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Strong and stable Russian reports

The long upturn for the Russian stock market came to an end in November, and it settled a little. Carnegie Rysslandsfond fell 0.6 % and is up 38.2 percent this year. Volatility was quite low throughout the month.

The biggest news was the restructuring of internet company Yandex’s ownership. There has been great debate about how control of the company, which is perceived as strategic, can be kept in Russian hands, and authorities have even threatened legislation. The solution now proposed guarantees both Russian control and the interests of foreign minorities, without legislation. Consequently, the share rose very sharply on the news.

Gazprom sold a treasury stake of 3.6% in a placement on MOEX. The purchaser was not revealed, but is very likely a Russian. It also reported its third quarter results. Revenue and EBITDA were somewhat weak, while net profit and cash flow were a positive surprise.

There were very many reports this month, and quite a few were strong. Lukoil’s net profit, for example, was 17 % better than market expectations. Its cash flow was also very strong. Novatek showed a strong volume increase, but weak gas prices held back the profit slightly. Gazpromneft’s profit was about as expected, while Transneft’s report was somewhat better. Net profit here was 11% above consensus forecasts.

MTS announced that it is selling its Ukrainian subsidiary for USD 845 million. In connection with the transaction, an extra dividend of RUB 26 billion will be paid, which means an extra yield of 4.3 %. MTS also provided strong figures for the third quarter.

Sberbank came up with stable numbers, as usual. The bank is now trading at 1.2 times book and at a PE ratio of 5.3. Its largest competitor, VTB, which the fund recently invested in, delivered a third-quarter profit that was 10% better than projections. We expect continued positive developments for VTB.

 

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Rysslands­fond

Carnegie Rysslandsfond invests in equities listed in Russia and in other parts of the former Sovjet Union. The region has great natural resources as well as many excitingcompanies in newer...

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