Page 131 - RusRPTMay19

projects and joint ventures in Russia in July 2017. Following the scandal, in 2017, Siemens pressed charges for illegally supplying its turbines to Crimea. It is also mulled exiting Siemens Gas Turbines Technologies, a joint venture with Russian Power Machines, and giving up its 45.7% share in Interavtomatika because of its unhappiness at the Crimea turbines scandal. As now Russia prepares to launch its own domestic production of turbines, there are two main contenders for the contract besides Siemens. First, steel tycoon Alexei Mordashov already reiterated its readiness to participate in the bid with Power Machines. Second, InterRAO electric utilities major previously eyed cooperation with General Electric for producing turbines. However, it is most likely that Siemens will remain the main supplier of turbines in Russia. Despite the Crimea embarrassment, Siemens has reiterated its readiness to participate in the Russian state power capacity modernisation programme and even localise 90% of the production of the turbines, as required by the Kremlin. Recent reports suggested that a subsidiary of Gazprom - GEH or GazpromEnegroHolding - squeezed out sanctioned Mordashov and formed a new domestic joint venture with Siemens. The timing of new partnership with the state giant came just ahead of the announcement on the state support programme, and does not seem accidental. Since 2018, Power Machines (Silovie Machini) of Mordashov and Tekhnopromexport have been under US sanctions, which would make his participation in the programme exposed to sanction risks and thus less likely.
Russia’s health care company MD Medical Group (MDMG) has released 1Q19 operating results that analysts view as strong: volumes enjoyed a pick-up from a modest base and greenfield facilities ramped up. The number of deliveries surged 16% y/y (10% LFL); blended prices were 8% y/y lower due to regional hospital dilution, while Moscow prices were almost flat y/y. In IVF, total cycles were up 17% y/y (8% LFL), driven by the pick-up at outpatient clinics from a low base; blended IVF prices were flat y/y at RUB214,000 due to the increasing share of mandatory insurance in the mix (51% vs. 43% a year ago). In total, revenues added 11% y/y vs. our annual forecast of 10% y/y. YTD, MDMG is up 11%, and trading at 6.0x 2019F EV/EBITDA, a 20% discount to the rest of our healthcare coverage. VTBC unchanged 12-month Target Price of $8.00 implies a 63% ETR.
131 RUSSIA Country Report May 2019 www.intellinews.com