Sberbank: It’s about time (upgraded to BUY)
We upgrade Sberbank’s common shares (commons) to BUY, from Hold, with a RUB 260/share price target (PT) (previously RUB 280), indicating 22% upside. We also upgrade the bank’s preference shares (prefs) to BUY, with a RUB 221/share PT (previously RUB 210) and 20% upside. We believe this could be a good window for Sberbank to perform, because: 1) we are more constructive on the valuation, at 5.2x 2019E P/E, and believe the stock could rerate to 6.0x levels as the sanctions are put on the back burner, at least for now, after the US lifted the sanctions on Rusal and related companies; 2) the dividend story is as strong as ever, and we believe the commons could yield 9% from the 2018E net income; and 3) albeit marginally, the risk for our estimates is still to the upside, thanks to the high base of the COR in 2018.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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