Jun
23
Russia’s largest long-distance communication operator – Rostelecom – summed up the results of the previous year by IAS. The sales of the company totaled 66.6 bn RUR, net profit – 12.2 bn RUR. The year 2008 might be called the most successful one for the company within the past 3 years after the liberalization of the long-distance communication market.
Rostelecom showed significant upping of OIBDA margin – the value of the given estimate reached 21%. Partially that was defined by the regulating moments, such as cancellation of compensation adding. However, there was another negative moment of the regulating character – decrease of tariffs for the national communication. The cost of on minute lost 8% average.
Nevertheless, the development of the non-regulated segments is another positive moment of the company. First of all we should outline gaining control over RTComm.ru, which allowed building up and diversifying the sales. Nevertheless, the diversification level remains relatively not high – almost 44% of income is gained by the company from the national communication, and about 70% comes from usual types of voice communication.
Extremely low debt load of Rostelecom still is one of its incontestable bonuses. Cash assets minus the interest debts as of the end of the previous year formed 542 mn USD, and the cash flow from the operating activity is enough for financing the investment program.
Despite the success of Rostelecom, the dynamics of its quotes does not depend on the fundamental factors. More to that, the situation is not to change soon – the coming reorganization of Svyazinvest might significantly raise the volatility of the company’s share market.
We revised our model of Rostelecom considering the new data and re-calculated the estimation of its shares’ value. The new estimations form 3.44 USD per common share and 2.58 USD per preferred share (the former estimations were 3.63 USD and 2.72 USD respectively). Note that the given estimates do not account the possible change of company’s structure. We confirm the former recommendations on the common and preferred shares of Rostelecom – SELL and BUY respectively.
Rostelecom: Good annual report - June 23, 2009 (PDF)
Jun
23
Evaluating LUKOIL’s results of 1Q 2009 by US GAAP we should outline the company’s profitability recovery versus the losing 4Q 2008. That was thanks to the effort of the company’s management on optimizing business processes and saving on behalf of the principal production operations. So, the expenses of extraction returned to the level of 2006. (3.1 USD per extracted barrel), expenses of processing at the company’s own refineries formed 2.03 USD per barrel. That was also supported by the devaluation of ruble that occurred and work with the contractors on reducing the price of the services being provided.
Along with that in 1Q 2009 the company has built up the oil extraction (+3.2% versus 1Q 2008), which we assume will reflect positively of the company’s finance. Also LUKOIL conducted diversification of supplies of its products (oil export upped by 17%, oil products export – by 3.9%), which we believe is due to the raise of export margin and the launch of supplying oil to the refinery, purchased in Italy.
We included all the changes on the product distribution markets in our model an also we have insignificantly corrected up the forecast of oil extraction within the current and the following years. Decrease of gas extraction by 11.2% in 2009 will occur mainly on behalf of the Russian segment and due to limitation of gas intake by Gazprom, which in its turn has been caused by the demand lowering for the given energy carrier. Also we have corrected down the selling price of the “blue fuel” due to the same reasons. We assume the recovery of gas direction in LUKOIL and other independent producers might be expected no sooner than mid next year.
In our model of LUKOIL we detailed the distribution prices of the company’s products at both: domestic and foreign markets. At the same time we did not change the long-term forecast of the oil prices. For the current year we suppose the average price of Urals will form 50-56 USD per barrel.
In our model of LUKOIL we considered the current extension of the company’s retail network and also the plans of further expansion to the retail market of the oil products.
As a result of corrections of the model, the new fair value of LUKOIL’s shares formed 77.06 USD versus 72.77 USD, forecasted earlier (5.9% higher). Due to the significant growth potential, which forms more than 40%, we confirm our recommendation BUY for the shares of the company.
LUKOIL: Saving and optimizing - June 23, 2009 (PDF)
Jun
23
Daily Stock review - June 23, 2009
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The beginning of the week was negative for the Russian share market. The RTS index reduced along with the oil prices and futures for the American indices. No support was indicated on behalf of Europe. The trades open was marked by a single drop to the level around 990 points, and in the afternoon the correction continued. The main drop related the shares of the commodity companies: the oil sector slipped by 5-7%, metallurgy – by 6-7%. Serious reduction of quotes was indicated on the shares of Sberbank and VTB – by more than 9%. The shares of NLMC were on the opposite side due to having added more than 3% against the neutral news background. At MICEX the shares of Aeroflot looked better than the market due to the statement by the CEO of the company with the details of the anti-crisis program.
Main Stock news
Tatneft reported by US GAAP for 1Q 2009.
