Page 117 - RusRPTMar19

3% y/y according to VTBC, and aggressive capex of RUB15bn (4230mn), which is seeing pressure from supply chain and IT. VTBC cut its 2019-23 net income forecast by 20% and 12-month TP 25% to $3.70/GDR, revising the stock down from Buy to Hold as a result. “The prospects for the distribution of expanding cash flows to shareholders are vague, the buyback pace is slow, and we are waiting for updates on tender offers or dividends,” Kolbina added. Forecasts for the profitability of the company are also downbeat. The gross margin remained flat at 21.1%, as the improvement in supplier terms were offset by the increasing penetration of promos (4pp y/y) and 70bp surge in the shrinkages, highlighting to us lesser operational control. SG&As increased across the board and added 90bp y/y in total revenues, to 12.2%. Thus, EBITDA margin lost 120bp y/y to 8.7%, while semi-annual EBITDA and net income underperformed the consensus a blended 7% and 20%, respectively.
9.2.6 Agriculture corporate news
Leading Russian agricultural holding RusAgro released strong 4Q18 operating results that show a 25% y/y gain in total revenues year-on-year, the company said on January 30. The most recent results were driven by the strong pricing environment, as sugar grew 35% y/y and key farming crops surged 50-90% y/y, seeing better supply and demand balances, global pricing recovery and a weaker local currency, VTB Capital (VTBC) said in a note.
The recovery in domestic prices for soft commodities is positive for agriculture producers in Russia and leading agro-company RusAgro. VTBC forecasts 2019F EBITDA up 33% y/y to RUB23bn, reflecting a recovery in the sugar and farming divisions. The stock is up 20% since the launch of the new marketing year and we consider the improving financials as fairly priced (2019F EV/EBITDA at 5.5x). Further upside comes from more strategic initiatives, such as the launch of the Russian Far East project in 2020, successful M&As in the vegetable oil division and an acceleration of exports to Asia.
Russia’s second largest bank VTB has acquired a 50% minus one share stake in United Grain Company, as seen by PRIME on Wednesday in the materials of the bank. Other details of the deal were not disclosed. United Grain Company was established in 2009 to support Russian farmers and to improve the infrastructure of the grain market.
9.2.7 TMT corporate news
Apple Inc. detailed the user data it is storing in Russia, reports East-West Digital News (EWDN). Apple users in the region have data including their name, delivery address, email address and phone number stored on servers in Russia. The company said it collects that information for customer service and to send users information on new products, according to a recent filing with the Russian government. The filing does not mention more personal data such as messages, documents, photos, and contacts that are often saved on Apple’s iCloud service. The move to store some data locally is not the first time Apple has agreed to the requests of the Russian government. Last year, Apple stopped publishing updates of the Telegram messaging service for about two months after the government asked Apple to pull the app from its App Store, according to the Telegram’s founder. Apple did not remove the app, though. Adopted in 2014 and applicable since September 2015, the Russian data-
117 RUSSIA Country Report March 2019 www.intellinews.com