Halyk Bank - Earnings Still in Good Shape; BUY
We refresh our numbers for Halyk Bank following the 1Q18 results and a catch-up with the management. We cut our 2018 earnings 1% to KZT235 bln and our 2019-20 forecasts 11-15% per year on increased minority interest attributable to Almex's stake in KKB. While we expect EPS growth to drop in 2019-20 to 2-7% per year, the ROE outlook remains impressive (on a very strong capital base), with 25.6% and 23.0% for 2018E and 2019E. The bank trades on a just 1.1 2018 P/BV and 4.6 P/E, offering a 9% dividend yield. We keep our BUY rating and raise our target price to $17.00 per share, as we trim our COE to 16% (versus 15.5% for the more liquid Georgian banks). Halyk Bank is our preferred pick within the frontier space. We see the current levels as a nice entry point after the unwarranted selloff in April, which looks to have been driven by Russian sanctions news.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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