Page 58 - RusRPTJune18

8.3 Stock market
Russia's leading bank state-controlled Sberbank will list Russia’s first Exchange-Traded Fund (ETF) on the Moscow Exchange (MOEX), the bank's asset management director Evgeny Zaytsev said on May 30. The first ETF in Russia will track the dynamics of MOEX indexes and include shares of 46 Russia's largest names. The dividends from the shares will be reinvested. "The more providers will place their funds on demanded shares and indexes [on the exchange], the more choice investors will have, first and foremost the private ones," MOEX commented to Vedomosti daily, noting that global ETF market is growing by 15% a year boosting $4.8 trillion of private and institutional investments. ETFs are some of the most traded securities that characterised by low commissions due to simple management principle of tracing the best-performing stocks. For Sberbank's fund planned to launch at RUB1bn ($16mn) the total commission will not exceed 1% of net assets, according to Zaytsev. By the end of 2017 Sberbank plans to launch another two ETFs, one based on bonds and another based on S&P500 index. Currently there are 13 Ireland-registered ETFs managed by FinEx and traded on MOEX as foreign securities. Sberbank Asset Management could become the largest player on the market with RUB71bn worth of assets in its portfolio and RUB580bn of individual retail investment portfolios, according to Vedomosti citing the data by Ekspert RA.
Aton top stock picks for 2H17, drivers
Company Ticker TP Upside Key drivers potential
Sberbank SBER RX RUB210 43% The bank trades at a 2017 P/E of 5.0x and P/BV of 1.0, which is well below EM peers. It enjoys high and sustainable ROE above
20%. Dividend payout ratio can be increased after 2017. Best liquidity in the market and strong corporate governance.
Alrosa
ALRS RX
RUB125 43%
Trades at 4.7x 2017 EV/EBITDA, offering a discount to global diversified miners (5.3x) and Norilsk Nickel (6.6x). Recent stock underperformance caused by sanction concerns (Alrosa is a state-owned company) is unjustified, in our view. We expect the stock to be supported by strong summer monthly sales as well as its FY16 dividends (10% yield). Alrosa generates strong FCF yielding 15% and has low debt of 0.6x.
Unipro UPRO RUB3.55 41% Turnaround story: we expect bright 2017 earnings with further
RX momentum supported by the Berezovskaya unit’s relaunch. One of
the best high-conviction dividend plays in the sector.
TCS Group
TCS LI
$15.2/GD 35% R
Management guides for 25-30% EPS growth in 2017, the highest in the sector. Strong 1Q17 IFRS results suggest the bank is on track to reach its FY guidance. Dividend policy assumes a 50% payout ratio from IFRS net income on a quarterly basis. The stock trades at a P/E of 9.0x, high compared to peers, but for this reason the bank operates at the highest ROE in the sector (40%+).
Etalon ETLN LI $4.7/GD 32% This year should be a strong for the company in terms of earnings R growth: we expect EBITDA and EPS to increase by 53% and 50%, respectively, driven by falling inventories from built flats. The share
58 RUSSIA Country Report June 2018 www.intellinews.com