Thursday, March 1, 2007
Thursday, March 1, 2007 Market
Blue chips: advancers and decliners MTS VimpelCom Sberbank Severstal Norilsk Rostelecom Novatek Lukoil RTS Index Gazprom Rosneft SurgutNG NLMK UES Sistema Tatneft
-2.2% -2.3% -2.5% -3.2% -3.3% -3.3% -3.7% -3.8% -4.2% -4.4%
-7%
-5%
1.9% 1.9% 1.9%
0.0% -0.2%
4.1%
The correction continued yesterday, with the RTS losing 2.5% to 1,858. Sberbank (-4% intraday) gained on pronounced support before the close. Keep an eye on possible aftershocks today.
Top news and ideas
MMK: RAS results in line with GAAP estimates. MMK published 2006 figures under RAS with net profit rising 29% y-o-y to USD1.36 bn. Although positive, the results are in line with estimates and already priced in.
TMK: A positive story with a new angle. Upbeat comments from the company and
expansion plans in large diameter welded pipe output should be positive for the stock.
-3%
-1%
1%
3%
5%
Volume monitor: daily/3M avg. volume
UES: Funding changes made to long-term investment program. Financing will
largely rely on the company’s own funds and profits from additional share issues of its power generating subsidiaries.
Comstar: MGTS 2006 RAS results in line with expectations, 2007 guidance NLMK
disappoints. Revenue was up 17% and net income rose 6%, but revenue guidance implies downside to our estimates for Comstar.
237%
X5
241%
Sistema
RBC: Board approves spin-off of IT business. We expect the move to crystallize value and the newly traded entity to be value accretive for shareholders.
249%
MTS
263%
UES
281%
50%
100%
150%
200%
250%
300%
RTS index and weekly trading volumes ADRs(lhs) Local (lhs) RTS Index (rhs)
USD mn 4,000
2,200
Other highlights
Brief – Gazprom said it signed a direct gas delivery agreement with Shell Enerji
in Turkey to supply 250MM cm annually until 2021, collecting additional retail margin.
Brief – TNK-BP Holding will acquire Urengoygeoresurs (C1+C2 reserves 241 mn bbl) (Interfax). The deal will help TNK-BP’s gas position.
Brief – SurgutNG has bought 6.8% of St. Petersburg-based Rossiya Bank for
USD42 mn (Vedomosti). The bank owns Sogaz, Gazprom’s former insurance arm. The rationale behind the move is unclear to us.
Brief – The Federal Property Agency sold 4.6% of Uralsvyazinform for USD102
1,800
mn and 7.2% of CenterTelecom for USD110 mn (Interfax). The final prices were in line and 16% below the current market prices, respectively.
2,000
1,600
Brief – The 13% income tax will not be changed anytime soon, Deputy Finance
1,500
1,400
3,500
2,000
3,000 2,500
1,000
1,200
500
Upcoming events Early-Mar Today Mid-Mar 13-Mar 15-Mar 15-Mar 15-Mar 15-Mar 15-Mar Mar 21
Russian market in context
Feb 07
Dec 06 Jan 07
Nov 06
Sep 06 Oct 06
Aug 06
Jun 06 Jul 06
Apr 06 May 06
1,000 Mar 06
Mar 06
0
Minister Sergei Shatalov said yesterday. We welcome this confirmation as we believe it is too early to return to a progressive tax scale.
X5 supervisory board meeting X5 2006 management accounts Seventh Continent 2006 financials BBH 2006 results X5 to announce new strategy State to auction 3.3% of Northwest Telecom Baltika 2006 consolidated results Magnit trading update for February Kalina 2006 results Razgulay board meeting
RTS Index MSCI EM Europe Index MSCI EM Index S&P500 Index OIX (Oil majors) Index GSCI (Commodities) index Oil (WTI), USD/bbl Nickel, USD/ton Steel (HR), USD/ton LT U.S. Treasury YTM EMBI-Russia spread, bp RUB/USD
Last Close 1,858 605 896 1,407 621 5,735 61.8 44,403 543 4.7% 111 26.16
Performance/Trends 1D 1WK 1M 3M 12M -2.5% -1.9% -1.9% 4.4% 28.1% -2.2% -4.9% -4.0% -1.8% 4.6% -1.8% -5.1% -1.9% 1.8% 13.8% 0.6% -3.5% -2.7% 0.7% 9.0% -0.1% -1.8% -3.9% -5.9% 11.0% -0.2% 2.2% 7.6% -2.5% -7.7% 0.5% 1.0% 11.5% 1.3% 0.6% -0.2% 4.0% 9.8% 29.1% 198.1% 4.3% 4.3% 4.3% 7.4% 42.8% 4.7% 4.9% 5.0% 4.6% 4.6% 119 103 99 103 100 26.17 26.20 26.53 26.31 28.12 Source: Datastream, Bloomberg
Morning Call
March 1, 2007
MMK: RAS results in line with GAAP estimates Analysts: Michael Kavanagh, Andrey Litvin e-mail: [email protected]
12M Perf. 33.1%
Price performance, USD
0.9
30%
Price Rel. to RTS
0.8
20% 10%
0.8
0%
0.7
-10%
Jan 07
Feb 07
Com., mn 10,163 Pref., mn Total, mn 10,163 Source: Bloomberg, MDM estimates
Dec 06
-30% Oct 06
-20%
0.6 Nov 06
0.7
Sep 06
9,604 8,628 1%
3M Perf. 21.2%
Aug 06
2008E 6,718 1,924 1,346 1% -5% -5% 29% 20% 1.3 4.5 7.1
Jul 06
2007E 6,661 2,029 1,414 7% 4% -1% 30% 21% 1.3 4.3 6.8
1M Perf. 8.6%
Jun 06
2006E 6,228 1,958 1,430 11% -13% -23% 31% 23% 1.4 4.4 6.7
12M High/Low 1.07/0.65
May 06
Rating Hold
Apr 06
MCAP, USD mn EV, USD mn Free float
FV, USD 0.82
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 0.95
Mar 06
