Page 100 - RusRPTJuly18

tranches will be announced separately. MTS is one of the largest assets of AFK Sistema , a multi-industry investment conglomerate. VTB Capital and Uralsib Bank both expect the buyback to be executed in a similar fashion to the previous one, when Sistema spent RUB30bn on 5.2% in MTS "selling as much stock to the company as MTS buys from minority investors, at the same price." "The share buyback program will allow Sistema to monetise its stake in MTS (in addition to quite generous dividends), while keeping control in the company," Uralsib believes, seeing MTS as the " fundamentally strongest Russian mobile operator ." The CFO of the company Andrey Kamensky also said the company might pay interim dividends for January-June 2018 of RUB5.1bn, making it the second dividend tranche this year, according to Interfax. The sum of the two tranches (2017 +January-June dividends) could "well be around RUB26bn," VTB estimates, seeing the payout as is in line with the expectations and MTS's dividend policy. The bank rates MTS at Buy, with the 12-month target price of $12.5 implying a 60% estimated total return.
Chinese Huawei for the first time topped the smartphone sales in Russia
taking the leadership from Korean Samsung for the first time in a decade, Vedomosti d aily reported on June 26 citing the data of electronics retailers. From May 28 to June 17 Huawei and its sub-brand Honor was leading the sales, with weekly market share at 23.8%-26.5%, versus 22.9%-23.2% for Samsung. Samsung has been the leader in smartphone sales in Russia since 2007, and until recently was followed by Apple. Back in February 2018 Huawei only had a market share of 17.4%. Analysts surveyed by Vedomosti l ink the boost in sales to aggressive marketing, client loyalty and re-purchase facilitation, and improvements of the product line. One of Russia's largest electronics retailers M.Video closed a strategic partnership with the Chinese company and boosted its sales by 30-40% year-to-date in May.
9.2.10 Utilities corporate news
Russian state electric utility holding InterRAO consolidated its shares buying 7% from the Federal Grid company (FSK), which sold another 3% in InerRAO to BK Region brokerage company. The transaction was priced at RUB 3.35/share, which made a 18% discount to the market and a total deal value of RUB24.5bn ($0.39bn) for InerRAO and RUB10.5bn for BK Region. FSK remains a shareholder in InerRAO at 8.57% stake. The transaction did, however, increase InterRAO’s total quasi-treasury stake, from 18.2% to 25.2%, and its free-float to 33.7%, VTB notes. The bank reiterates a Buy recommendation for InerRAO, with the 12-month target price of RUB7.8 and implying an estimated total return of 95%.
9.2.13 Other sector corporate news
Russian forestry, timber and paper company Ilim Group will invest $1bn by 2021 in Russian Irkutsk region , the company said on June 22. The parity joint venture of International Paper and Ilim Holding will erect a carton packaging plant with 0.6mn tonnes annual capacity and modernise a cellulose plant with 0.13mn tonnes capacity. The group's total cellulose output in 2017 was 2mn tonnes in three facilities, and the investment in the Irkutsk region could potentially boost the output by up to 1.5mn tonnes. The company already invested about $2bn in Bryansk and Kolyamzha. "We are now investing about $250mn a year after we finished a $2bn program to build the
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