Surgutneftegas: Currency rates are putting away the dividends...
26 November 2009 | We have revised our model of Surgutneftegas. The reason for that was the output of the 3Q 2009 report, correction of our suppositions of the company’s future development, and also the postponing of the target time and evaluation one year forward. Particularly, in our model of Surgutneftegas we have corrected the former forecast of income for the current year towards reduction: on EBIT – by 2.2%, on the net profit – by 21.5%. Mainly that happened due to the corrections on the operating estimates, and also due to the continuing strengthening of Russian ruble, which, considering significant dollar liquidity of the company, turns into negative currency exchange. Due to the negative currency exchange precisely For the second quarter in a row Surgutneftegas shows low level of the net profit. The fourth quarter, as we see it, will not make an exception and we expect negative currency exchange similar to the ones in the third quarter.
Gazprom: Having passed the bottom
23 November 2009 | We have revised our estimation of Gazprom’s shares. The reason for up-dating the company’s model was the report by IAS for 1H 2009, the budget draft for the next year and corrections of WACC method calculation. The provided financial report of the gas monopoly totally brought no surprises. As it has been expected, the second quarter was worse than the first one and likely was the weakest within the whole year. In 1H 2009 the financial estimates were affected by the decline of the gas sale at all markets by 22.3% average, and by the reduction of the retail price of gas by 9.6% in the state of the far abroad and by 24% in Russia. As a result within the six months of the year 2009 sales slipped by 24.1 bn USD or by 32.8% and formed 49.285 bn USD, operating profit and EBITDA showed reduction by 56.7% and 52.6% respectively and formed 12.98 bn USD and 16.18 bn USD.
Rostelecom: Prospects are limited again
11 November 2009 | On Monday Rostelecom summed up the results of 1H 2009 by IAS. According to the report, the sales within the half year year grew by 4.4% versus 1H 2008 and formed 32.8 bn RUR. Net profit dropped from 9.8 bn RUR to 1.5 bn RUR. OIBDA margin reduced by 7.6 p.p. to the level of 17.6%.
Transneft report - 1H 2009 results
19 October 2009 | According to the report by Transneft for 1H 2009 by IAS, the net profit of the company within the reported period reduced by 10.4% to 1.61 bn USD. Sales of the company slipped by 7.8% to 5.01 bn USD. Operating profit in 1H 2009 lowered by 4.7% to 2.49 bn USD, EBITDA – by 5.6% to 3.11 bn USD.
MTS report - All eggs in one basket
19 October 2009 | October 13 MTS, Sistema and Comstar announced closing of the deal on buyback of 50.91% of Comstar’s shares, owned by Sistema, by MTS. So, that way the structures of Sistema conducted changes, similar to those done in Alfa-Group a year and a half ago. The amount of the deal formed 39.15 bn RUR. The result of the deal was the establishment of the second (by date) telecommunication holding, which provides all communication services – starting with fixed communication to cellular. Considering the treasury shares of Comstar, the effective share of MTS in the company will form a bit more than 59%.
Surgutneftegas report - Crisis ain`t scary for savings machine
28 August 2009 | August 14 Surgutneftegas output its financial report for 2Q and 1H 2009 by RAS. The provided report indicates the stability of the company to crisis scenes. Particularly at the oil price drop in 1H 2009 by 51.37% and the reduction of extraction by 3.86%, the sales of the company showed slipping by just 47.9% to 6.999 bn USD. That is considering the fact that Surgutneftegas is characterized as low vertically integrated company, which operates mainly for export. Net profit of Surgutneftegas dropped by just 23.7% to 2.317 bn USD on behalf of high income on financial items. The company had not bad managed the optimization of costs, which turned into 46% reduction of self cost.
NOVATEK report - Take the max from the market
28 August 2009 | We have updated our model of NOVATEK. The output report of the company by IAS for 1H 2009 was reason for that, along with the change of gas tariff policy of RF from 2010. The results for the first half of the year might totally be characterized as confident. NOVATEK reduced sales (1.206 bn USD) by the end of half year 31.7%, but the given result turned out to be stronger at the price drop for hydrocarbons and the lowering of demand for gas versus the competitors, and has also exceeded our expectations. By the operating (409 mn USD) and net profit (280 mn USD) the company has mainly showed the results at the levels that we expected.
