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July 2020 www.intellinews.com I Page 5
pace of recovery, but the focus remains on long- term developments.
In the long-term picture, the internet stocks
have much to offer, the analysts believe. BCS GM forecasts a 20-30% compound annual growth rate (CAGR) in 2019-2022 for Russian internet stocks. Internet companies are especially seen gaining on lower interest rates and lower cost of capital.
Yandex internet major has been upgraded to Buy by BCS GM, "considering its solid L-T growth outlook and potential triggers in MSCI inclusion (August), IPO of its taxi unit (timing unclear)."
Yandex is estimated to trade at 2021 Price / Earnings multiple of 27x (18x excluding Taxi, Market subsidiaries), which BCS GM sees as attractive, considering its 33% 2019-22 earnings per share CAGR.
BCS GM also maintains a Buy recommendation on Yandex main rival Mail.ru Group and Qiwi e-payment system, while having a Hold on all telecom names and multi-industry investment conglomerate AFK Sistema (shareholder of MTS mobile major and Ozon e-commerce platform).
"Some segments, such as ride-hailing for Yandex and Mail.ru, or betting for Qiwi, should recover fairly quickly as intra-country lockdowns relax.
"For others – such as ad or hiring for HeadHunter – recovery should take more time, as macro and virus concerns should prevail for a while," BCS GM commented. The analysts continue to see HeadHunter job search portal as over-valued and have downgraded its shares to Sell.
Russian mobile major Mobile TeleSystems (MTS) is downgraded by BCS GM to Hold. "Though it trades with a solid 9% 12-month dividend yield, upside is now limited after the stock jumped 17% since late March (4% vs Moscow Exchange)," BCS GM notes.
For another mobile major Veon, the dividend size remains uncertain, which should keep pressure on the stock in the near-term – BCS GM base case now is for 9.5% 12-month DY. In addition, Rostelecom continues to trade with a 6% yield – "not bad versus 4-6% deposit rates in Russia, but not appealing either."
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