Bloomberg ticker MAGN RU Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Solid 2006 RAS. MMK has released 2006 financials under RAS. Revenue rose 13% to USD5.9 bn and net profit was up 29% to USD1.36 bn. Recovering steel prices in the second half, as well as lower raw material prices, drove the results. Profitability improved with net margin rising to 23%, up from 20% in 2005. The company disclosed that it had a loss of USD29 mn (2% of net profit) from an accident at its cold rolling shop at the end of November. Inline with GAAP estimates. The published results under RAS suggest that our own 2006 estimates are close to what the company will release later under U.S. GAAP. We estimate MMK’s 2006 U.S. GAAP revenues at USD6.23 bn and net profit at USD1.43 bn. Shareholders are to elect new board. In March, MMK will hold an extraordinary shareholders meeting, where shareholders will vote on the composition of the new board. Ahead of its IPO, the company will probably introduce two new independent directors. The two new candidates are David Logan, who serves on the International Advisory Council of Thames Water and as non-executive director of European Nickel, and BP Russia President Peter Charow. The last big payout. The board proposes paying USD0.034/share in dividends for 2006 (a yield of 3.6%). Thus the full-year dividend payout for 2006 reached roughly 100% of net profit. Most likely, this was the last sweet payout the company will make ahead of its IPO, which is expected to take place in 2Q07. The record date of the dividend payment is February 12. News is priced in. We believe the published financial results are in line with expectations and will have no impact on MMK shares. We reiterate our Hold recommendation on MMK with 2007 year-end DCF value of USD0.82/share. MMK: 2006 RAS figures in line with estimates USD mn
2006 RAS
2005 RAS
y-o-y
2006E GAAP
GAAP/RAS
2005 GAAP
Sales
5,913
5,212
13.5%
6,228
3.2%
5,380
GAAP/RAS 5.3%
COGS
3,764
3,456
8.9%
3,688
-0.3%
3,447
-2.0%
Gross profit
2,150
1,755
22.5%
2,540
10.1%
1,933
18.1%
Operating profit
1,835
1,491
23.1%
1,778
-11.3%
1,323
-3.2%
Pretax
1,797
1,406
27.9%
1,907
-6.3%
1,317
6.1%
Net
1,359
1,055
28.9%
1,430
-10.2%
947
5.2%
Operating margin
31%
29%
29%
Net margin
23%
20%
23%
2
25% 18% Source: MDM estimates, Company data
March 1, 2007
Morning Call
TMK: A positive story with a new angle Analysts: Michael Kavanagh, Andrey Litvin e-mail: [email protected]
2007E 3,767 1,091 645 n/a n/a n/a 29% 17% 1.9 6.6 11.2
2008E 4,485 1,526 948 19% 40% 47% 34% 21% 1.6 4.7 7.6
7,194 Com., mn 218 7,194 Pref., mn 0% Total, mn 218 Source: Datastream, IBES consensus
1M Perf. -8.6%
3M Perf. 14.8%
12M Perf.
Price performance, USD
60%
40
50%
35
40%
30
30% 20%
Price Rel. to RTS
25
10%
20
0% Feb 07
2006E n/a n/a n/a
12M High/Low 38/21.6
Jan 07
Rating Not Rated
Dec 06
MCAP, USD mn EV, USD mn Free float
FV, USD n/a
Nov 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 33.00
Oct 06
Bloomberg ticker TMKS LI Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Company serves up good news for investors. On Wednesday morning, TMK hosted a breakfast with analysts to discuss the company’s operating performance in 2006, with the company’s CFO, Vladimir Shmatovich, as the main speaker. Apart from positive comments on the pipe market and a reiteration of the company’s high valueadded expansion strategy in OCTG pipes, Shmatovich introduced a new angle to TMK’s growth story with a positive outlook for large diameter (LD) welded pipes in Russia. Positive 2006 trading update in line with expectations. On Tuesday, TMK reported that 2006 revenues were expected to reach approximately USD3.3 bn (up 13% y-o-y), in line with both market expectations and earlier guidance. Without further disclosure, the company commented that there was a material improvement in margins. During the conference with analysts on Wednesday, TMK mentioned that 2006 EBITDA may come in at USD790 mn, implying a 24% margin (the company uses a bottom-up calculation method). Based on a more conventional top-down approach (operating profit plus DD&A), we estimate that EBITDA may reach about USD760-770 mn (23% margin). This implies that 2H06 EBITDA margin was lower than the 25% reported in 1H06, which we attribute to rising raw material prices. TMK is due to publish full results in May 2007. Increased production and an improved mix. In 2006, TMK shipped 3.02 mn tons of tubular goods, a 3% increase over 2005; however, high value-added OCTG shipments increased by more than 16%. TMK is continuing to upgrade its high value-added seamless pipe production capacity as part of its strategic investment plan to 2010, under which it will add 1.1 mn tons of capacity. This program is approximately 30% complete. Strong demand and positive outlook. TMK reported strong demand for its products from both Russian and foreign customers, with no changes foreseen in the near future. Sales outside Russia grew by more than 8%. Shipments to the United States grew by over 90%, while deliveries to the Middle East increased by approximately 7%. In conclusion, the news is positive for the stock. Stripping away the current turmoil in world equity markets, we believe investors will welcome the upbeat comments from TMK, with the renewed positive view on welded LD pipes potentially adding upside to the stock. We would view any weakness in the share price as a buying opportunity.