Sibirtelecom report - Cheap mid class
28 August 2009 | We are completing the series of reports, dedicated to the annual results of IRC. We have one company left in our list – Sibirtelecom. Sales of the company by IAS in 2008 totaled 37.7 bn RUR, OIBDA – 13.1 bn RUR, the net profit – 1.5 bn RUR. Totally, the estimates of the report do not look remarkable – the company showed quite average estimates for the branch without any significant advantages over the other IRC neither on OIBDA margin dynamics, nor ROIC margin. Only sales dynamics seems to be a bit better.
MTS stock (RTS:MTSS) price target is 9.49 USD, recommendation BUY by Veles Capital
13 August 2009 | The day before yesterday MTS reported by US GAAP for 2Q 2009. The principal quarter estimates of the company: sales totaled 2.02 bn USD, OIBDA – 954 mn USD, net profit – 563 mn USD. Totally, the report of MTS looks strong and confident. Despite the continuing economic crisis, the company shows positive trends on the dynamics of the operating estimates. Though partially that was due to the seasonal factors, however, under the conditions of macroeconomic unstableness even the seasonal growth was considered by us to be a strong competitive advantage, which confirms the opinion that the Russian market of cellular communication might survive the crisis with insignificant losses. For now, the given estimates are mainly expressed in increase of payments on the debt on behalf of ruble devaluation. However, in 2Q 2009 ruble got stronger versus dollar, which leaded to gaining profits from currency exchange versus loss within the three previous quarters.
CTC Media stock (NASDAQ:CTCM) price target is 13.85 USD, recommendation ACCUMULATE by Veles Capital
13 August 2009 | August 6 CTC Media put out its financial report by US GAAP for 1H 2009 and for 2Q 2009. Totally the report makes a positive impression. Having corrected the result considering devaluation of ruble versus dollar, which is the main currency of the company’s report, the estimates do not look that dramatically as it might have seemed earlier. No doubt that the crisis has affected the company’s activities in a certain way. Particularly, ruble income of CTC channel – the group’s largest asset – lowered by just 10% versus 2Q 2008. Along with that the company manages to keep the principal expense items under control, due to which the business profitability is dropping by lower rates. Note, mainly the consolidation of the assets, purchases last year, made a negative impact on the profitability.
Russian wholesale generating companies (WGK) reviews and recommendations by Veles Capital
13 July 2009 | Several moments might be outlined among the fundamental consequences of the crisis for WGC. First of all, that is a rapid drop of power energy consumption. Second, the loans’ price upping – it might become a problem for financing investment programs. Third, along with crisis development, active discussions on the matter of holding tariffs growth for the power energy companies, and also on the power energy market liberalization time constraints in order to reduce the load of the economy during the hard times.
KAMAZ price target is $1.32 by Veles Capital
13 July 2009 | KAMAZ output the consolidated estimates for 2003 by IAS. According to the data of the report, the sales of the enterprise grew by 1.8% in dollar terms, and in ruble terms – lowered by 0.9% to the level of 96.3 bn RUR. EBITDA of KAMAZ totaled 8.6 bn RUR versus 13 bn RUR a year before. In 2008 KAMAZ gained net profit at the level of 1 bn RUR, which is 86.5% lower than the similar estimate of 2007.
Rostelecom (RTS:RTKM) price target is 3.44 USD by Veles Capital
23 June 2009 | Russia’s largest long-distance communication operator – Rostelecom – summed up the results of the previous year by IAS. The sales of the company totaled 66.6 bn RUR, net profit – 12.2 bn RUR. The year 2008 might be called the most successful one for the company within the past 3 years after the liberalization of the long-distance communication market.
Lukoil (RTS:LKOH) price target is $77.06 by Veles Capital
23 June 2009 | Evaluating LUKOIL’s results of 1Q 2009 by US GAAP we should outline the company’s profitability recovery versus the losing 4Q 2008. That was thanks to the effort of the company’s management on optimizing business processes and saving on behalf of the principal production operations.
