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bne Invest
March 8, 2019 www.intellinews.com I Page 10
bring even tougher measures – including more corporates being targeted.
Nevertheless, the obvious mismatch between share price and value is leading analysts to cautiously start marking Rusal’s stock up the recommendation ladder. Merrill Lynch was first to reinstate target pricing with a BUY rating on Rusal last month, saying the shares are worth HK$5.5.
“The stock is back on investors’ radar,” says Smolyaninov, who also has a buy on the name.
Renaissance Capital has also followed Merrill Lynch and resumed coverage on Rusal with a target price of HK$6.0 and a BUY rating. In general Rencap has a positive outlook on the aluminium market, and believes Rusal’s medium-term deleveraging and longer-term dividend yield potential could be positive catalysts, the bank has argued recently.
Russia's corporate profits up to a three year high in November 2018
bne IntelliNews
Cumulative Russian corporate profit hit a three year high of RUB12.8 trillion ($194.8bn) in November, or a monthly profit of RUB1.3 trillion, according to Rosstat.
Russian companies reported better profits in 2018 than in 2017 every month of the year other than March and August.
Still, investors will remain wary as the name has had a chequered history. The company floated in 2010 at HK$9 in a politically charged IPO. Russia’s First Deputy Prime Minister Arkady Dvorkovich flew to Hong Kong to personally browbeat the Hong Kong exchange to accept Rusal’s application to list. The stock climbed to a peak of HK$13.1 but then slid steadily over the next two years as Russia’s economy ground to a halt by 2013.
Since then Rusal stocks have never really managed to regain their feet, trading in a band of between HK$2 and HK$5, which remains clearly below the value of its underlying assets.
But this is the fate of all stocks connected to the government, as bne IntelliNews highlighted in its recent article “King Of The Castle” that shows all the big state-owned or connected companies are trading below par.
Russia’s corporate sector net profit was down 8.5% in 2017 y/y, according to Rosstat. The trend runs counter to GDP growth, which hit 1.5% last year after contracting by 0.2% in 2016.