3
Morning Call
March 1, 2007
UES: Funding changes made to long-term investment program Analyst: Alexey Gogolev, e-mail: [email protected]
1.7
60% 50% 40% 30% 20% 10% 0% -10% -20%
Price Rel. to RTS
1.3
0.9
Jan 07
Feb 07
Dec 06
0.5 Oct 06
48,224 Com., mn 41,042 60,286 Pref., mn 0% Total, mn 41,042 Source: Datastream, IBES consensus
12M Perf. 69.1%
Price performance, USD
Nov 06
MCAP, USD mn EV, USD mn Free float
19% 4% 1.9 10.3 41.1
3M Perf. 22.1%
Sep 06
2008E 41,383 8,948 2,179 12% 19% 22% 22% 5% 1.5 6.7 22.1
Aug 06
2007E 36,881 7,503 1,792 18% 28% 53% 20% 5% 1.6 8.0 26.9
Jul 06
2006E 31,210 5,863 1,175
1M Perf. -0.8%
Jun 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
12M High/Low 1.29/0.54
May 06
Rating Not Rated
Apr 06
FV, USD n/a
Mar 06
Price, USD 1.18
Mar 06
Bloomberg ticker EESR RU Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Composition of investment program changed. Yesterday, UES announced the details of its investment program for the period to 2010. The company will build thermoelectric power plants with a total capacity of 28,800 MW and hydropower plants with 4,900 MW of capacity before 2010. The investment program is worth USD115 bn, the figure that UES chief executive Anatoly Chubais announced two weeks ago. However, the source of financing has been changed: UES now plans to raise USD14 bn from additional share issues by its generating units; USD38 bn will be financed from own funds; future borrowing will bring in USD17 bn; while the share of federal budget funds has shrunk to USD8 bn. Investment program too ambitious? It remains to be seen whether UES will be able to raise enough financing from share issues, as the market price of the generating units’ shares is already high. At the same time, financing the investment program from own funds may prove difficult, as it would require a substantial increase in tariffs, a politically contentious issue. We believe the idea may not be so popular, particularly during the pre-election period.
4
March 1, 2007
Morning Call
Comstar: MGTS posts 2006 RAS results in line with expectations, 2007 guidance disappoints Analyst: Elena Bazhenova, Ekaterina Generalova e-mail: [email protected]
Total, mn 418 Source: Bloomberg, MDM estimates
9
10% 0%
8
-10%
7
-20%
6
-40% Jan 07
4 Feb 07
-30%
Dec 06
5
Nov 06
418
12M Perf. n/a
Price Rel. to RTS
Oct 06
ADRs, mn
10
Sep 06
3,745 4,837 35%
3M Perf. 23.9%
Price performance, USD
Aug 06
2008E 1,582 658 325 12% 14% 16% 42% 21% 3.1 7.4 11.5
Jul 06
2007E 1,411 579 281 20% 23% 61% 41% 20% 3.4 8.4 13.3
1M Perf. 0.3%
Jun 06
2006E 1,174 470 174 26% 22% 73% 40% 15% 4.1 10.3 21.5
12M High/Low 9.7/4.9
Apr 06
Rating Buy
May 06
MCAP, USD mn EV, USD mn Free float
FV, USD 11.60
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 8.96
Mar 06
Bloomberg ticker CMST LI Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Preliminary 2006 RAS results in line with expectations. Vedomosti reported today that MGTS’s revenues under RAS rose 17% in ruble terms and 22% in dollar terms to USD794 mn in 2006. Net income fell 32% in ruble terms and 29% y-o-y in dollar terms to USD221 mn. Stripped of the effect of one-offs, bottom line organic growth was 6% y-o-y in ruble terms to RUB3.6 bn. The results were in line with our expectations. 2007 guidance disappoints. Management expects revenue to increase 9% y-o-y in ruble terms in 2007, whereas our estimate is for 17% growth. The company blamed this on the negative impact of interconnect reform. Guidance may negatively impact our Comstar estimates. We were surprised by the 2007 guidance given our expectation that tariff reforms should have a positive impact on revenues. We will seek clarifications before making any changes to our estimates. For now, we retain our Buy recommendation on Comstar and USD11.6 per GDR 2007 target price. Fundamentals aside, the privatization/restructuring of Svyazinvest remains the key make-or-break development for Comstar.
5
Morning Call
March 1, 2007
RBC: Board approves spin-off of IT business Analysts: Elena Bazhenova, Ekaterina Generalova e-mail: [email protected]
12M Perf. 23.7%
13
30%
12
20%
11
10%
10
0%
9
Nov 06
Oct 06
Jan 07
-30% Feb 07
6 Dec 06
7
-10% Price Rel. to RTS -20%
8
Sep 06
1,327 Com., mn 119 1,286 Pref., mn 46% Total, mn 119 Source: Datastream, IBES consensus
3M Perf. -1.8%
Price performance, USD
Aug 06
2008E 304 100 67 22% 23% 43% 33% 22% 4.2 12.9 19.9
Jul 06
2007E 248 81 47 31% 47% 43% 33% 19% 5.2 15.9 28.4
1M Perf. -9.2%
Jun 06
2006E 189 55 33 80% 76% 57% 29% 17% 6.8 23.3 40.4
12M High/Low 12.1/6.57
Apr 06
Rating Not Rated
May 06
MCAP, USD mn EV, USD mn Free float
FV, USD n/a
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 11.13
Mar 06
Bloomberg ticker RBCI RM Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Move should prove value accretive for shareholders. RBC said yesterday that its board had approved the spin-off the company’s IT business via the distribution of shares in the new company, Armada, to RBC’s current shareholders. Armada shares will be offered to RBC shareholders on a pro-rata basis at USD0.26 (RUB6.69) per share. The company said Armada’s charter capital will consist of 1 mn common shares. With anticipated earnings of USD2.56 mn we believe Armada will trade well above the implied capitalization of USD2.6 mn, making the spin-off value accretive for RBC shareholders. Share purchase orders are to be submitted between March 12 and April 23. The cut-off date was set for March 7. An EGM scheduled for April 21 will let shareholders vote on the spin-off. Armada to start trading OTC in April. RBC shareholders will be offered 95% of Armada stock, while the remaining 5% will be reserved for an options program for Armada’s management. Armada plans to start trading OTC on April 24. It plans MICEX and RTS listings and a depositary program later this year. Considering Armada’s earning potential, reaching a market capitalization of USD75-100mn looks realistic to us. Spin-off should help RBC to crystallize the full value of its IT businesses. We view the spin-off as positive as it will help RBC to crystallize value and the newly traded entity should prove value accretive for current RBC shareholders. The spin-off should also help mitigate the negative impact of the launch of new internet entertainment project on RBC’s margins and cash flow.
