WOOD Flash – Sberbank: 1Q18 RAS results – broadly neutral
This morning, Sberbank reported RUB 196bn in 1Q18 RAS net income, up 26% yoy. Although there is no direct read-across between the RAS and IFRS results, looking at it directionally, we believe the results have broadly neutral implications for the stock. We note that the 1Q18 RAS NIM indicates that management’s guidance is accurate so far. Although it should recover seasonally in the rest of the year, we believe there is a strong likelihood of significant margin erosion in 2018E, primarily on the back of repricing dynamics. We pencil in a 40bps yoy margin decline for Sber in 2018E. Recently, we downgraded the stock to HOLD, primarily on the back of the limited room for earnings upgrades and multiples expansion. Sber is trading at 7.2x P/E and 1.5x P/TBV on our 2018E numbers. Our RUB 280/share price target (PT) indicates 7% upside from these levels.
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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