Comstar-UTS (RTS:CMST) price target is $5.67 by Veles Capital
28 May 2009 | Yesterday Comstar – United Telesystems, JSC output US GAAP report for 1Q 2009. Sales of the company totaled 334 mn USD by the results of the quarter, which is 20% lower than the estimate of 1Q 2008. OIBDA formed 126 mn USD (-26%). Net profit reduced by 77% to the level of 13 mn USD.
Severstal (RTS:CHMF) price target is $8.44 by Veles Capital
20 May 2009 | Severstal completed the first quarter with net loss by IAS in the amount of 644 mn USD versus 470 mn USD of profit within the similar period year before. According to the message of the company, net loss includes 381 mn USD of loss from currency exchange before tax payoff (in 4Q the net loss of the company totaled 1.2 bn USD). Sales of Severstal in 1Q 2009 totaled 2.796 bn USD (35% down). EBITDA formed a negative value – 158 mn USD versus 298 mn USD in 4Q and 1.036 bn USD in 1Q of the previous year.
CTC Media (NASDAQ:CTCM) price target is $11.06 by Veles Capital
13 May 2009 | On Thursday, May 7, CTC Media output report for 1Q 2009 according to US GAAP. Sales totaled 105 mn USD, OIBDA – 39 mn USD, net profit – 23 mn USD.
Veles Capital downgraded price target on MTS from $12.44 to $10.60, recommendation
16 March 2009 | March 11, 2009 MTS output 4Q 2008 and full-year 2008 US GAAP report, which includes company’s activity estimates under the conditions of crisis. We assume the following important moments of the report are to be outlined. First of all, the devaluation of Russian ruble and Ukrainian hryvnia (the company gains more than 90% of sales in those currencies) reflected on dollar estimates (both: income and expense) – 14% reduction of sales versus 3Q 2008 is pretty much explained precisely by the currency factor.
Veles Capital downgraded price target on Severstal from $15.52 to $13.94, recommendation "buy" unchanged
16 March 2009 | Severstal gained 1.208 bn USD of net loss by IAS in 4Q 2008. At 2008 year-end the net profit upped by 9.9% versus 2007 estimate to 2.034 bn USD. The sales increased by 1.44 times to 22.393 bn USD. The company did not provide forecasts of 2009, but lowered capital expenses target for 2009 from 3 bn USD to 1 bn USD, focusing at the repair-technical maintenance.
Russian steel industry review by Veles Capital (March 2009)
10 March 2009 | Ferrous metallurgy has actually sensed the breath of the global financial crisis. Metallurgy enterprises’ capacity loads dropped significantly, realization prices reduced, the companies began reducing salary funds, liability-related problems (especially currency ones) appeared. This is how the year started for the ferrous metallurgists.
Steel market conjuncture of the current months is gradually recovering; there appears an uncertain demand of the products. But it should always be kept in mind that growing is far from dropping: for instance, 50% growth is a lot less than the previous 50% drop, if considering absolute expression. More to that, growth rates are not even close to the drop rates’ levels. We do not see any optimistic prospects of steel market conjuncture recovering. So the steel products’ prices will likely be climbing in proportion to inflation rates and, ceteris paribus, last summer’s highs will not be reached again soon.
Veles Capital downgraded price target on Gazprom from $12.36 to $10, recommendation
10 March 2009 | Considering the 9 months 2008 report we indicate 55% upping of gas monopoly’s sales to 2,573 bn RUR versus similar period last year. Net profit increased by 65.5% to 705.41 bn RUR, EBITDA climbed by 84.3% to 816.4 bn RUR. That provides totally secure all-time high financial estimates. But things are not that safe in gas monopoly as it might seem from the first sight. If comparing 3Q 2008 to 2Q 2008, the sales reduction can be indicated under the conditions of continuing operational expenses growth, which in its turn has decreased the company’s operational profit by 12.8%. That is while gas prices climbed in Europe. The main reason of sales reduction hides in gas demand dropping on behalf of the consumers, along with oil and gas condensate prices decrease and the seasonal factors. As for the operational expenses, they grew following the purchased oil and gas, and also the repair and exploitation expenses.
Veles Capital downgraded price target on CTC Media from $32.6 to $10.84, recommendation "buy" unchanged
5 March 2009 | Thursday CTC Media output US GAAP report for 4 Q 2008 and full year. The given report includes CTC Media activity estimates under the conditions of crisis in Russian economy. For now the main consequence of the crisis is dynamics of principal estimates of the company, exposed to seasonal factor, turned out to be not as considerable as it has been in previous years due to ruble devaluation. Nevertheless, CTC Media managed to fit in the forecasts made earlier.
