WOOD Flash – Sberbank: 4Q18 results - solid but the tone on the Deniz deal seems somewhat changed
Sber reported RUB 176bn of 4Q18 net income, vs. RUB 175bn for consensus and our estimate of RUB 186bn. The only significant deviation was the positive surprise on the COR front: Sber finished the year with a 115bp COR (adjusted for refinery portfolio impairments) vs. 130bp guidance. At this point, however, we do not see any meaningful changes to our estimates on the back of 4Q18 results. In our view, the main takeaway from the conference call was management’s tone on the Denizbank deal, which we found somewhat different than before. We believe there could be a tail risk that the deal is not airtight. As for dividends, we understand that a 50% payout from 2018 is possible but there is also a chance that the board may postpone reaching the “holy grail†payout level until 2020E. Although the 4Q18 results were not the positive trigger the stock needs, we still believe Sber is cheap. The stock trades at 5.1x P/E and 1.1x P/TBV on our 2019E numbers. We have a PT of RUB 260 for the commons and rate Sber a BUY.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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