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20 I Companies & Markets bne DNeocvember 2017
bne:Funds
Sberbank cements most expensive Russian company lead
IntelliNews Pro
Russian equities are slowly coming back into vogue and if an investor is going to buy anything, they will buy Sberbank before anything else.
The Russian equity market had a stellar year in 2016 returning over 50% to portfolio investors, but this year the performance has been lackadaisical and the two main indices remain down on the start of the year by a few per cent.
The same is not true for Russia’s most attractive stocks, many of which have seen prices soar. Russia's largest lender, state- controlled Sberbank, leads the way and broke its ordinary share all-time price record of RUB200 on November 7 on the Moscow Exchange, cementing its status as the country's most valuable blue chip in terms of capitalisation.
The market capitalisation of Sberbank reached RUB4.5 trillion ($76bn), approximately doubling year-on-year and well ahead of state-controlled oil major Rosneft with RUB3.5 trillion and gas giant Gazprom with RUB3.1 trillion.
Analysts surveyed by Vedomosti on November 7 noted that Sberbank has become an absolute favourite among investors,
SBER:LI London Intl I Sberbank of Russia PJSC
consistently beating the market and marked as a Buy across the board by investment banks and brokerages.
Sberbank has ousted the Russian supermarket chain Magnit as the “tourist stock” and investors’ darling amongst the equity firmament. The reason is as well over half the population has an account with Sberbank it is a great proxy for the whole economy, but enjoys explicit state guarantees and monopolistic power that underwrites its performance. In the last two crisis years Sberbank was responsible for the entire sector’s profits with all the other banks only breaking even on aggregate.
The consensus forecast of analysts surveyed by Bloomberg in November suggests a target price of RUB240 per ordinary share, an upside of 20% from current price at the middle of the month.
In October Sberbank unveiled a new ambitious 5-year strategy, aiming to make RUB1 trillion in profit in medium- term, as much as the whole Russian banking sector is expected to make in 2017. That is five times what the entire sector made in 2016.
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