for FY09 exceeded our expectations, which is positive news for the share price, and supportive of our forecasts....
25.05.10
M.Video: 3.7x 2011E EBITDA: Expensive?
In this note we increase our M.Video fair value from $7.3/share to $8.0/share following a strong FY09 results release as well as better outlook on margins, further to company guidance....
20.05.10
VOZROZHDENIE: Amid 1Q10 Weakness, We Look One Step Ahead
Vozrozhdenie reported weak 1Q10 results, posting earnings of just RUB97mn (down 75% YoY and 74% QoQ). The poor figures stemmed from a 140 bpts QoQ decline in the net interest margin (NIM) and an elevated effective tax rate of 48%. The higher effective tax rate resulted from the difference between reported and taxable interest income and expense working against the bank. Both factors had been previously flagged by management. We expect 1H10 to mark the floor of Vozrozhdenie's profitability, followed by a recovery in the bank's performance once its NIM recovers from the current lows and/or Vozrozhdenie slows its...
19.05.10
POWER MACHINES: Powerful Enough
Russia’s leading producer of power generating equipment. Power Machines is the major force in Russia’s power generating equipment market, holding very strong positions in all major segments, including hydro, steam and gas turbines as well as generators. The company’s production is therefore suitable for all types of power plants, namely hydro, nuclear, and fuel-based. The company has a monopoly in Russia on the production of hydro turbines and once it completes the construction of a new production plant (scheduled for 2012-13) Power Machines should become Russia’s leading producer of modern steam turbines for nuclear power plants. We initiate coverage of...
17.05.10
PHARMSTANDARD: Life after Arbidol
Pharmstandard reported strong FY09 IFRS financials on 14 May. Revenue was in line with our expectations while EBITDA was 46% above our forecast as a result of a better gross margin than we had anticipated and a reduced allowance for receivables impairment, with the latter keeping distribution costs flat. Net profit was up 44% to reach $216mn (41% above our forecast) on the back of a lower effective tax rate and reduced finance costs. We are pleasantly surprised by the company’s FY09 profitability and are encouraged by its plans to invest in Russian pharma R&D. Nonetheless, in our view...
13.05.10
STRATONOMICS: MAY
While we favour a defensive stance in the current environment, we believe strong fundamentals will again prevail once markets stabilise: 1) We forecast GDP to expand 6.4% this year – one of the highest expected growth rates in the EM universe; 2) With Russian government external debt a mere 3%/GDP (2009) we believe Russian sovereign risk remains negligible; 3) Our expectation is for a 2%/GDP fiscal deficit this year, one of the lowest in the EM universe; 4) The CBR continues to cut interest rates amid falling inflation; 5) Russia still enjoys the lowest 12M fwd P/E in the...
13.05.10
BashTEK: Systematised
In this report we initiate coverage of Bashneft and its subsidiaries: Ufa Refinery, Ufaneftekhim, and Novoil. Bashneft has undergone a radical turnaround since Sistema acquired a controlling stake in the company in 2009 and hence we believe the company presents a compelling investment case: Sistema has created a new vertically integrated oil company by consolidating the Bashkirian refining and marketing assets into Bashneft. Bashneft has become the sole oil supplier to the Bashkirian refineries and thus eliminated third-party suppliers, which previously received refining margins, from the arrangement. In Apr 2010 Sistema acquired a 49% stake in Russneft, which we...
29.04.10
THE RUSSIAN ECONOMY: CBR Cuts Refinancing Rate 25 bpts to 8.00%
Rate cut supported by lower inflation: The Central Bank of Russia (CBR) has today (29 Apr) cut the refinancing rate by a further 25 bpts to 8.00% – a new post-Soviet low – in an effort to 1) drive an economic recovery by kick-starting bank lending and 2) suppress rouble strengthening (the Russian currency is currently RUB33.5/Basket, and has appreciated 7.4% YtD). The new rate will be effective from 30 Apr. We note that lower inflation, which dropped to 6.5% YoY in Mar 2010 from 7.2% in the previous month, has been conducive to rate cuts (a year ago...
29.04.10
NCSP: Profitable Haven
In this note we revise upward our fair value for Novorossiysk Commercial Sea Port (NCSP) to incorporate the company’s FY09 IFRS results, released on 22 Apr, and recent growth in the Russian stevedoring sector. For example, in 1Q10 the sector managed to expand 11% YoY in total physical cargo volumes, with increases being reported in all Russia ’s port regions. Some of the profitable cargo types such as containers grew +52.3% YoY on import deliveries and +39.5% YoY on exports in 1Q10. ...
28.04.10
RUSSIAN EQUITY STRATEGY: Remain Defensive Russia amidHeightened Global Risk Aversion
Risk aversion on the rise. Mounting risk aversion has been the principal theme of 2010 as anxieties come to the fore concerning sovereign debt problems in southern Europe and China ’s early motions to tighten monetary policy in order to cool its galloping economy. Thus, in light of S&P’s downgrade of Greek sovereign debt to junk status yesterday, we briefly address the issue from a Russia perspective...
26.04.10
GLOBALTRANS: Rolling Faster
In this note we revise upward our fair value for Globaltrans to incorporate the company’s better-than-expected FY09 IFRS results, released on 12 Apr, and recent developments in the Russian railroad transportation sector. For example, in 1Q10 the sector managed to combine certain tariff increases with around a 13% YoY expansion in total railroads turnover...
26.04.10
RUSSIAN EQUITY STRATEGY: Spread Contraction Warrants LowerCost of Equity
Russia country risk premium cut by 50 bpts. We believe that the spread contraction over the past five months justifies a lowering of the risk premium by 50 bpts from 4.2% to 3.7%. Consequently, our base cost of equity is lowered from 12.7% to 12.2%. Although the three month average CDS spread has contracted by 65 bpts since 11 Nov (when we last revised our CoE), we cut the country risk premium by only 50 bpts to reflect an increase in the volatility of the RTS Index relative to the S&P500....
26.04.10
CONSUMER GOODS AND RETAIL: Survival of the Cheapest
In this note we outline our arguments why, at current valuation levels, investors should use a more selective approach to the Russian consumer sector. Our bullish forecast for Russian consumer companies’ performance in 2010 remains unchanged, however we are concerned by their stocks’ valuations, with a Russian sector average 2010E P/E of 19.9x vs the international peers’ average of 14.0x. ...
19.04.10
RUSSIAN BANKING: FY09 IFRS Reporting Season in Review
In this note we review the FY09 IFRS reporting season with respect to the Russian banks we cover and provide an updated 2010E outlook . The four respective Russian banks reported their FY09 results between 18 Mar (Sberbank) and 7 Apr (Bank St Petersburg). We summarise the key trends in the numbers and management guidance, and update our fair values and ratings....
15.04.10
EURASIA DRILLING COMPANY: Opportunity Knocks?
We upgrade our EDC fair value by 16% to $20.9 per GDR (previously $17.94) on the back of: Strong 2009 financial results; Expansion of its customer base; and The company’s potential participation in the Iraqi West Qurna-2 oil field’s development. Our new fair value implies downside potential of 6% to the current market price. We retain our HOLD rating. ...