Net profit of Tatneft in 1Q 2009 by US GAAP formed 230.6 mn USD, as comes from the report of the company. Net profit turned out to be lower than the previous year results by 11.7%. However in ruble equivalent growth of the given estimate was indicated by 25.2% versus 1Q 2008.
Other Stock news
Ø Gazprom Neft carried out holders’ meeting and outlined the prospect development directions.
On Monday the Gazprom Neft’s shareholders meeting took place, where the company’s board of directors has been elected, and also dividends for 2008 in the amount of 5.4 RUR per share have been adopted.
Ø The share of Zyuzin in Mechel reduced to 66.7%, 38% of which are in pawn.
The decrease of share took place in March as a result of covering the convertible bonds for 150 mn USD by Zyuzin’s company Calridge. 0.66% of shares given as a tribute to the authorized capital stock of Armolink were input in the providence for the financing, attracted by the company. Besides, all the portfolio of Mechel, belonging to Dalewave (129.27 mn shares, 31.05% of capital) and a share of Bellasis (25.87 mn shares, 6.2%) are in pawn.
Ø S&P lowered the rating of Uralsvyazinform.
June 22 2009 Standard & Poor’s rating service lowered the long-term credit rating of Uralsvyazinform from “BB-” to “B+”. One of the reasons for the rating lowering was the company’s addiction to the short-term financing.
Daily Stock review - June 23, 2009 (PDF)
Jun
23
Trader’s daily - June 22, 2009
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Stocks Market today. Negative mood in the beginning of the week resumed at the background of price lowering for oil and ruble weakening versus bi-currency basket. The main drop reflected the shares of the commodity companies, and also banks. The main activity was focused in the shares of Sberbank. At MICEX Aeroflot was outlined due to growth at the background of announcement by the CEO with the details of the anti-crisis program.
Market tomorrow. The oil continues dropping, which gives no support to the shares of the oil companies. The States are negative also. So, the external background forms negative suppositions for tomorrow trades.
Bonds
Market today. Drop at the ruble debt market continued. Quotes of the most liquid issues reduced by 20-50 b.p. average. Particularly the selling was indicated in the issues of Moscow and Moscow region, RZD-16, MTS-4, Lenenergo-3. At the Eurobond market the quotes drop was also indicated, which primarily made its impact on the mid-term currency loans of companies and banks (Rosbank 2013, Bank of Moscow 2013, TNK-BP 2013, Alfa-Bank 2013, Gazprombank 2015.
Market tomorrow. Reduction of oil price and growth of dollar rate took out all the ruble issues’ attractiveness. At the same time the difference of funding cost and market rates on notes is currently favorable to the speculators, which will not allow to slip significantly.
No comment
Profit of Tatneft for 1Q 2009 grew by 25% to 7.929 bn RUR, higher than forecasted. (Company)
Gazprom Neft might consider purchasing Rusneft if the price is “interesting”. (Interfax)
Share of Zyuzin in Mechel after covering the convertible bonds reduced to 66.7%, 38% of which is being as a warranty. (Interfax)
Evraz’s metallurgy division is operating now at full power due to ZSMK furnace having been launched. (Company)
Shareholders of WGC-3 refused from dividends for 2008 and voted against reducing the authorized capital stock. (Company)
Trader’s daily - June 22, 2009 (PDF)
Jun
23
Late May Dalsvyaz output its annual consolidated report by IAS. For now almost all IRCs have reported already. At the background of the other companies, Dalsvyaz looks strong, but not without negative of course.
As a strong moment we outline the most significant sales growth. The main input of the given estimate’s upping was provided by the increase of subscribers of broadband access (BBA) services – within a year their number upped by 74% to 309 thousand. Nevertheless, by OIBDA margin estimate the company occupies poor positions.
Also we should call the comfortable debt load a very positive feature of the company. By Debt/SE (0.49) and Debt/OIBDA (1.16) coefficients the company occupies not the first place though, but those figures are lower than the branch average. Also we should mention that Dalsvyaz has no currency debts. Meaning that the company has no loss (no profit also) from currency exchange, which appear when ruble versus dollar or euro rates change, and that excludes “paper” affects on the net profit. Besides, the company has liabilities in the currency, in which it gains almost all the income.
Note that Dalsvyaz, unlike the other IRCs, reduced its plans on investment program insignificantly, which is a consequence of a more stable financial situation. That means the company will not lower the development rates and will keep its confident position at the market, first of all in BBA segment.
Nevertheless, despite all the values of Dalsvyaz, there are serious risks for the company’s share market that are related to the possible restructuring of Svyazinvest and the company joining Rostelecom.
