Sberbank: Banks, germs and steel (upgraded to BUY)
We have upgraded Sberbank’s commons (new price target (PT) RUB 422/share) and prefs (new PT RUB 359/share) to BUYs. We believe that geopolitics and profit-taking from the oil rally have played a role in the recent drawdown. We would not downplay the risk of an escalation in the Ukraine and Russia conflict but, if we accept this as a tail risk, the historical IRRs show that the current levels are significantly more compelling as entry points compared to a few weeks ago. In our view, Sber’s bottom-up prospects are also better than expected, following its resilience against the COVID-19 crisis. The NIM stayed steady, despite management’s cautiousness. A closer look at the loan book shows that the bank has de-risked this over time. These factors give us increased confidence in the bank’s longer-term earnings power. On balance, we believe this a good window to build positions. On our estimates, Sber’s commons trade at 5.9x P/E and 1.3x P/TBV for 2022E.Sberbank Russia is an open joint stock commercial bank. Co.'s principal business activity is corporate and retail banking. This includes, but is not limited to, deposit taking and commercial lending in freely convertible currencies, local currencies of countries where the subsidiary banks operate and in Russian Roubles, support of clients' export/import transactions, foreign exchange, securities trading, and trading in derivative financial instruments. Co.'s operations are conducted in both Russian and international markets. As of Dec 31 2014, Co. had total assets of RUB25.20 trillion.
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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