Moscow Exchange cut to HOLD, TP RUB 150 - Time to take profits
Given the stock price increase by 18% over a month since our last Update in July, we downgrade Moscow Exchanges shares to HOLD from BUY, with our DCF-based target price unchanged at RUB150. At the current price, the stock should likely offer a 6.6% FCF-linked DY for 2020e propped up by the trading growth yoy, though the yield is already not far from the 6% Russian average. Starting from 3Q 20e, we could see a delayed negative effect from interest rate cuts in 1H on net interest income, though currently we still envisage no risks to our 20e FCF and dividends in the model. We still point out that the business segments of the company are well-balanced against business cycles long-term, but anything out of ordinary such as the pandemic or oil market panic benefits fees via higher yoy market volatility and trading. Nevertheless, currently all of these factors could be already priced in and trading growth could slow down in 2H 20e compared to 1H.Moskovskaya Birzha MMVB-RTS PAO. Moskovskaya Birzha MMVB-RTS PAO (MMVB-RTS OAO) is a Russia-based integrated stock exchange that provides electronic trade organization, clearing and settlements on trades, depository and information services. The Company provides trading and settlement services in such segments of the financial market as foreign exchange (FX) market, federal bonds market, market of derivative financial instruments, cash equities market, corporate and regional fixed income market, commodities market, as well as market for state and municipal orders. The Company was established as a result of the merger between MMVB ZAO and RTS OAO. It operates through six branches and three representative offices. As of February 27, 2013, the Company's major shareholder was the Central bank of the Russian Federation with a stake of 22.47%. In January 24, 2014, the Company sold its whole stake in MMVB-IT ZAO.
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