6
March 1, 2007
Morning Call
Stock performance summary Company name Oil and gas Gazprom Novatek Rosneft Lukoil TNK-BP Holding Surgutneftegaz Gazprom Neft Tatneft Bashneft Transneft pref Ritek Telecoms and technology MTS AFK Sistema VimpelCom Comstar Rostelecom Golden Telecom MGTS Uralsvyazinform Volga Telecom Sibirtelecom NorthWest Telecom Center Telecom Southern Telecom Dalsvyaz Bashinformsvyaz RBC CTC Media Rambler Media Utilities UES OGK-2 OGK-3 OGK-4 OGK 5 OGK-6 Metals and mining Norilsk Nickel Polyus Gold Severstal Evraz Group Mechel NLMK MMK TMK VSMPO Industrials, consumer, banks Sberbank Rosbank X5 Seventh Continent Magnit Wimm-Bill-Dann Lebedyansky Baltika (euro) Razgulay Severstal Auto AvtoVaz Irkut Veropharm Apteka 36.6 Kalina Oriflame (euro) RTS Index
Last price, USD
1D
1WK
1M
3M
12M
YTD
12M High/Low
10.23 54.50 8.44 79.36 2.23 1.19 4.21 4.30 14.30 2,195.77 9.00
-3.2% -2.2% -3.3% -2.3% -1.8% -3.3% -2.1% -4.4% -2.7% -3.8% -6.3%
-4.1% -1.6% -2.6% -0.4% -1.3% -2.5% -4.5% 2.1% 0.0% -4.9% -6.3%
-7.3% -2.7% -7.7% -3.6% -0.9% -6.2% -7.4% -0.9% -5.9% -10.1% -6.3%
-12.1% -17.4% -7.8% -12.0% -9.0% -14.0% 0.0% -11.3% -13.9% -9.4% -14.3%
22.7% 67.4% n/a -7.9% -34.4% -25.6% -15.8% -27.9% -18.2% -14.8% -10.0%
-11.7% -14.2% -9.6% -9.2% -14.1% -22.9% -8.2% -6.9% -10.6% -4.3% -19.6%
12.94/7.75 66/31.5 9.47/7.37 95.23/63.01 3.47/2.09 1.85/1.07 5.5/3.59 6.4/3.5 18.5/11.77 2523.42/1669.71 11.2/8
51.29 28.55 80.46 8.96 8.04 54.21 25.15 0.07 6.00 0.11 1.60 0.73 0.18 3.90 0.21 11.13 21.10 45.81
4.1% -4.2% 1.9% -5.7% -0.2% 3.4% -2.2% 0.5% -4.2% -3.9% 2.3% 0.0% 0.0% -4.9% -6.7% -4.1% 3.5% -1.4%
-7.1% -9.4% -6.9% -2.6% -2.4% -6.0% -0.5% -2.9% -2.0% 0.0% 1.0% 2.4% 1.4% -4.9% -6.7% -8.0% 7.7% -1.7%
-8.3% -6.4% -7.4% 0.3% -1.7% 1.3% -7.2% -9.0% -5.2% -2.6% -1.3% -2.4% 5.5% -5.3% -6.7% -9.2% -1.9% 5.2%
7.5% 2.7% 4.2% 23.9% 26.2% 36.7% 13.2% 43.7% 30.4% 17.5% 15.7% 6.1% 23.3% 14.7% 12.9% -1.8% -7.5% 36.2%
38.7% 12.8% 80.1% n/a 120.7% 80.5% 20.4% 40.4% 37.9% 24.7% 23.3% 5.2% 14.1% 9.9% -16.0% 23.7% n/a 97.0%
2.2% -10.8% 1.9% 6.7% 5.7% 15.7% 1.0% 2.1% -0.8% -1.3% 0.0% -2.4% 1.4% -6.3% -7.7% -3.0% -12.1% 35.7%
56.97/26.22 32.9/18.1 90.18/38.59 9.7/4.9 8.39/3.02 59.05/21.73 27.23/16.64 0.07/0.03 6.6/2.85 0.12/0.06 1.61/0.78 0.76/0.4 0.18/0.1 4.3/2.5 0.25/0.16 12.1/6.57 27.25/14 47.5/21.63
1.18 0.16 0.15 0.10 0.14 0.15
-3.8% -3.3% -0.3% -3.4% -0.3% -4.6%
-4.9% -2.8% -1.3% -3.4% -2.7% -8.5%
-0.8% 2.8% 2.4% -2.5% 4.1% 6.5%
22.1% 29.2% 44.7% n/a 23.3% 34.4%
69.1% n/a n/a n/a 84.4% n/a
8.8% 14.4% 21.6% 23.1% 9.9% 34.4%
1.29/0.54 0.17/0.09 0.16/0.06 0.12/0.05 0.14/0.07 0.17/0.08
180.00 50.50 13.45 33.10 31.40 26.00 0.95 33.00 307.50
-0.1% -5.6% 1.9% -0.6% -0.8% -3.7% -0.8% 0.0% -3.6%
-1.4% -8.3% 0.7% 0.0% -3.5% -7.8% 0.5% -6.5% -0.8%
2.9% -1.9% 5.1% 14.1% 8.3% 0.4% 8.6% -8.6% 4.2%
18.8% -1.0% 14.5% 33.2% 25.0% 9.2% 21.2% 14.8% 20.6%
103.5% n/a 3.5% 47.8% 20.1% 24.4% 33.1% n/a 41.3%
14.7% 2.4% 20.1% 28.8% 23.2% 11.8% 8.6% -5.7% 4.9%
189/83 67.5/37.5 14.15/10 35.1/20.5 33.8/19.01 29.46/18 1.07/0.65 38/21.6 330/170
3,750.00 6.32 28.70 27.61 39.50 66.00 80.50 34.77 4.25 31.00 80.00 0.99 37.00 60.00 47.20 29.19 1,858.14
1.9% -2.7% -1.0% -0.7% -3.2% 1.9% -0.6% -4.7% -2.3% -6.1% 0.0% -2.5% -4.1% -4.8% 0.4% -2.0% -2.5%
6.1% -7.3% -1.0% -1.4% -3.3% -1.4% -0.6% -4.4% 1.9% -2.5% 0.0% -3.9% -3.6% -3.2% -5.6% -2.3% -1.9%
8.2% -6.9% 6.6% 6.2% 1.3% -1.2% 9.5% 2.2% -0.5% 5.6% 8.1% -7.5% -4.4% 0.0% 3.7% -4.9% -1.9%
