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might be compensated by i) stimulated exports and ii) the company’s rouble cost base vs. tariffs predominantly in dollars. The current low share price ignores the fundamental value, say analysts, and the stock trades at 2019F EV/EBITDA of only 4.7x vs. the 5-year historical average of 7x. Sberbank CIB’s unchanged 12-month Target Price of $5 implies a 92% ETR: Buy reiterated. Global Ports’ consolidated revenues were up 8% y/y in the first half of 2018, which reflects the 3% y/y growth in container revenues and 26% y/y in non-container sales. The container part of the business accounts for the 16% y/y growth in marine container terminal handling volumes (i.e. excluding the Moby Dik joint venture and inland container terminals) and an 11% y/y decline in revenues per TEU. Most of the reduction was driven by the lower share of more expensive imported containers, while a single-digit percentage of decline was due to the changes in tariffs. The non-container part of the business continues to grow faster, as the cars and bulk cargo volumes gained 57% y/y and 21% y/y, respectively, in the first half of 2018 thanks to the buoyant performance of metals and mining exports this year (coal at VSC and metal and other export bulk cargos at Petrolesport). The company exerted strong cost control and despite the 16% y/y volumes growth, the cash cost of sales was up 7% y/y in dollar terms (+10% y/y in roubles) in the first half of 2018. Together with the 8% y/y decline in SG&A costs (-6% in RUB) total costs were 2% higher y/y (+4% in roubles). As a result, EBITDA grew 12% y/y to $109mn and was close to our and the consensus estimates. The net loss was reported at $3.8mn, but adjusted for the FX loss of $39mn, the company posted a $35mn of gain vs. analysts estimates of $30mn on the stronger performance of its JVs. The latter generated a $1.7mn gain vs. the $10mn loss in 1H17.
Zvezda Shipbuilding Complex LLC and Samsung Heavy Industries Co. Ltd (South Korea) have signed a term sheet for creating a joint venture to manage projects for the construction of 42,000-120,000 DWT shuttle tankers at Zvezda Shipbuilding Complex. The document was signed during the visit of the President of the Russian Federation Vladimir Putin to the Russian largest shipyard, where he attended the ceremony of section laying down for an Aframax tanker and flowing of the first concrete cube of the largest dry dock in Russia. According to the agreement between Zvezda and Samsung Heavy Industries Co. Ltd, the joint venture will be established by the end of 2018. The purpose of the agreement is to exchange experience in the design and construction of shuttle tankers. Samsung Heavy Industries Co. Ltd will provide Zvezda with technical specification, as well as basic and detailed design project of vessels, will facilitate the development of working construction documentation jointly with the Lazurit Central Design Bureau Joint Stock Co. Additionally, according to the agreement, Samsung Heavy Industries will provide technical assistance in planning, project management and quality control of building and assembly operations, procurement of the materials and equipment, engineering and technical maintenance of shuttle tankers production at Zvezda. Samsung Heavy Industries will also hold special trainings for Russian staff at its shipyard and organize production workshops at similar projects.
Russian Railways (RZD) published strong preliminary operating results for 2017 . The monopoly reported 6.6% y/y growth in loaded turnover to 2.49bn ton-km, with freight loadings for the year up 3.2% to 1.26mn tons. December numbers were also strong with turnover up 5.2% and volumes up 4.8%. As seen throughout 2017, coal remained the key driver. Coal volumes remain solid. Throughout 2017, coal remained the key driver of the results, representing 30% of total volumes and posting 5% growth in December (and
110 RUSSIA Country Report October 2018 www.intellinews.com