Page 165 - RusRPTSept21

to RUB54.9bn. This makes the share of its local business 24% of the total versus 10% at the time of the lunch.
• Qiwi
Qiwi's 2Q21 financials came in 2-4% above our and the consensus forecasts on the adjusted EBITDA and adjusted net profit lines. The company also announced a quarterly dividend of USD 0.30/share, which implies a 3.1% yield (12.3% annualised), and improved its FY21 guidance for the adjusted net revenue decline from 15-25% to 10-20%. According to Qiwi, this guidance incorporates the worst-case scenario, which implies that it will fail to secure a role in payment processing for the betting industry after the new legislative changes take effect by the end of September. In particular, Qiwi disclosed that betting-related revenues, which could be at risk, stood at about RUB 2bn in 1H21, i.e. around 19% of the company's total adjusted net revenues for the period. We believe that uncertainties around betting remain the key short-term drag on the stock's performance, while otherwise we see the stock's valuation at 2021F EV/EBIDA of 3.0x as hardly demanding. Our 12-month Target Price of USD 15 implies an ETR of 62%: Buy reiterated.
Single betting payments processing center named, Qiwi to lose substantial portion of betting-related revenues.
Russian President Vladimir Putin has signed an executive order naming Mobilnaya Karta as the Unified Interactive Bets Accounting Center (Russian abbreviation: ETSUP). There had been two centers for processing betting payments competing for this status: the first backed by the First Bookmakers Self-Regulatory Organization using the payments infrastructure of Mobilnaya Karta and the other backed by the Association of Russian Bookmakers with QIWI's payments system. The naming of the former as ETSUP means QIWI will lose its former status and thus its betting revenue stream. The order goes into effect on September 1.
Though the news is clearly negative for QIWI - serving as an indicator that niche businesses can fall victim to changes in regulation - we note that the company's most recent guidance was based on the assumption of its losing the status of a betting payments processor (QIWI said it does not plan to revise its 2021 guidance following the decision), which has been reflected in our model. In y-o-y terms, QIWI expects a 10-20% decrease in net revenues in 2021 (we see a 23% decrease) and 15-30% decrease in adjusted net income (we expect 30% decrease). However, given that the executive order goes into effect on September 1, the full effect of these changes will be seen
165 RUSSIA Country Report September 2021 www.intellinews.com