Page 154 - RusRPTNov21

9.2.7 TMT corporate news
Russia could impose record fines on Facebook and Google (held responsible for YouTube) for not removing prohibited content. Since these companies are accused of repeated violations, fines could be in the range of 1/20 to 1/10 of the yearly revenues they generate in Russia, reports East-West Digital News (EWDN). Thus Facebook, which makes around RUB10bn ($138mn) per year in the country, according to an expert estimate cited by Vedomosti could have to pay anything between RUB500mn ($6.9mn) and RUB1bn ($13.7mn). A court decision is still required to enact the fines. In an exchange with the business daily, a representative of Roskomnadzor, the internet and telecom regulator, described the violations as follows: “YouTube systematically fails to comply with the requirements to remove prohibited content. Since 2014, more than 3,000 illegal materials containing child pornography, suicidal, drug-related, fake, extremist and other content that are dangerous for Russian citizens have not been removed.”
● Yandex
Yandex’s 3Q21 results and the upgraded FY21 guidance support our positive outlook. In particular, strong growth in the high-margin advertising and ride-hailing businesses help sustain heavy investments in ecommerce, which in turn is enjoying accelerating momentum.
The rapidly expanding Logistics segment is turning into an important new source of value, in our view. Meanwhile, the recent funding round of ClickHouse sent a clear signal about the untapped value potential of Yandex’s technology expertise. Having updated our model, we are increasing our 12-mo TP 11% to USD 100 (ETR 20%); Buy reiterated.
Strong growth of high-margin businesses. Search & Portal revenues rose 33% YoY in 9mo21 to RUB 117bn. These make up less than a half of total revenues now, but S&P remains the key source of cash, with its 9mo21 EBITDA 32% higher YoY at RUB 56bn. Yandex increased its FY21 S&P revenue growth guidance from the mid-twenties to high-twenties and sees its margin higher than 48%. Ride hailing kept generating robust growth and margins: 9mo21 GMV grew 78% YoY to RUB 403bn; EBITDA 122% YoY to RUB 15bn, with an EBITDA margin from revenues of 30%. Yandex upped its FY21 GMV growth guidance for ride hailing from 60% to 65-70% YoY.
Ecommerce well on track. Strong cash generation by S&P and ride hailing allowed Yandex to continue to invest heavily in its ecommerce opportunity (Yandex.Market, Yandex.Lavka and egrocery deliveries). Total ecommerce has shown an accelerating trend, with GMV more than tripling YoY to RUB 42bn in 3Q21, including GMV of Yandex.Market at RUB 32bn. Yandex still plans to triple its ecommerce GMV in FY21, implying some RUB 168bn.
Rising star of Logistics. Having launched this business last year, Yandex more than quadrupled its GMV YoY to RUB 18bn in 9mo21. Logistics is loss making now (EBITDA loss was RUB 0.8bn in 9mo21),
154 RUSSIA Country Report November 2021 www.intellinews.com