50.6% 10.7% 8.3% 3.2% 16.2% 31.4% 0.3% 9.3% 9.0% 16.8% 18.9% -2.0% 20.5% 16.6% 2.6% 4.6% 4.4%
145.9% n/a 79.4% 10.4% n/a 180.3% 8.1% 17.6% 19.7% 28.6% 20.1% -3.4% n/a 76.5% -7.3% -2.0% 28.1%
8.7% -13.2% 10.4% 3.4% 10.6% -0.8% 0.6% 4.0% 6.3% 2.5% 17.6% -4.3% 16.5% 3.0% -8.4% -4.1% -3.3%
3780/1370 7.54/3.84 29.9/14.5 28.3/17.5 41.9/20.15 69.1/23.55 81.3/45 36.65/26.14 6.35/3.5 33.8/17.75 80/35 1.22/0.85 39.85/23.5 63/30 55/34.5 32.44/22.73 1970.77/1234.82 Source: Bloomberg
7
Morning Call
March 1, 2007
Stock valuation summary Company name Oil and gas Gazprom Novatek Lukoil Rosneft TNK-BP Holding Surgutneftegaz Gazprom Neft Tatneft Bashneft Transneft pref Ritek Aggregate - oil and gas Utilities UES Mosenergo OGK-2 OGK-3 OGK-4 OGK 5 OGK-6 Aggregate - utilities Telecoms and technology MTS AFK Sistema VimpelCom Aggregate - mobile telecoms Comstar Rostelecom Golden Telecom MGTS Uralsvyazinform Volga Telecom Sibirtelecom NorthWest Telecom Center Telecom Southern Telecom Dalsvyaz Bashinformsvyaz Aggregate - fixed line telecoms RBC CTC Media Rambler Media Aggregate - media Metals and mining Norilsk Nickel Polyus Gold Severstal Evraz Group Mechel NLMK MMK TMK VSMPO Aggregate - metals and mining Industrials, consumer, banks Sberbank * Rosbank* Aggregate - banks X5 Magnit Seventh Continent Lebedyansky Baltika (euro) Wimm-Bill-Dann Aggregate - FMCG Razgulay Severstal Auto AvtoVaz Irkut Apteka 36.6 Veropharm Kalina Oriflame (euro) Aggregate valuation FF-adj. MCAP W.A. valuation
8
MCAP, USD mn
2006E
P/E 2007E
2008E
2006E
EV/EBITDA 2007E
2008E
2006E
EV/Revenue 2007E
232,267 16,546 67,531 89,400 35,339 48,725 19,982 9,762 2,431 14,514 898 537,396
11.4 31.4 8.3 23.3 4.8 11.0 5.8 7.5 5.0 6.0 8.3 11.2
10.9 24.1 9.1 28.3 9.5 13.7 6.0 7.4 4.3 5.0 8.1 11.5
11.4 17.5 9.4 31.4 11.9 13.1 7.5 8.2 5.0 4.5 8.6 11.7
8.5 23.5 5.6 12.8 5.0 4.5 4.9 3.4 2.6 4.0 4.8 7.2
7.8 19.3 6.1 15.0 6.6 5.1 5.0 3.8 2.4 3.3 4.5 7.2
7.9 14.5 6.2 16.0 7.7 4.9 5.8 4.4 2.7 2.9 4.6 7.0
13.1 31.4 8.9 26.0 5.7 7.9 7.1 5.8 4.2 6.6 9.5 11.5
3.3 7.0 1.1 2.9 1.4 1.4 1.3 0.7 0.7 1.8 1.0 2.1
3.1 5.4 1.1 3.0 1.6 1.4 1.3 0.8 0.8 1.6 1.0 1.9
48,224 6,926 3,994 4,394 4,839 3,184 3,812 75,372
41.1 n/a 73.3 n/a n/a n/a 64.9 20.8
26.9 n/a 36.1 76.7 61.2 50.9 47.7 25.1
22.1 164.1 21.1 41.7 25.9 35.4 29.5 26.5
10.3 29.2 31.6 46.8 38.1 51.4 25.8 16.9
8.0 25.0 21.0 34.7 27.7 22.6 20.4 12.8
6.7 21.8 13.4 21.8 16.4 16.6 16.2 10.3
1.9 3.2 4.3 5.9 5.4 4.7 4.1 7.2
1.6 2.7 3.5 5.0 4.5 3.4 3.5 2.3
1.5 2.6 2.9 4.1 3.7 2.8 3.0 2.0
20,448 13,775 16,504 50,727 3,745 6,577 1,987 2,368 2,499 1,808 1,665 1,687 1,429 675 510 205 25,155 1,327 3,197 688 5,212
13.8 16.8 18.5 16.3 21.5 62.6 n/a 13.7 24.5 15.2 9.9 22.2 37.6 21.1 12.7 35.5 25.1 40.4 29.3 92.2 54.0
12.0 14.4 14.0 13.5 13.3 30.6 13.7 10.1 18.2 13.6 7.6 14.3 20.4 16.9 10.6 26.9 16.4 28.4 21.0 34.2 27.9
11.2 13.2 12.0 12.1 11.5 26.8 11.7 9.6 14.0 11.3 6.8 13.7 13.6 15.0 7.3 21.4 13.6 19.9 15.6 20.9 18.8
7.2 6.8 7.7 7.2 10.3 15.6 8.7 8.5 8.2 6.5 6.2 7.7 6.2 7.0 5.2 5.6 8.0 23.3 17.3 64.2 34.9
6.5 6.0 6.6 6.4 8.4 10.8 6.6 6.4 6.7 5.5 5.0 5.8 5.1 6.1 4.3 5.1 6.3 15.9 12.9 26.4 18.4
6.1 5.9 6.0 6.0 7.4 9.7 5.6 6.0 5.9 4.9 4.5 5.3 4.5 5.6 3.4 4.7 5.6 12.9 9.6 16.0 12.9
3.6 2.9 3.8 3.4 4.1 3.1 2.3 3.6 2.8 2.5 2.2 2.7 2.1 2.4 1.8 1.5 2.6 6.8 8.0 15.2 10.0
3.3 2.5 3.2 3.0 3.4 2.8 1.8 2.9 2.4 2.1 1.8 2.2 1.8 2.1 1.4 1.4 2.2 5.2 6.0 10.1 7.1
3.1 2.3 2.9 2.8 3.1 2.6 1.4 2.7 2.2 1.9 1.7 2.0 1.6 1.9 1.2 1.3 2.0 4.2 4.5 6.8 5.2
