Moscow Exchange: Profit (and dividend) taking after the rally (downgraded to HOLD)
After the 28% rally since our most recent update, in early-April, we advise to take profits, and we downgrade Moscow Exchange (MOEX) to HOLD, from Buy, but increase our 12M price target (PT) from RUB 118/share to RUB 125/share (plus the DPS of RUB 7.93), implying 7% upside. We still see MOEX as a safe place to stay in turbulent times. Moreover, we like it for its: i) well-diversified top line, benefiting from higher volatility; ii) EPS growth profile (a 2019-22E CAGR of 8%); and iii) solid track record in paying out dividends (dividend payout ratios of c.89% over the past three years). On the other hand, we note that: i) the recent dovish stance of the CBR poses downside risk for our NII forecasts; and ii) MOEX’s current valuation is quite demanding, in our view. Its 2020E P/E stands at 12.8x (consensus), i.e., 21% above the long-term average, which means that even our forecast record-high DPS of RUB 8.67 from the 2020E profit translates into a dividend yield of c.7%. This is indeed attractive for the EM universe (average dividend yield at 3% for the MSCI EM), but in line with the average for the Russian equity universe (7%).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.
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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