reports
- Kirill Chuyko
BCS Coverage Update: Oil & Gas Sector – Transfer of Coverage
We are pleased to announce that Ronald Smith has joined the BCS GM Research Team as Lead Oil & Gas Analyst. Ron brings a wealth of experience, which will strengthen BCS research product and services. Ron will take over coverage from Kirill Tachennikov, who will move to another role within BCS Research – we sincerely thank Kirill for his contributions as an O&G analyst. Commencing immediately, Ron will be providing continuous and timely coverage and assessments of important events and news ...
TATN TATNEFT PJSC
LKOH OIL COMPANY LUKOIL PJSC
NVTK NOVATEK JSC
SIBN GAZPROM NEFT PJSC
GAZP GAZPROM PJSC
ROSN ROSNEFT OIL CO.
SNGS SURGUTNEFTEGAS PJSC
LKODN ROSNEFT OIL CO. SPONSORED GDR REGS
OGZD OIL COMPANY LUKOIL PJSC SPONSORED ADR
TATNP GAZPROM (GDR)
GZPFY TATNEFT (PREF A)
ATAD GAZPROM NEFT (GDR)
904596 TATNEFT (GDR)
SURGUTNEFTEGAS (GDR)
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS ‘The Chart’: Alrosa – Diamond market rising from the dead .....
The COVID-19 epidemic delivered a huge hit to global diamond demand. However, the most recent data from Google trends suggest that pent-up consumer demand for diamond jewelry is accumulating and is ready to be unleashed. – Diamond purchases plunged worldwide beg-2020, but buyer interest appears to have re-emerged – Google trends signal diamond market rising from the dead o ‘Diamond ring’ topic up 19.5% from Apr to Mid-June o Bridal segment is c25% of diamond sales by value in k...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Trade Idea Closed: Short Severstal – Iron ore, export HRC prices...
We close our Short Severstal Trade Idea (opened 7 May) as recent movements on the commodity and steel markets pose S-T risks to the idea. – Market rally and optimism brought S-T upside risk – Iron ore price rally to support steel prices this month – Return / Duration: -2% relative to RTS, -16% in US$ absolute / 1 mo – Risks: M-T risks remain high, including China stopping steel imports – Valuation: CHMF trades at 8.6x M2M P/E – fair in current circumstances Kirill Chuyko, Managing...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Trading Idea Closed: Short NLMK – Closing on Stop Loss
We are closing our Short NLMK Trade Idea, as the stock has breached our Stop Loss of 15%. The stock returned: - -21% in $-terms - -27% in Rb-terms - -6% relative to the RTS Reason for breach / L-T fundamental view: The market has been focusing more on the longer term recovery hopes, rather than collapsing steel prices in Russia and poor steel demand. Our L-T fundamental take on NLMK remains Under Review; we will shortly Resume Coverage. Separately, we retain our Short SVST Trade Idea, arguin...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Alert: Norilsk fuel spill overblown, but a hit to ESG
We believe the reaction to yesterday’s news of a fuel spill is overblown – the event is an unfortunate accident rather than a systematic negligence of ecological focus. The stock remains a Buy, despite S-T turbulence. – Fuel spill in Norilsk – 2nd largest in Russian history o 21kt of diesel spilled from warehouses into rivers and land o Norilsk’s accident profile available here – Stock hit by negative sentiment, rumors of potential fines – $4bn value lost – Norilsk sees ...
