Sistema: good progress, but higher risk (stays BUY)
Following a sell-off in the Russian equity market, amid geopolitical uncertainty, we have updated our view on Sistema’s investment thesis, valuation and risks. We have reduced our price target (PT) to RUB 27.2 per share (from RUB 48.0). Although Sistema still offers substantial upside of 39% on our new PT, which equates to a BUY rating, we believe that investors would be better off buying some of the assets separately: for example, Ozon (BUY, USD 36 PT) has declined more than Sistema during the recent sell-off. We note that despite the significant sell-off of Ozon, Sistema’s discount to NAV has narrowed to 28%, from 42% at the beginning of November, due mostly to the solid performances of MTS and Segezha.Sistema is a telecommunications and technology investment group based in Russia. Co. invests in, and manages a range of companies which operate in the telecommunications, oil and energy, high technology, banking and other sectors. The main focus of Co.'s activities is service-based industries. Co.'s operations are organized along four segments: Telecommunications, Technology and Industry, Consumer Assets and Oil and Energy. Through its subsidiaries, Co.'s activities include: wireless telecommunications services , IT and systems integration, cable TV, manufacturing of radiotechnical equipment, oil, gas and energy production, banking activities, trading and investing and financing activities.
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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