Globaltrans - Fragile Equilibrium
We think the cornerstone of Globaltrans' investment case is the gondola railcar market, which has seen a remarkable recovery since lease rates bottomed out at R500 per railcar-day in 2015. This has boosted the dividend yield to above 15%. But while this may seem rather attractive, we see headwinds ahead stemming from rising railcar purchases by other players on one hand, and the company's postponed capex and inefficient capital structure on the other. We have incorporated our updated projections for the rail transportation market into our model, and we reinitiate coverage of Globaltrans with a HOLD recommendation and a target price of $10.10 per GDR, which reflects the healthy cash flow we expect over the medium term.Globaltrans Investment is a rail transportation company in the Russian Federation. Co. is engaged in providing a wide range of railroad freight transport and logistics services. Co. provides rail freight transport and logistics services, as well as certain ancillary services to industrial customers and medium-size corporate customers in Russia and to destinations within Russia and to Ukraine. Co.'s regional network encompasses 10 branch offices. Co. is a private participant in the transportation of scrap and ferrous metals and it has market positions in the transportation of construction materials and ores.
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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