Page 114 - RusRPTDec18

November 15.
Armen Sarkissian's Russian lottery monopolist S8 Capital will acquire 100% in Price.ru marketplace from internet major Rambler Group, Kommersant daily reported on November 14 citing sources on both sides of the deal. The amount of the deal is not officially disclosed, but could amount to $12mn. S8 could be an emerging player in the Russian online services field. Before Price.ru acquisition, Kommersant also reported that the lottery operator is to launch an online car leasing service named Next.Car. Rambler representative Rafael Abramyan commented to Kommersant that Price.ru was a non-core asset for the group which focuses on content and streaming services. "Increased competition fueled by recent deals of Yandex with Sberbank, and Mail.ru with [Chinese] Alibaba have upped the stakes on the e- commerce market and facilitated the sale of Price.ru [to S8 Group]," the commented. Price.ru is a small players with 5.7mn users in October 2018, as compared to 184mn for ru.aliexpress.com, 130mn for Yandex.Market, and 7.6mn players for newly launched Beru marketplace of Yandex and Sberbank.
QIWI held an investor day in London yesterday. The company updated its strategy in each business segment and provided mid-term guidance for 2021. It expects adjusted net revenues to grow at a CAGR of 25% to R30.7-33.9bn in 2021 (our forecast: R24.7bn) and adjusted net income to reach R13.7-15.1bn in 2021 (our forecast: R11.4bn) with a CAGR of 37%. Payment services. The company plans to double its net revenues from payment services by 2021, reaching R22.6-25.0bn (our forecast: R19.3bn). It expects the boost to come through rapid growth of payment volumes supported by digital services being extended to self-employed individuals. Net revenue yields, meanwhile, are expected to remain flat. Sovest. QIWI targets issuing 3.7mn Sovest cards by 2021 (currently around 0.7mn). The net revenue guidance for the project is R5.1-5.7bn by 2021, which is in line with our projections of R5.2bn. The project began showing positive unit economics in July 2018 and has been progressing successfully since then. Overall, the project is expected to break even in 2020 (in line with our expectations). This is not even taking into account possible upside from the multi-banking platform being introduced, which could help it reach the breakeven point even faster. Tochka Bank. The SME segment is also showing rapid growth, with the number of customers reaching 240,000 in October 2018. The company targets more than 600,000 by 2020. The company confirmed that Tochka Bank was close to breakeven in September and October and may break even earlier than the previously guided mid-2019 (we expected end-2019). The company also updated its strategy for Rocketbank. It now targets 1mn customers in 2019 and 5mn by 2023 (currently around 0.3mn). The company expects to release the new gamified interface by year-end in order to help target a younger audience. QIWI reiterated its statement about dividends. The management intends to recommend starting to pay dividends after 1Q19, with the net income payout ratio capped at 70%. The investor day showed that even with CEO Sergei Solonin currently absent on an extended trip around the world, the execution of the business remains strong. The results across projects have been strong and ambitious targets are being set. The mid-term guidance came in above our expectations, mainly on stronger growth trends in the core payment business and faster monetization of Tochka Bank. We are pleased to see that Tochka Bank is approaching breakeven and that Sovest's unit economics are improving. Given that an active investment phase is coming to an end, we also welcome the future prospects for dividends. On the whole, we remain positive on QIWI.
114 RUSSIA Country Report December 2018 www.intellinews.com