34,380 9,646 13,553 11,609 4,238 15,582 9,604 7,194 3,690 131,110
6.6 7.9 9.6 8.5 6.9 7.4 6.7 n/a 16.0 16.8
7.3 48.5 8.5 6.9 5.1 7.7 6.8 11.2 12.5 16.1
8.2 79.1 9.0 8.3 6.4 7.6 7.1 7.6 n/a 18.1
4.1 25.7 4.1 5.2 4.0 4.7 4.4 n/a 10.1 12.4
4.6 29.9 3.6 4.4 3.1 4.4 4.3 6.6 8.1 10.0
5.4 40.4 3.9 5.1 3.9 4.5 4.5 4.7 n/a 10.0
2.8 12.0 1.2 1.5 0.9 2.2 1.4 n/a 3.7 4.3
3.0 11.9 0.9 1.3 0.8 2.0 1.3 1.9 3.1 3.8
3.2 12.0 0.9 1.3 0.8 1.9 1.3 1.6 n/a 3.3
74,100 4,547 78,647 6,213 2,844 2,071 1,643 4,152 2,904 19,827 451 1,054 2,345 783 480 370 378 1,459 930,766 257,608
25.3 31.1 17.3 61.9 45.9 31.1 19.2 14.8 32.5 34.3 20.5 19.5 18.3 8.0 n/a 19.7 12.2 14.3 12.1 14.6
19.4 20.8 13.4 31.5 28.4 23.4 15.9 9.8 20.2 21.5 7.0 14.4 15.9 6.4 75.5 13.7 10.3 12.4 12.3 13.7
16.3 14.1 10.9 22.5 18.3 17.3 13.3 8.5 15.1 15.9 5.9 9.8 9.0 5.2 44.2 10.8 9.1 9.9 12.7 13.7
6.3 4.4 8.2 25.1 27.8 16.8 13.1 8.6 14.8 17.7 8.3 8.2 5.7 5.7 25.3 13.6 8.3 10.2 7.3 8.0
3.2 3.0 6.3 15.1 17.1 12.1 9.9 7.0 10.4 11.9 5.4 6.5 5.3 4.8 12.9 9.7 7.1 8.8 6.6 7.3
2.7 7.2 5.7 4.7 2.5 5.3 4.0 3.1 4.6 3.5 2.9 2.2 11.2 2.0 1.4 1.1 11.2 1.2 0.9 0.6 8.9 2.0 1.4 1.0 8.1 2.5 1.8 1.5 6.5 2.8 2.0 1.7 8.3 1.9 1.5 1.3 9.0 2.1 1.5 1.2 4.9 1.1 0.9 0.8 4.7 1.1 0.9 0.6 n/a 0.5 0.5 0.5 4.1 1.3 1.1 0.9 9.1 1.3 0.9 1.1 7.8 3.8 2.8 2.3 6.2 1.3 1.1 1.0 7.6 1.5 1.4 1.3 6.5 2.3 2.2 2.1 7.4 9.8 3.1 2.9 Source: MDM estimates, IBES consensus *P/BV shown in EV/EBITDA columns
2008E
March 1, 2007
Morning Call
Key commodities London WTI Crude Oil Index – PRICE INDEX, USD/bbl
LME-Copper, Grade A Cash – A.M. OFFICIAL, USD/ton
80
Source: Bloomberg
Source: Bloomberg
Gold Bullion, USD/oz
Jan-07
Feb-07
Dec-06
Nov-06
Oct-06
Sep-06
Jul-06
Aug-06
Jun-06
Apr-06
Feb-06
Feb-07
Jan-07
10,000 Dec-06
15,000
300 Nov-06
350 Oct-06
20,000
Sep-06
25,000
400
Aug-06
450
Jul-06
30,000
Jun-06
35,000
500
May-06
550
Apr-06
40,000
Mar-06
45,000
600
May-06
LME-Nickel Cash – A.M. OFFICIAL, USD/ton
650
Feb-06
Jan-07
Source: Bloomberg
Mar-06
MB-Steel HR Coil CIS, USD/ton
Feb-07
Dec-06
Oct-06
Nov-06
Sep-06
Feb-06
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Jul-06
Aug-06
Jun-06
Apr-06
May-06
Mar-06
Feb-06
50
Jul-06
55
Aug-06
60
Jun-06
65
Apr-06
70
May-06
75
Mar-06
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000
Source: Bloomberg
MB-Platinum Matthey, USD/oz
750
1,400
700
1,300
650
1,200
600
1,100
550
Source: Bloomberg
Jan-07
Feb-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
Apr-06
Mar-06
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
800 Apr-06
400 Mar-06
900 Feb-06
450
Feb-06
1,000
500
Source: Bloomberg
9
Morning Call
March 1, 2007
MDM Bank
Investment Division 33/1 Kotelnicheskaya Nab. Moscow, Russia 115172
Head of Equities Vladimir Bril [email protected] +7(495) 228-3516
Institutional Sales Vladimir Bril Tanja Djurdjevic Mark Van Loon Alexey Kaminsky Ivan Legenchuk Kate Korolkevich
[email protected] [email protected] [email protected] [email protected] [email protected] [email protected]
[email protected] +7(495) 795-2521 Bloomberg: MDMG Reuters Dealing: MBWM, MDMB http://www.mdmbank.com
Head of Research Alex Kantarovich, CFA [email protected]
Metals & Mining Michael Kavanagh Andrey Litvin
Oil & Gas [email protected] [email protected]
Strategy, Economics, Banking
Nadia Kazakova, CFA [email protected] Andrey Gromadin, CFA [email protected]
Telecoms & Technology
Alex Kantarovich, CFA
[email protected]
