Reports
-
Feb 20, 2012 download PDF
Ukraine Strategy Weekly: Markets Encouraged by China, But Other Worries Persist
Last week showed both continuous market nervousness, with not much progress on key global issues, on one hand, and a buying mood on the other, thus driving the MSCI Global up 1.4% w-o-w despite strong intra-week volatility. The Greek saga of missed deadlines continued, as the approval of a bail-out package was postponed again, and one more time this week, as the EU donors remained unconvinced the country would meet the underlying conditions. However, support came from other markets as China expressed intentions to help Europe. The Bank of Japan, in a move not expected by analysts, decided to expand its asset purchase program by JPY 10 trillion to JPY 65 trillion. In a more forceful development, the Chinese central bank on Saturday cut its reserve requirement ratio by 50bp to 18.5-20.5%, with the market viewing it as a signal that further stimulus could be on the way. Meanwhile, tensions over Iran moved into focus, pushing oil prices up 1.1% w-o-w (+13% YTD).
-
We maintain our valuation for Kernel Holding with a 12-month price target of $27.75/share, suggesting 23% upside. We reiterate our Hold recommendation on the stock.
-
Feb 16, 2012 download PDF
Ukraine Banking Sector Update: Liquidity Improves, But Lending Expectedly Sluggish
While European banks are hotly awaiting the ECB’s second LTRO auction at the end of February, liquidity in the Ukrainian banking system has improved markedly since December after the NBU eased its monetary stance by changing the distribution of required minimum reserves between banks’ correspondent and special accounts with the central bank.
-
We revised our price targets and recommendations for metal and mining stocks in our coverage universe based on updated valuation models rolled forward to 2012. Four out of seven stocks were downgraded, one upgraded, and our view on the remaining two remained unchanged. Six other stocks, namely Pokrovskoe Mine, Komsomolets Donbassa, MMK Illicha, Interpipe NPR, Poltavskiy GOK and Pivnichniy GOK were moved to non-rated coverage due to their low liquidity.
-
Global markets remained in a bullish mood for much of last week on expected progress in Greece as well as a raft of other developments including the Bank of England (BoE) increasing monetary easing by GBP 50bn (to a total of GBP 325bn), speculation about the size of the ECB’s next refinancing operations, the ECB’s decision to keep its rate at 1.0%, the BoE’s rate remaining at 0.5%, and improved jobless claims data in the US.
-
Our revised valuation for Astarta Holding, combining the DCF and comparative valuation approaches, yields a 12-month price target (PT) of $24.05/share. The new target, being 13% higher than our previous PT, suggests 14% upside to the stock’s current market price and justifies a Hold recommendation. Astarta ranks fourth on the sector analyst’s ranking scale thanks to expected solid 2011 and 2012 results notwithstanding low sugar prices, good stock liquidity and high corporate governance standards.
-
We maintain our valuation for Avangard with a price target of $12.21/DR, suggesting a 54% upside to the stock’s current market price. We recommend the stock as a Buy, keeping it second on the sector analyst’s ranking scale. One should also consider Avangard’s underperformance versus local peers, with the stock’s current 2012E EV/EBITDA of 2.5x being the lowest multiple among Ukrainian agri stocks (their average is 4.5x).
-
LSE-listed Avangard, Ukraine’s largest egg producer, and its majority shareholder Oleg Bakhmatyuk today rejected media reports accusing the company of illegally obtaining government subsidies.
-
Feb 03, 2012 download PDF
Motor Sich: 2011 Results Preview: Net Income Watched Closely; No Impact on Valuation
We expect Motor Sich to release preliminary condensed 2011 results (net income — the most awaited figure, as well as total assets, equity and a few other indicators) as part of its AGM announcement in the coming days. In previous years such announcements were published between Feb. 2-5.
-
MHP, Ukraine’s largest poultry producer, increased chicken meat output by 7% y-o-y to 384.0 kt in 2011, selling 370.9 kt (+12% y-o-y) and utilizing the remaining volume at its meat processing assets. Its average chicken meat price totaled UAH 15.0/kg in 2011 (+10% y-o-y). Growth in production volumes, despite the company already operating at full capacity, was a result of more effective use of existing capacities. Export sales of chicken meat increased by almost 80% y-o-y to reach approx. 10% of total sales volumes last year, delivered mainly to the MENA region.