Halyk Bank: dividends, and then some (stays BUY)
Despite the 77% total USD-based return from the stock in the past 12m, we still believe that Halyk is mispriced at 2.2x P/E and 0.7x P/TBV for 2023E. We believe that clarity on the regulations related to dividend distributions has also removed a significant risk. As hefty as it sounds, the 50% upside in our valuation indicates target 2023E multiples of only 3.4x P/E and 1.0x P/TBV. In our view, it is difficult to justify Halyk’s current market valuation without a macro meltdown scenario. We believe that the depressed market multiples result from an acute loss aversion related to Kazakh geopolitics, and worries about the bank being on the wrong side of the political shift in the country, due to the Nazarbayev family’s ownership. Clearly, frontier equities being a smaller asset class plays a role as well. We are not overlooking these risks but believe there are nuances in Halyk’s favour, and that the valuation compensates generously for these. We maintain our BUY rating on the stock and increase our price target (PT) to USD 17.6 (from USD 12.9).
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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