Veles Capital upgraded price target on Rosneft from $14.31 to $15.11, recommendation
18 September 2008 | Rosneft reported for 2Q 2008. Throughout the reported term company’s income has been reduced -43.7% and formed 4.312 bn USD. However, if we exclude the single-time income of Rosneft in 2Q 2007 off YUKOS case in 7,920 bn USD, then the natural net income of the reported term would soar +153%. Do note though – net income has appeared above the general forecast +4% and +10%, exceeding our expectations.
Veles Capital set price target of $5.75 on NLMK, recommenation - "buy"
17 September 2008 | Over 1H 2008 NMLK’s net income increased by 43.8% - to 1.531 bn USD, says
company’s report. Company’s revenue added 63% and formed 5.884 bn USD,
EBITDA increased by 47%, to 2.313 bn USD. The given financial results hit NMLK’s
average forecasts, composed according to data received from analysts, whom work
in different investment banks and companies. Company’s CapEx formed 822.4 mn
USD. Cocking coal expenses per 1 ton of products reached 30.5% vs 25.8% last
year.
Veles Capital reduced price target on Lukoil from $138.44 to $129.63, recommendation "buy" unchanged
15 September 2008 | On August 29th LUKOIL published its 2Q 2008 report under US GAAP. During 2Q 2008 net income of the company rose +64.1% versus similar value of 2007, form 2,517 bn USD to 4,130 bn USD. Versus 1Q 2008 (3.163 bn USD), net income had also demonstrated growth of +30.5%. The quarter value of net income had also appeared below market expectations at average of 10.3%, but met out forecast, based on value of 4.128 bn USD.
Veles Capital reduced price target on Comstar-UTS from $13.48 to $12.69, recommendation "buy" unchanged
12 September 2008 | Last week Comstar-UTS published its 1H 2008 financial results.
Company’s report demonstrated negative trends of efficiency
dynamics, due to higher expenses growth rates over income growth
rates. This trend especially evident over 1H period. Among the reasons of higher growth rates of expenses are: decreased tariffs of MGTS (Comstar’s major subsidiary) and also Comstar’s aggressive activities in broadband market segment.
Veles Capital upgraded recommendation on Sitronics from "sell" to "hold"
11 September 2008 | Last Tuesday Sitronics published the results of its activity for 2Q
and 1H 2008.
It should be mentioned that Sitronics’ financial results become
better and better. According 1H 2008 results, the company
demonstrated positive dynamics of OIBDA and sales income. A
growth of income was boosted by all main activities of the
company, including “Telecom Solutions” and “IT Solutions”,
which increased company’s revenue by 47.2% and 36.7%
respectively. Moreover, Sitronics succeeds to keep expenses
low, directed company’s efficiency into positive zone. The only
goal, which Sitronics has not achieved yet – to gain net income
with positive results.
Veles Capital maintains "buy" recommendation on Uralsvyazinform
11 September 2008 | Uralsvyazinform’s results over the year can be characterized as neutral.
The company demonstrated average revenue growth rates (in
comparison with other IRCs). The main growth drivers of revenue were –
increased tariffs on local communications, intrazone connections due to
CPP, cellular incomes (the number of company’s subscribers increased
by 16% over the year) and also due to a development of new services.
Veles Capital maintains "buy" recommendation on KAMAZ
9 September 2008 | Late this August KAMAZ group published its financial results under IAS
2007 report. Group’s revenue increased by 45% vs 2006 results, EBITDA
added 83.5% and formed 499 mn USD, company’s net income increased
twice to 291 mn USD. KAMAZ’s efficiency also increased, coupled with
high growth rates of main indicators. Thus, EBITDA margin formed 13.1%
(10.4% over year 2006), a growth of net income margin formed 7.6% against
5.4% over year 2006.
Veles Capital maintains "buy" recommendation on Dalsvyaz
9 September 2008 | Dalsvyaz has become a leader among other IRCs on revenue growth rate (+46.2%). The boosting factor was – consolidated results of Sakhatelecom. However, this factor negatively influenced Dalsvyaz’s efficiency – OIBDA margin of Sakhatelecom (26.3% over year 2007) is lower than Dalsvyaz’s efficiency, leading to “degradation” of these results for the merged company.
