Globaltrans - Strong 1H17 IFRS Results, but We Downgrade to HOLD
We update our Globaltrans model following the release of the company's 1H17 IFRS results, recent market developments and updates to our macro forecasts. We think the gondola market is currently balanced, while lease rates are high enough to justify investments in new rolling stock. Meanwhile, the tank segment is stable. Our new target price of $9.91 per GDR is based on a DCF-derived fair value of R624 per GDR (based on an 11.5% WACC and 2% terminal growth) and a USD/RUB forecast of 63.0. The new target price is 30% above our previous target price and driven by stronger performance in the gondola segment and a lower WACC. However, we now see limited upside, as the share price has moved higher, so we downgrade our recommendation from BUY to HOLD.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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