Moscow Exchange - Equities May Recover in 2018, But EPS Momentum Remains Weak
Despite its solid recent earnings and trading updates, we still struggle to get excited about Moscow Exchange heading toward 2018. We have nudged up 2018-19 EPS by 2-3%, but see very modest ruble earnings growth next year (1%) and a 4% drop in dollar terms, which hardly makes for a compelling story. That said, we see decent catalysts for equities and fixed income volumes in 2018, but as interest rates look set to fall quite strongly, good fee income recovery (13% growth) looks insufficient to offset a further drop in interest income. MOEX trades close to its recent P/E highs, while the 1H17 dividends disappointed, raising risks for our full-year 2017 projection. We stick to a market-neutral view on the stock, raising our target price to R124 per share and keeping our HOLD.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.
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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