We revised our model of Dalsvyaz and our estimation of its shares. Our new estimates form 3.4860 USD per common and 2.6145 USD per preferred share (former estimates – 2.3992 USD and 1.7994 USD respectively). Considering the current market quotes, the company’s shares obtain significant growth potential and we confirm our recommendation BUY for both share types. However, we make a reservation that the given estimation does not consider any possible changes in the structure of Svyazinvest and has been formed only including the fundamental estimates of the company.
Dalsvyaz: Low debt provides for growth - June 22, 2009 (PDF)
Jun
23
Trader’s daily - June 19, 2009
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Stocks Market today. The market is gradually recovering after the emotional sale on Wednesday-Thursday. After that, the oil prices climbed slightly, which increased the attractiveness of the Russian notes. The market was mainly pulled by the oil chips, which climbed following after a serious correction earlier.
Market tomorrow. There are no serious ideas and the market will be managed by commodity markets. If looking at the technical factors, than upping is possible on Monday.
Bonds
Market today. On Friday the market recovered slightly after several days of selling – the quotes of the note within the first echelon added average 10-15 b.p. The activity was indicated in the issues of Moscow and Moscow region, and also VTB-5 and a number of loans of RZD. However, at the background of Minsk forum Cbonds, the activity at the debt market was minimal. All that equally relates to the Eurobond market.
Market tomorrow. On Monday the sale at the market of ruble notes might increase, including at the background of oil price reduction and ruble rate growth. The focus will be on the new issues, which have the premium to the secondary, particularly – X5 loan.
No comment
The retail trade turnover in RF in May reduced by all-time high 5.6%. (Rosstat)
Drop of investments to the principal capital in RF in May accelerated by all-time high 23.1%. (Rosstat)
The number of unemployed in RF in May reduced for the first time in a year by 0.2 mn to 7.5 mn people. (Rosstat)
Extraction of Rosneft in 2009 will grow by 2% to 112.3 mn tons. (Interfax)
Rosneft plans to invest in Yurubcheno-Tohomskoe deposit 25 bn RUR in 2010. (Interfax)
LUKOIL purchases 45% of refinery in Netherlands from Total for 725 mn USD. (Interfax)
Irkutskenergo upped the net profit by IAS in 2008 by 2.4 times to 5.5 bn RUR. (Interfax)
WGC-4 upped the net profit by IAS in 2008 by almost 4 times. (Interfax)
Marshals put up for sale the shares of Vimpelcom, which belonged to Telenor. (Interfax)
Trader’s daily - June 19, 2009 (PDF)
Jun
23
Daily review - June 19, 2009
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On Thursday the selling continued at the Russian share market, despite the light negative background. The oil prices and the foreign market slipped a little. However the reduction was not that significant to cause the 4% drop of the Russian market. There also were additional moments, which looked negatively – first of all that relates the possible upping of loan on the gas sector. But that reason is also no enough to justify such serious drop. {Possibly the market participants begin to gradually get rid of notes due to expectations of the possible second wave of bank crisis.
Main Stock news
Gazprom Neft provided the expected results for 1Q 2009 by US GAAP.
Gazprom Neft provided its financial results by US GAAP for 1Q 2009. The report states that the net profit of the oil company reduced by 76.3% versus 1Q 2008 and totaled 335 mn USD. Note that in 4Q the company showed loss in the amount of 543 mn USD.
Daily review - June 19, 2009 (PDF)
Jun
23
Trader’s daily - June 18, 2009
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Stocks Market today. The market participants were emotionally getting rid of everything. Despite the likely weak negative background, the market dropped 4%. Possibly, the sale was caused by fixating the profit in expectations of some event. Note the news on possible upping of taxes for gas companies caused the additional selling in the shares of Gazprom and NOVATEK.
Market tomorrow. Situation is still indefinite. However, from the technical point of view, the market might meet support at the level of 980 points.
Bonds
Market today. On Thursday the ruble bonds cost reduction continued, though via lower turnover. The activity was outlined in the new issue X5-Finance, TGC-6, RZD-3, various issues of Moscow (45, 58, and 59) and Seventh Continent. At the Eurobond market the prices reduced also, though almost without deals. We might outline interest to the issues of Gazprom 2015, TNK-BP 2013, VTB-2018 (with the offer in 2013) and Bank of Moscow 2013.
Market tomorrow. On Friday the correction continued at the bond market will likely continue, which will be supported by rather tense situation with liquidity and the oppressing external background.
