Page 76 - RusRPTAug19

Tatneft, ord. 9.20% 5.60% 7.20% 6.60%
Source: Bloomberg, Company data, VTB Research Cap
8.3.3 ECM news
Russia's Credit Bank of Moscow (CBOM) acquired a 19.65% stake in 36.6 pharmacy chain through the restructuring of its debt, the bank reported on June 28. 36.6 shares rallied by 140% in the second quarter of 2019, mostly in June, but the analysts surveyed by Vedomosti daily believed that the growth was not sustainable.
The capitalisation of Russian gas giant Gazprom on Moscow Exchange topped RUB6 trillion ($95bn) on July 4, reaching its highest since August 2008 and extending its lead as Russia’s most value company over rival state- owned Sberbank. Russia’s stock market is having a great year with the leading RTS index up 31% YTD as of June 4, but Gazprom’s shares are having an even better year, up 61% YTD, according to VTB Capital’s data. In June Gazprom’s shares soared after the management revised up the dividend strategy, bolstered by rumours of reshuffle of incumbent Kremlin managers. The shares of Gazprom are "trading at fair value" after surging by 40% on a recent surprise dividend announcement, BCS Global Markets wrote on June 10, downgrading the recommendation on the name to Hold, but upgrading the target price to $7.5 per GDR.
The shares of Russia's largest retailer X5 Group rallied over 22% in June on strong first-quarter results, cementing its role as the innovation leader in the industry, but the rally has limited the 12-month upside and brought estimated Excess Return to minus 9%, BCS Global Markets argues on July 1. Most recently Sberbank CIB also argued that X5 is becoming an uncontested industry leader with the potential of becoming the leading online food retailer as well. But BCS GM analysts recommend investors lock in profits now and downgraded X5 shares to Sell, with the target price of $37 per depository receipt remaining unchanged. BCS believes that retail market has limited upside in the current macro environment characterised by declining real disposable incomes and escalating consumer debt. "Economic conditions will continue to be challenging for retailers, putting pressure on margins," the analysts argue. X5 Retail has already become the most expensive of its Russian peers in food retail, trading at 2019 estimated Price / Earnings of 17.3x and 2019 estimated Enterprise Value / Ebitda of 5.5x, suggesting a 9% premium on P/E to the Russian peers median, BCS GM estimates. "In addition, X5 is priced with an 15% premium on 2019e P/E to Developed Market peers, while trading at a 12% discount to Emerging Market peers," BCS notes.
8.4 International ratings
Russia - Rating agency
as of July 1, 2018
last change
Moodys (USD rating)
Baa3 (S)
25/1/18
Fitch (USD rating)
BBB- (S)
22/7/16
76 RUSSIA Country Report August 2019 www.intellinews.com