- Kirill Chuyko
BCS Best Picks: Awaiting the Bears
In May, our Best Picks saw a loss of -7% absolute and -3% against the RTS. Our latest trade ideas play on risk-off market sentiment – despite a weak opening round, risks remain and we see decent returns ahead. - Portfolio reshuffle: Opened a cross-sector play MTSS/MOEX vs TATN/SIBN o Opened Short SVST and Short NLMK - Return: -7% in $, -3% vs RTS in May – Awaiting the Bears - Cross-sector play: MOEX and MTS should prove solid in face of risk-off … … TATN to post weak IFRS this ...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Under Review: KAZ Minerals – COVID headwinds cloud future
We are taking KAZ Minerals Under Review and withdrawing our recommendations, TPs and earnings estimates. – UR as rapidly changing economic environment casts uncertainty o Full impact and duration of COVID-19 epidemic still unknown – We will perform more detailed scenario analysis and update rating shortly Note: Our previous recommendation, target price and financial forecasts are withdrawn and should not be relied upon in making investment decision. Kirill Chuyko, Managing Director, ...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Downgrade: Gold – Shine fades as rally loses steam
We downgrade all names in the Russian Gold Sector to a Hold. Our TPs – increased by 6-22% – now reflect the gold rally, but further price upside is limited and production is maxed for now. – Upside for gold price limited – US inflationary boom unlikely in S-T o Jewelry demand to remain weak, but supply issues resolving – Limited production growth + stable gold price = little upside in stock prices – Dividend yields at 5-6% for majors – Solid, but upside limited – Global fi...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Under Review: SVST, MMK, NLMK, EVR – Local steel price premium u...
We are taking Severstal, NLMK, MMK and Evraz Under Review and withdraw our recommendations, TPs and earnings estimates. - Premium of domestic steel prices to export excessive o Local steel price premium of 30% is not sustainable o Domestic demand likely to collapse up to 50% in May - We will perform more detailed scenario analysis and update rating shortly Note: Our previous recommendation, target price and financial forecasts are withdrawn and should not be relied upon in making inves...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Trade Ideas Opened: Short SVST & NLMK – Exporter bliss is gone, ...
This time of the year when the domestic steel price premium to export is c30%, SVST and NLMK valuations are too high – both are Shorts again. - Domestic prices likely to collapse on a 30% premium to net back - Domestic demand may fall up to 50% in May, forcing jump in exports - Export prices already fell 5.8% m/m, may fall more on export spikes - MMK and NLMK’s exports are already lossmaking on steel only basis - Valuation: SVST/NLMK P/E at 9.7x/10.4x if steel premium falls to 15% - Return ...
- Kirill Chuyko
BCS Best Picks: Playing it safe, while volatility high
Given limited visibility and unprecedented volatility, we have closed the remaining Trade Idea in our basket. - Portfolio change: Long Halyk Bank closed - Return: Largely flat in $, -3% vs RTS in April, beating RTS on 12M horizon - Basket empty, given low visibility and high volatility o Long HSBK closed as bank foregoes 2019 dividends - Ahead: Cautious, prefer defensive stocks on a week-by-week basis Kirill Chuyko, Managing Director, Head of Research, For more details, please contact: ...
- Kirill Chuyko
BCS Survey: C-Virus to peak late-May, Oil $40+ end-‘20
Amid current volatility and uncertainty, in early-mid April we polled our equity and fixed income clients as well as corporates and retail to measure sentiment on key issues. The survey is based on 600+ respondent views. - Investment professionals agree – Oil prices seen at $40+ by year-end … … and peak of C-Virus contagion seen in late-May - Investors on balance generally concur o Safer plays – Utilities, TMT, Gold and Retail o Riskiest sectors – Transport, Oil and Bankin...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Upgrade: TMK – On the way to ‘non-public’
We Upgrade TMK’s 12MF TP to Rb61/share, in line with the price announced in the buyback yesterday, which will cover all the free-float, lead to an LSE de-listing and make the company less public. We recommend tendering all shares. - Rb61/share offer price is 31% premium to Tuesday’s close and 6.5% now - TMK, post-buyback, will de-list from LSE o Low valuations, sanctions and IPSCO sale led to decisions - Buyback covers 99.4% of free-float, including local shares - TMK will spend up to Â...