JP Morgan: recommendation on X5 Retail Group is "underweight"
30 November 2007 | JP Morgan maintains its "underweight" recommendation on X5 Retail Group, while reducing their estimates for the company. In research analysts mention that the company has reported its 3Q07 earnings below the estimates.
Merrill Lynch downgrades UES target price 6%
7 September 2007 | Investment bank Merrill Lynch has cut its target price for Unified Energy System from $1.60 to $1.51 taking into account the unbundled assets, WGC-5 (The Fifth Generation Company of the Wholesale Power Market) and TGC-5 (Territorial generation company ¹5), the investment bank said in a note.
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Russian stock market daily evening report (September 01, 2010, Wednesday)
Weak growth goes on at the market versus relatively calm foreign background. AvtoVAZ still is the favorite note showing quotes growth acceleration without any visible reason. The telecommunication companies are drop leaders, headed by Sibirtelecom, where the shreholders register was closed yesterday.
Considering therapid beginning of Fall at american grounds, the russian investors might likely continue play upwards also.
Russian stock market daily morning report (August 31, 2010, Tuesday)
The trading week began actively at the Russian share market. The foreign background was favorable to the shares, oil was climbing, which leaded to the good open. Among all the shares being traded we should outline the preferred shares of Rostelecom, which added a bit less than 10% due to information on possible change of dividend policy relating the preferred shares. Along with that, the shares of IRC Svyazinvest were climbing also. We should outline the shares of AvtoVAZ - on Monday the had of government Vladimir Putin announced continuation of import duties for cars raise, which definitely is positive for the car-maker and leaded to its quotes growth.
Russian stock market daily evening report (August 31, 2010, Tuesday)
Once again slight drop took place at the market following the impact of fall at the U.S. and Asian markets. Support still comes on behalf of the climbing oil prices. The shares of Rostelecom were climbing due to old news on dividends. Also demand remained in other telecommunication companies' shares. We do not exclude a neutral open of the market with possibilitty of further climbing following the oil quotes.
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Surgutneftegas: Currency rates are putting away the dividends..., 26 November 2009
We have revised our model of Surgutneftegas. The reason for that was the output of the 3Q 2009 report, correction of our suppositions of the company’s future development, and also the postponing of the target time and evaluation one year forward. Particularly, in our model of Surgutneftegas we have corrected the former forecast of income for the current year towards reduction: on EBIT – by 2.2%, on the net profit – by 21.5%. Mainly that happened due to the corrections on the operating estimates, and also due to the continuing strengthening of Russian ruble, which, considering significant dollar liquidity of the company, turns into negative currency exchange. Due to the negative currency exchange precisely For the second quarter in a row Surgutneftegas shows low level of the net profit. The fourth quarter, as we see it, will not make an exception and we expect negative currency exchange similar to the ones in the third quarter.
Gazprom: Having passed the bottom, 23 November 2009
We have revised our estimation of Gazprom’s shares. The reason for up-dating the company’s model was the report by IAS for 1H 2009, the budget draft for the next year and corrections of WACC method calculation. The provided financial report of the gas monopoly totally brought no surprises. As it has been expected, the second quarter was worse than the first one and likely was the weakest within the whole year. In 1H 2009 the financial estimates were affected by the decline of the gas sale at all markets by 22.3% average, and by the reduction of the retail price of gas by 9.6% in the state of the far abroad and by 24% in Russia. As a result within the six months of the year 2009 sales slipped by 24.1 bn USD or by 32.8% and formed 49.285 bn USD, operating profit and EBITDA showed reduction by 56.7% and 52.6% respectively and formed 12.98 bn USD and 16.18 bn USD.
Rostelecom: Prospects are limited again, 11 November 2009
On Monday Rostelecom summed up the results of 1H 2009 by IAS. According to the report, the sales within the half year year grew by 4.4% versus 1H 2008 and formed 32.8 bn RUR. Net profit dropped from 9.8 bn RUR to 1.5 bn RUR. OIBDA margin reduced by 7.6 p.p. to the level of 17.6%.
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