Russia: will they, won’t they?
We updated our RBI estimates due to transfer of coverage with a target price of EUR
20.5. We emphasize that this TP assumes a 0 value of Russia and Belarus thus any
positive news would trigger further upside in valuation while the downside from here
seems limited.
The implied valuation of Belarus and Russia is already close to zero at a PE of 1.9x and
PBV of 0.3x for 2023. This may be rational but what is not is the discount on the rest of
the Group vs. peers in our view as it is trading at PE of 4.7x and 0.4x PBV multiple
compared to 6.5 PE and 0.9x PBV of regional peers. While ROE without the Eastern
Europe segment would be substantially lower 8.4% on average in our forecasted period
vs. 10.5% including Russia and Belarus, adjusted for the lower profitability still results
in a major discount not to mention the risk profile change for the Group in a spin-off/sale
case.
Unfortunately on the dividend front we do not expect a payout from 2022 profit as long
as the Russian will they won’t they issue is not addressed i.e. spin-off or sale thus we
expect a payout only in 2024 from 2022-23 profit but that would translate to a decent
EUR yield of 7.0%. While spin-off completion and Poland litigation are risks to our
valuation, we believe the market already prices a very bad scenario
Raiffeisen Bank International is a universal bank focusing on corporate and retail customers in Central and Eastern Europe (CEE) and on corporate customers in Austria. In CEE, Co. consists of a network of banks, leasing companies and financial service providers. In Austria, Co. is involved in corporate finance and export and trade finance banks. Co. provides services to customers in 2,800 branch offices. In the retail banking business, Co.'s product and service portfolio comprises inter alia credit services (mortgages, credit cards and personal loans), as well as payment transaction and current account package services. As of Dec 31 2014, Co.'s total assets amounted to Euro121.6 million
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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