Page 81 - RUSRptSept18

10 and 11 this year in the implementation of a buyback program , the first vice-president of the oil company Pavel Fedorov said in August 7. The announced program for $2bn can support its capitalization and, perhaps, soon outstrip the value of Russia’s top stock Sberbank, he said. As of April 10 and 11, 2018, ordinary shares of Rosneft at the close of trading in the Moscow Stock Exchange traded at a level of RUB307.6 and RUB324 respectively. Currently the company's share price on the Moscow stock exchange is about RUB326.25. Investors took this news negatively and the stock lost 1.6% reducing the company’s valuation to RUB4,489 trillion. On August 6 the company's board of directors approved the company's first ever buyback programme, including its global depositary receipts. The company plans to make the buybacks in the second quarter of 2018. The program will operate until December 31, 2020. Rosneft plans to spend up to $2bn to buy a maximum of 340mn shares or 3.2% of its stock from a free float if 10.4%.
Russia's largest milk producer Ekoniva is preparing for an IPO, the company said on July 31 without disclosing the details. Controlled by German Ekosem-Agrar, while some of the Russian mid-caps have postponed their previously planned IPOs after April's US Treasury sanction round, more recently several Russian companies said they are considering a public offering . These reportedly include the petrochemical major Sibur , one of country's most profitable companies controlled by Kremlin-affiliated sanctioned shareholders. Ekoniva, in turn, is Russia's largest producer of raw milk, controlled by Stefan Durr, the management of the company, and minority shareholders. The company wants to raise funding to invest in milk processing facilities to expand its output of dairy products. Currently Ekoniva has four processing factories with 600 tonnes milk processing capacity, using about 20% of own supplied milk. Should Ekoniva succeed in processing most of its own milk, it could take the third place in Russian dairy market after Danone and PepsiCo, analysts surveyed by Vedomosti daily believe, who also note that Ekoniva is known to agro investors as having one of the highest Ebitda's in the industry.
Russian St Petersburg Bank confirmed RUB660mn ($10mn) share buyback , confirming previous reports that the bank will try to improve its valuation . "This [buyback] is the best signal we can make to the market, that we believe that shares are undervalued and we don't agree with the valuation," the chairman of the bank's board Konstantin Balandin told Interfax in April. The bank will acquire a total of 12mn shares at a price of RUB55 per share. In 2015 the bank already acquired about 3% of its shares for about RUB600mn. St Petersburg bank was Russia's 16th largest bank as of June 1 with RUB659.5bn of assets. Top managers of the bank control 50.48% of ordinary shares, out of, which 24.95% belong to the bank's chair Alexander Savelyev. Vedomosti d aily notes that among the shareholders is the son of former Russian Minister of Defence Sergey Serdyukov (8.53%) and the husband of the head of the Federation Council Valentina Matvienko Vladimir (2.33%).
About two thirds of the capitalization of Russia’s stock market is made up of oil and gas names and in the past the market’s performance has been closely tied to the price of oil. However, as politics have come to player a bigger role the relationship between the cost of a barrel of the black stuff and the height of the leading dollar denominated RTS index has broken down. And the relation was further weakened by the re-introduction of the so-called budget rule at the start of this year, where all government oil revenues from when oil prices are over $40 are siphoned off into the state’s rainy day fund. There is a handy rule of thumb for checking if Russian share prices are over or under valued as the RTS’s value is on average x20 the cost of a barrel of oil. Although this relation doesn't work as well as it used to despite the run up in oil company prices this year, that are easily outperforming the RTS, according to the rule of thumb the RTS is undervalued by over 400 points as of August – the biggest gap it has displayed for at least two years. At the time of writing the RTS was 1,085 and oil prices are averaging $77.1, which means the implied
81 RUSSIA Country Report September 2018 www.intellinews.com