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guidance, we still see the stock as overpriced. Having fine-tuned our model, we are raising our 12-mo TP 4% to $145, which nevertheless points to a negative ETR (-6%). We downgrade EPAM from Hold to Sell and advise investors to take profits,” Bespalov added. Originally from Belarus, the company has a corporate headquarters in New York and does most of its business international. It has been a good example of a successful tech company coming out of the Commonwealth of Independent States (CIS) and deals with a raft fo blue chip names. However, the lion’s share of its engineers are still based in Minsk. The company continues to put in a strong performance. EPAM’s 4Q18 revenues of $505mn (+26% y/y) and non-GAAP EPS of $1.27 (+26% y/y) came in 1% and 4% above the consensus and its own guidance, respectively. EPAM’s strong revenue generation, high utilisation (over 80%), as well as the decrease of SG&A (excluding stock- based compensations) as a share of revenue to 17.7% vs. 19.9% in 4Q17 and 18.2% in 3Q18, supported margins. In particular, the non-GAAP operating margin stood at 18.4% in 4Q18 vs. management guidance of 17-18%, VTBC reported. “We believe that EPAM’s ability to deliver consistently strong growth and stable margins has been behind the strong share price performance over the past couple of years. EPAM’s guidance for 2019 also implies continued strong top line growth, at 22% y/y (21% organic). Meanwhile, management believes that the high profitability of 4Q18 will not be sustained throughout the year, as utilisation will normalise at 77-79%, while SG&A will return to 18-19% of revenues,” Bespalov said.
9.2.8 Telecoms corporate news
Russia’s leading mobile phone company Mobile TeleSystems (MTS) reported earnings up by a third (34%) y/y in the fourth quarter of 2018 and management guided for more growth in 2019, the company said on February 28. “The results came in line with consensus on revenue and EBITDA (if adj. for UMA consolidation), and the company delivered on its FY 2018 guidance. Expectations for 2019 look good, with our forecasts (and Bloomberg consensus) falling in the middle of the guided range for revenues and EBITDA (excl IFRS 16 impact),” BCS Global Markets said in a note. MTS’s top line was RUB23.4bn ($355mn), which was up 34% over a year previously and EBITDA up 42% to RUB8.7bn with a 37% margin. The key growth drivers included: ad revenue which was up 38% and games revenue, up 37%, with the top performing title “Hustle Castle.” Also contributing to the profits was MTS’s subsidiary social media site Vkontakte (VK) which saw revenues grow by 27% and an EBIDA margin of 18%.
9.2.10 Utilities corporate news
Russian utility company Unipro has released strong 4Q18 and FY18 operating data, with an 11% y/y increase in production in 4Q18 alone, offsetting the 8.3% y/y drop in 9mo18. Thus, full year production was down just 3.3% y/y to 46.6bn kWh. All power plants, except for Yavinskaya GRES, saw a y/y production rise in 4Q18: 22% at Smolenskaya GRES, 13% at Berezovskaya GRES, 12% at Surgutskaya GRES and 9% Shaturskaya GRES. This was driven by the increased load owing to the weather conditions and the repairs schedule. Total heat sendout improved 4.3% y/y to 2,218 thGCal.
Russian utility InterRAO has released its FY18 operating data and Russian Accounting Standards (RAS) results. The group’s total electricity
123 RUSSIA Country Report March 2019 www.intellinews.com