Page 143 - RusRPTNov20

social networks was also pressured (down 7pp y/y and 2pp q/q to 46%) both by weak ad revenue and investments in its services. Together with higher interest expenses (debt jumped due to investments in JVs – to RUB21.6bn vs RUB8.5bn in 3Q19), this caused net income to fall 19% y/y to RUB2.8bn JVs – performance remained solid at Delivery Club (revenue up 2.1x y/y); CityMobil saw recovery, as expected (GMV grew 3x y/y vs 2x in 2Q20) Guidance 2020: revenue RUB103bn, EBITDA margin in mid-20s o Lower profitability is guided to partially reverse in 2021.
Mail.ru​ has announced the acquisition of control (51%) of Deus Craft, ​a mobile game developer, for some USD 49mn, including a USD 35mn deferred payment to be transacted in April 2021 if the studio meets a USD 15mn monthly revenue target by the end of 1Q21. We tend to take the deal as positive. First, we see the game segment as one of the key drivers for​ ​Mail.ru in the coming years and a huge opportunity due to the large addressable market. Secondly, the deal indicates that the recently raised money from the ABB and the placement of convertible bonds will likely be spent on taking advantage of this and potentially other opportunities to develop the core business. VTBC reiterates its Buy recommendation, with our 12-month Target Price of USD 35 implying an ETR of 27%.​ M​ ail.ru​ did not disclose the current revenues or profitability of Deus Craft, but it indicated that its consolidation in October would have a slight negative impact on the Group’s EBITDA. The studio's current operating product, the mobile game Grand Hotel Mania, was released in July 2020. Deus Craft is also to release two more mobile games within the next 12 months, according to ​Mail.ru​. The studio has offices in Moscow, Saint Petersburg, and Novosibirsk, and employs more than 70 people.
Yandex​'s 3Q20 revenues were broadly in line with the consensus, while adjusted EBITDA and adjusted net profit came in notably higher​. The strong top line growth was driven by the continuing expansion of the Taxi Segment, the technical effects from the consolidation of Yandex.Market from July, as well the recovery of Search & Portal and the growth of other businesses. Although a different revenue mix resulted in lower margins, total EBITDA still increased y/y due to the strong business expansion along with higher margins in the key segments, Search & Portal and Taxi.
Yandex still refrained from providing its FY20 guidance. We take the results as positive and continue to see strong long-term upside in the name.
Key highlights.
Advertising revenues returned to growth, rising 6% y/y to RUB33.2bn. Ad revenues made up 57% of total revenues. An additional boost was given by advertising revenues generated by Yandex.Market, which was consolidated from 24 July (excluding Yandex.Market, the ad
143 ​RUSSIA Country Report​ November 2020 www.intellinews.com