SBERBANK: What a Dance
Sberbank published excellent 2Q17 IFRS results this week that evidence the bank’s remarkable resilience to economic headwinds. The related management conference call was also encouraging regarding its 2H17 outlook and beyond. We have incorporated the recently reported financials into our valuation model, which improved our earnings forecast, and we consequently increase our target price to RUB240 (from RUB210) per common share, and reiterate our BUY rating. The bank still offers an extremely low valuation (2018E P/BV of 1.0x, P/E of 5.3x) despite over 20% RoE and fast-growing dividends, which we think may reach RUB9 for 2017 (5% yield on common shares). We are very confident that the stock will achieve new price highs in 2H17, and it remains our top pick in the finance universe. In mid-November Sberbank will present a new three-year strategy; we regard this as an important event that is set to be another big driver for the stock.
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