Halyk Bank - Reaping the Benefits of Scale
We lift our target price for Halyk Bank to $16 per GDR and raise our recommendation to BUY, putting the stock among our top picks for 2018. We update our model to incorporate KKB and roll forward our forecast period to 2020. If 2017 was about what kind of deal Halyk Bank would get for playing its part in the cleanup of Kazakhstan's banking sector (answer: a pretty good one), 2018 will be about merging the two banks and starting to tap into the revenue and cost synergies that the deal should bring to what is now comfortably the country's dominant bank. We expect >30% EPS growth and 24% ROE in 2018 and, with capital accumulation likely to be strong, this should trigger a resumption of dividends (respective payouts of 20% and 30% for 2017-18, implying corresponding dividend yields of 4% and 7%).
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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