Elena Bazhenova
[email protected]
Peter Westin
[email protected]
Ekaterina Generalova
[email protected]
Irina Plevako
[email protected]
Editors/Production
Consumer/Industries
Nathan Gardener
[email protected]
Elena Afonina
[email protected]
Thomas Lavrakas
[email protected]
Alexey Gogolev
[email protected]
Ekaterina Ogurtsova
[email protected]
Andrey Goncharov
[email protected] © 2007 OAO MDM Bank. All rights reserved.
This report is being distributed in the Russian Federation by OAO MDM Bank (the “Bank”), which accepts responsibility for its contents. This report is for your private information, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security and is specifically not a recommendation to purchase or sell any securities. The information herein has been obtained from, and any opinions herein are based upon, sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability in relation to the use of this information or any investor activity taken in the securities described herein. Opinions, forecasts and estimates expressed are current as of the date appearing on this report only and are subject to change without notice. We make no representation that we will update the information discussed in this report on a regular basis, or correct any inaccuracies contained herein. We and our affiliates and employees may, from time to time, have long or short positions in, and buy, sell, make a market or otherwise act as principal in transactions in the securities, or derivatives thereof, of companies mentioned herein. Investors should assume that the Bank does, or seeks to do, investment banking business with any of the companies mentioned in this report. This report was prepared by the Bank and may be used by investors in the Russian Federation subject to the laws of the Russian Federation. The Bank is not registered as a broker or dealer with the SEC or NASD in the United States and this report may be distributed in the United States only to persons who by the acceptance hereof confirm that they are a “major U.S. institutional investor” as defined in Regulation 15a-16 of the Securities Exchange Act of 1934. The Bank is not registered with the FSA in the United Kingdom and this report may not be distributed in the United Kingdom to private clients. This report may be distributed to foreign investors in other jurisdictions only to institutional investors to subject to the laws of their home jurisdiction. This report is confidential and may not be distributed or reproduced, in whole or part, without the express written permission of the Bank.
10
Blue chips: advancers and decliners MTS VimpelCom Sberbank Severstal Norilsk Rostelecom Novatek Lukoil RTS Index Gazprom Rosneft SurgutNG NLMK UES Sistema Tatneft
-2.2% -2.3% -2.5% -3.2% -3.3% -3.3% -3.7% -3.8% -4.2% -4.4%
-7%
-5%
1.9% 1.9% 1.9%
0.0% -0.2%
4.1%
The correction continued yesterday, with the RTS losing 2.5% to 1,858. Sberbank (-4% intraday) gained on pronounced support before the close. Keep an eye on possible aftershocks today.
Top news and ideas
MMK: RAS results in line with GAAP estimates. MMK published 2006 figures under RAS with net profit rising 29% y-o-y to USD1.36 bn. Although positive, the results are in line with estimates and already priced in.
TMK: A positive story with a new angle. Upbeat comments from the company and
expansion plans in large diameter welded pipe output should be positive for the stock.
