VEON - The Jigsaw Comes Together
We initiate coverage of VEON with a BUY recommendation and target price of $4.90 per share. We see potential for both underlying equity FCF (33% CAGR in 2017E-20E) and dividends (6.4% yield for 2017E rising to 7.3% for 2018E) to grow. Over the long term, value crystallization could come from the Italian JV. On our estimates, VEON is trading at an attractive 2018E EV/EBITDA of 4.1 (3.1 excluding Italy). Our target price is SOTP-derived, with a 45% contribution from Russia, the FSU and the HQ, 36% from the Italy JV, 14% from the stake in GTH Holding and 5% from dividends.
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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