- Kirill Chuyko
BCS Catalyst Watch – 2Q20
BCS Catalyst Watch is a quarterly publication, geared to providing advance notification of key corporate and macro-level events, insight into key issues and guidance on what to watch. In this Catalyst Watch, given turbulent times and eroding M-T economic outlook, we believe it instructive to reiterate our economic projections (excerpt from Strategy) and identify relatively recession-proof stocks (Most defensive, Dividend plays). We also highlight the most actionable Catalysts (Best/Worst) for e...
- Kirill Chuyko
BCS Best Picks: Not immune – Basket down on global sell off
In March, our Best Picks underperformed the RTS by 5% (-19% in $-terms) – the basket was caught in the Bear market, even Gold fell short in the hunt for liquidity. For now, volatility is the name of the game. - Portfolio reshuffle: Long Lukoil closed - Return: -19% in $, -5% vs RTS in March, still beating RTS on 3M horizon - LKOD – Triggers materialized, but idea closed after the oil price collapsed - Gold – PLZL/POLY Basket had a short run, but we still see M-T upside - HSBK – Triggers...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Trade Idea Closed: Long PLZL/POLY basket (50-50%) – Closing on S...
We are closing our Long PLZL/POLY basket (50-50%) Trade Idea, as it has breached our Stop Loss of 10%. The stock returned: -16.8% in $ terms -15.3% in Rb terms -12.5% relative to the RTS Kirill Chuyko, Managing Director, Head of Research, Oleg Petropavlovskiy, Director, Senior Analyst, Artem Bagdasaryan, Associate, Analyst, For more details, please contact: Oleg Achkasov ( / / ) Luis Saenz ( / / 23)
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Trade Idea Opened: Long PLZL/POLY (50-50%) – A perfect risk-off ...
We open a 50/50% Long PLZL/POLY ‘Basket’ Trade Idea, with an expected return of not less than 20%. Still undervalued (not yet reflecting economic uncertainty), the names offer upside as haven plays and on gold price appreciation. - Market uncertainty re: COVID19 outbreak to support gold prices - Expected rise in gold price not priced into PLZL/POLY valuations … … nor is the ruble’s recent devaluation - Valuation: M2M P/E for PLZL/POLY attractive at 7.3/7.1x o Trading at par with...
- Artem Bagdasaryan
- Kirill Chuyko
- Oleg Petropavlovskiy
BCS Under Review: Steel Sector – S-T, ruble helps; L-T, potentially ...
We take the Steel sector (NLMK, Severstal, MMK, EVRAZ and Mechel) Under Review to consider the S-T and L-T impact of the ‘C’-virus, recent oil price collapse and resulting ruble depreciation. - S-T support likely there for steel names o Ruble declined c6-10%, adding 12-50% to M2M profits o Valuations look rather attractive at spot o M2M P/Es of 6.8/5.9 for NLMK/SVST at 10 month low … … with M2M 12MF dividend yields of 13 and 13%, respectively - L-T risks are high, thou...
- Kirill Chuyko
BCS Best Picks: Retail delivers again; March for HSBK, LKOD
In February, our Best Picks returned 4% vs the RTS (flat in $-terms) – MGNT delivered the goods, albeit the basket suffered from the broader market sell off. Still, we see the recent weakness as a buying opportunity for HSBK and LKOD. - Portfolio reshuffle: Short MGNT DRs closed - Absolute/Relative return: Flat/4% in February - Top performer: MGNT – 9.5% absolute return in 2.5 weeks (+2.3% vs RTS) - LKOD, HSBK hit by market correction – S-T weakness a buying opportunity - Ahead: Triggers ...
- Kirill Chuyko
BCS Termination of Coverage (Temporary): Acron
We temporarily terminate coverage of Acron due to an interdepartmental transfer of coverage of the fertilizer sector. Coverage of the sector will be resumed by Senior Analyst Anastasia Egazaryan. - We withdraw our 12MF TP of Rb3,126/share and Sell recommendation - Our previous financial forecasts withdrawn and … … should no longer be relied upon in making investment decisions Kirill Chuyko, Managing Director, Head of Research, For more details, please contact: Oleg Achkasov ( / /...
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