Moscow Exchange: Stay safe and earn on volatility (stays BUY)
We reiterate our BUY rating on Moscow Exchange (MOEX), increasing our 12M price target (PT) from RUB 104/share to RUB 118/share (19% upside), and see the company as one of our top financial picks in the EME region. We like MOEX for its well-diversified top line, which makes its profits resilient to various market scenarios and allows it to benefit from higher volatility on the financial markets: we expect the 2019-22E EPS CAGR at 8%. Moreover, we see the company as a hefty dividend payer (an 89% payout ratio over the past two years), and expect a record-high DPS of RUB 8.5 from the 2020E profit, implying a dividend yield of 9%, more than double the average for the MSCI EM and its peers. Finally, we appreciate the targets outlined in MOEX’s strategy (i.e., broadening its product and services offering; doubling the number of retail investors; annual F&C growth >10% until 2024E; focus on operational risk management), which offer additional upside for our forecasts for F&C growth (2019-24E CAGR at 9%). On our numbers, MOEX trades at 2020-22E P/Es of 9.9-8.8x, 48-50% discounts vs. its peers (compared to a historical average discount of 47%), while our 2020-22E EV/EBITDA multiples of 3.9-3.2x imply 70-72% discounts (average discount of 60%).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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