No comment
International reserves of RF as of June 12 reduced to 406.6 bn USD. (CB)
MEDT of RF forecast inflation in June at the level of 0.5-0.6% (Klepach, Interfax)
Net profit of Gazprom Neft according to US GAAP in 1Q 2009 reduced by 76% to 335 mn USD. (Interfax)
WGC-6 in 2008 gained loss in the amount of 829 mn USD versus profit a year before. (Interfax)
FAS approved the claim of MTS on purchasing Comstar-UTS. (Interfax)
Net profit of Megafon by US GAAP in 1Q upped by 20.2% to 11.1 bn RUR. (Company)
Volgatelecom in 2009 plans to up the net profit by IAS by 11.5% to 3.3 bn RUR. (Interfax)
Wimm-Bill-Dann in 1Q 2009 reduced the net profit by US GAAP by 70% to 12.6mn, better than forecasted. (Interfax)
Trader’s daily - June 18, 2009 (PDF)
Jun
23
Trader’s daily - June 17, 2009
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Stocks Market today. Again the market was covered by the wave of sales. Almost everything was for sale, especially the oil and gas-producers’ shares. The reasons for that were the oil price lowering and the threat of tax load upping in the gas industry. The demand was still indicated in the preferred shares of Transneft.
Market tomorrow. The situation at the market goes not provide any growth reasons. However the market might meet the resistance at the level of 1,010 points of the RTS index.
Bonds
Market today. At the ruble bonds market once again ruled the sellers. Raise of selling orders was indicated on RZD-12, RZD-15, VTB-5 and the new issue of X-5. After a long break the selling appeared in Gazprom Neft. The Eurobond market participants likely got nervous. If a week ago the liquid currency issues were hard to find, today the offer is more than enough. However, there is no rush – it does not always lead to the actual deals.
Market tomorrow. Likely the market participants got alarmed that the global liquidity buffer might get significantly thinner. Though the participants of the ruble market are currently a lot more alarmed on the ruble rate.
No comment
Consumer prices (CPI Index) in the U.S. reduced in May by 1.3% versus the same month of 2008. (Interfax)
Gazprom Neft purchased 33.57% of Sibir Energy’s shares and closes the offer. (Interfax)
Ministry of finance offers to up MET for the natural gas starting from 2010. (Ministry of Finance)
Oil and oil products export duty rates might be driven closer to each other. (Ministry of Finance)
Raspadskaya is loaded 75% in June – less than planned. (Interfax)
The volume of loans of Sibirtelecom in 2009 will form up to 7 bn RUR. (Interfax)
Sibirtelecom plans to build up the number of subscribers of the cellular communication in 2009 by 13% to 5.5 mn. (Interfax)
Net profit of Volgatelecom by IAS in 2008 reduced by 3.8% to 2.9 bn RUR. (Interfax)
Trader’s daily - June 17, 2009 (PDF)
Jun
23
Daily review - June 17, 2009
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On Tuesday slight rally was indicated at the Russian market. The trades opened with weak decrease within the frames of following the lowered American grounds. However, the drop was insignificant due to the market having actually considered all the negative in the prices on Monday, having lost 4-5%. However, in the afternoon the market started climbing gradually. In the beginning the support was provided by the upped oil prices, later – b y the output of stats on the newly-built houses in the U.S., which unexpectedly turned out to be better than forecasted by the market participants. As a result by the end of the day the Russian shares managed to enter the positive zone. The main growth drivers were the shares of the oil companies, which climbed following the oil prices.
Main Stock news
Sibirtelecom: annual results by IAS.
Sales of Sibirtelecom, JSC in 2008 by IAS totaled 37.7 bn RUR versus 35.2 bn RUR a year before. The operating profit reduced from 6.2 bn RUR to 5.7 bn RUR. The net profit totaled 1.5 bn RUR in 2008, which is by 42% lowered than 2007.
Other Stock news
Ø Gazprom estimated the coming prospects.
On Tuesday the representatives of Gazprom gave a large-scale press-conference on the company’s development prospects and the activity of the concern under crisis conditions. The main conclusions were the following: lowering the capital investments for the close-coming years, delay of launching the strategic deposits due to the current and forecasted market conjuncture, particularly due to the demand and its recovery forecast. Production forecast for the current year remains within the frames of 450-510 bn cubic meters of gas.
Ø Financial results of Akron and Dorogobuzh by IAS for 1Q 2009.
On Tuesday June 16, Akron and Dorogobuzh reported for 1Q 2009 by IAS. So the report of the company states that within the reported period the mother company (Akron) gained net loss in the amount of 840 mn RUR, Dorogobuzhclosed the quarter with profit of 417 mn RUR.
Daily review - June 17, 2009 (PDF)