Page 143 - RusRPTMar21

possibly through a deal; achieving the scale in the cloud business that would allow for a price tag to be attached to it.
Risks. We suggest keeping an eye on how the pandemic situation evolves in Russia; how successful Yandex's planned investments in e-commerce turn out to be (given that there are already successful incumbents in the space, along with ambitious, well-funded new entrants); any potential regulatory changes (although at this stage are not aware any that could adversely affect Yandex's fundamentals).
Yandex plans to form two separate business groups according to CEO Tigran Khudaverdyan: "Search, Advertising and Cloud Services" and "E-commerce and Ride-tech." Classifieds and subscription services will stay separate. Andrei Stiskin, the current head of Yandex search, will head the first business group, while Daniil Shuleiko, the current head of Yandex.Taxi JV, will head the second one. We believe the reorganization will increase the manageability of the company as a whole, allow it to extract synergies from similar business models and help it solve consumer problems faster and more efficiently. Uber still has an around 35% non-diluted stake in Yandex.Taxi JV. We believe that a deal to buy Uber out of the JV is imminent and could be a significant catalyst. The ongoing integration of Yandex.Market, Yandex.Eats, Yandex.Lavka and the logistics vertical (the last three are part of the Yandex.Taxi JV) indicates that the deal might happen sooner rather than later.
Yandex released solid 4Q20 numbers, with revenues beating consensus by 2% and adjusted EBITDA exceeding it by 7%.
The results featured strong growth and lower margins, which was fully in line with our expectations, as the company started to prioritise investments in growth over margins against the backdrop of the abating pandemic-related pressures. Yandex's 2021 revenue guidance of RUB-305- 320bn implies top line growth of 40-47% y/y. This is slightly below the Bloomberg consensus of RUB321bn and our forecast of RUB331bn, but we believe that Yandex preferred to be conservative in the beginning of the year. After the recent rally in the name, the numbers might not serve as a strong immediate trigger for the stock, in our view. Still, we continue to see the long-term story of Yandex as attractive.
Yandex's 4Q20 revenues increased 39% y/y to RUB71.6bn and came in 2% above consensus and 4% above our forecast. The result was driven primarily by the Taxi Segment's revenue growth of +54% y/y to RUB22.3bn and the full quarter consolidation of Yandex.Market, which added RUB8.7bn of revenues. We also note that advertising revenues continued to recover, with growth reaching 12% y/y to RUB38.4bn. Search & Portal revenues increased 8% y/y to RUB37.1bn.
143 RUSSIA Country Report March 2021 www.intellinews.com