Yandex - Draft Taxi Law: Storm in a Teacup

Evgeny Moskvichev, the chairman of the State Duma's transport and construction committee, has discussed proposed amendments to the second reading of a draft law governing the taxi industry in an interview with RIA Novosti. The proposed amendments have yet to be discussed by the three or four working groups involving industry representatives. Once they have been talked over, the amendments will be passed on to the Duma's legal department (in late June or early July), and published. A member of the Federation Council (the upper chamber of parliament) has already criticized the proposed amendments and has asserted that they would be detrimental to the taxi industry. We regard the news as neutral at this juncture and suggest awaiting the final amended draft from the working group stage. We think new regulation is a core risk for the entire TMT space. We value the Yandex.Taxi JV at $7.5 bln (including $6.7 bln for the ride-sharing business on its own), which implies $13.8 per Yandex share. We reiterate our BUY recommendation for Yandex and target price of $51.00 per share.