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Reports Russia

Russian stock market daily morning report (August 08, 2014, Friday)

August 8, 2014, Friday, 11:52 GMT | 07:52 EST | 16:22 IST | 18:52 SGT
Contributed by Veles Capital

We assume that in mid-term prospect the Russian market continues the downtrend at the back of uncertainty regarding consequences of the restricting measures on the matters of replacing import and lack of any positive events capable of breaking the negative trend. The foreign background from the global grounds does not provide for optimism either. Asian exchange indices are slipping Friday despite the outperforming stats on imports. European exchange indices closed in the red zone yesterday at the back of weak reports of large companies and statements by Mario Draghi that the geopolitical risks threat recovery of European economy. Exchange grounds in America were also looking down despite the positive data from the US labor market.

Main events

NLMK: financial results for 1H 2014.

Generally, the results for 1h 2014 turned out to be close to our projections, which allows keeping the target cost of the stock at the level of 1.5 USD and provides for the recommendation “BUY” with an 18% growth potential.

We forecast the sales of NLMK for 2014 at the level of 11.35 bn USD, EBITDA – 1.9 bn USD. Sales of the company grew 6% qoq to 2,808 mn USD. The net profit reduced 9% qoq to 158 mn USD mainly due to loss from currency exchange in the volume of 62 mn USD. Free cash flow grew 73% qoq to 467 mn USD.

Extraction of Surgutneftegas for 7 months of 2014 formed 35.6 mn tons.

Extraction volume by Surgutneftegas for January-July 2014 formed 35.63 mn tons. Extraction has reducer insignificantly vs the similar period of the previous year – for 7 months of 2013 extraction volume formed 35.66 mn tons. Gas extraction for the given period reduced significantly and formed 5.4 bn cubic meters vs 7.07 bn cubic m a year earlier.

Extraction volumes of the company remained in line with targets, production results would not affect the company’s shares quotes.