WOOD Flash – LSR: delisting of GDRs; conference notes
LSR has announced its plan to delist the GDRs on the London Stock Exchange, offering to tender the outstanding notes at USD 2.11/GDR. Depending on the level of take-up, the plan could cost the company up to RUB 12bn, which could increase the net debt by up to 71%. The company does not plan to cancel the repurchased GDRs, nor does it intend to place them via an SPO in the foreseeable future. In this flash note, we go through the key details of the delisting, and offer a write-up of our meeting with the company at our EM Financials & Real Estate Conference, which took place last week (15-16 June). The series of rate hikes and the effective absence of the extension of the mortgage subsidy programme for St. Petersburg and Moscow have had a profound impact on the near-term earnings and sales outlook for the company. We see downside for our forecasts, as well as the consensus estimates (which seem to be slightly more optimistic than what we are pricing in). The stock is inexpensive, trading at around 0.8x P/B, c.4x EV/EBITDA and around 10x P/E, on the consensus 2021E estimates. That said, given the more challenging external backdrop, the deteriorating earnings outlook and the risk for the dividends, we see limited positive triggers for the stock in the near term.
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.
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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.
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