-3%
-1%
1%
3%
5%
Volume monitor: daily/3M avg. volume
UES: Funding changes made to long-term investment program. Financing will
largely rely on the company’s own funds and profits from additional share issues of its power generating subsidiaries.
Comstar: MGTS 2006 RAS results in line with expectations, 2007 guidance NLMK
disappoints. Revenue was up 17% and net income rose 6%, but revenue guidance implies downside to our estimates for Comstar.
237%
X5
241%
Sistema
RBC: Board approves spin-off of IT business. We expect the move to crystallize value and the newly traded entity to be value accretive for shareholders.
249%
MTS
263%
UES
281%
50%
100%
150%
200%
250%
300%
RTS index and weekly trading volumes ADRs(lhs) Local (lhs) RTS Index (rhs)
USD mn 4,000
2,200
Other highlights
Brief – Gazprom said it signed a direct gas delivery agreement with Shell Enerji
in Turkey to supply 250MM cm annually until 2021, collecting additional retail margin.
Brief – TNK-BP Holding will acquire Urengoygeoresurs (C1+C2 reserves 241 mn bbl) (Interfax). The deal will help TNK-BP’s gas position.
Brief – SurgutNG has bought 6.8% of St. Petersburg-based Rossiya Bank for
USD42 mn (Vedomosti). The bank owns Sogaz, Gazprom’s former insurance arm. The rationale behind the move is unclear to us.
Brief – The Federal Property Agency sold 4.6% of Uralsvyazinform for USD102
1,800
mn and 7.2% of CenterTelecom for USD110 mn (Interfax). The final prices were in line and 16% below the current market prices, respectively.
2,000
1,600
Brief – The 13% income tax will not be changed anytime soon, Deputy Finance
1,500
1,400
3,500
2,000
3,000 2,500
1,000
1,200
500
Upcoming events Early-Mar Today Mid-Mar 13-Mar 15-Mar 15-Mar 15-Mar 15-Mar 15-Mar Mar 21
Russian market in context
Feb 07
Dec 06 Jan 07
Nov 06
Sep 06 Oct 06
Aug 06
Jun 06 Jul 06
Apr 06 May 06
1,000 Mar 06
Mar 06
0
Minister Sergei Shatalov said yesterday. We welcome this confirmation as we believe it is too early to return to a progressive tax scale.
X5 supervisory board meeting X5 2006 management accounts Seventh Continent 2006 financials BBH 2006 results X5 to announce new strategy State to auction 3.3% of Northwest Telecom Baltika 2006 consolidated results Magnit trading update for February Kalina 2006 results Razgulay board meeting
RTS Index MSCI EM Europe Index MSCI EM Index S&P500 Index OIX (Oil majors) Index GSCI (Commodities) index Oil (WTI), USD/bbl Nickel, USD/ton Steel (HR), USD/ton LT U.S. Treasury YTM EMBI-Russia spread, bp RUB/USD
Last Close 1,858 605 896 1,407 621 5,735 61.8 44,403 543 4.7% 111 26.16
Performance/Trends 1D 1WK 1M 3M 12M -2.5% -1.9% -1.9% 4.4% 28.1% -2.2% -4.9% -4.0% -1.8% 4.6% -1.8% -5.1% -1.9% 1.8% 13.8% 0.6% -3.5% -2.7% 0.7% 9.0% -0.1% -1.8% -3.9% -5.9% 11.0% -0.2% 2.2% 7.6% -2.5% -7.7% 0.5% 1.0% 11.5% 1.3% 0.6% -0.2% 4.0% 9.8% 29.1% 198.1% 4.3% 4.3% 4.3% 7.4% 42.8% 4.7% 4.9% 5.0% 4.6% 4.6% 119 103 99 103 100 26.17 26.20 26.53 26.31 28.12 Source: Datastream, Bloomberg
Morning Call
March 1, 2007
MMK: RAS results in line with GAAP estimates Analysts: Michael Kavanagh, Andrey Litvin e-mail: [email protected]
12M Perf. 33.1%
Price performance, USD
0.9
30%
Price Rel. to RTS
0.8
20% 10%
0.8
0%
0.7
-10%
Jan 07
Feb 07
Com., mn 10,163 Pref., mn Total, mn 10,163 Source: Bloomberg, MDM estimates
Dec 06
-30% Oct 06
-20%
0.6 Nov 06
0.7
Sep 06
9,604 8,628 1%
3M Perf. 21.2%
Aug 06
2008E 6,718 1,924 1,346 1% -5% -5% 29% 20% 1.3 4.5 7.1
Jul 06
2007E 6,661 2,029 1,414 7% 4% -1% 30% 21% 1.3 4.3 6.8
1M Perf. 8.6%
Jun 06
2006E 6,228 1,958 1,430 11% -13% -23% 31% 23% 1.4 4.4 6.7
12M High/Low 1.07/0.65
May 06
Rating Hold
Apr 06
MCAP, USD mn EV, USD mn Free float
FV, USD 0.82
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 0.95
Mar 06
Bloomberg ticker MAGN RU Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Solid 2006 RAS. MMK has released 2006 financials under RAS. Revenue rose 13% to USD5.9 bn and net profit was up 29% to USD1.36 bn. Recovering steel prices in the second half, as well as lower raw material prices, drove the results. Profitability improved with net margin rising to 23%, up from 20% in 2005. The company disclosed that it had a loss of USD29 mn (2% of net profit) from an accident at its cold rolling shop at the end of November. Inline with GAAP estimates. The published results under RAS suggest that our own 2006 estimates are close to what the company will release later under U.S. GAAP. We estimate MMK’s 2006 U.S. GAAP revenues at USD6.23 bn and net profit at USD1.43 bn. Shareholders are to elect new board. In March, MMK will hold an extraordinary shareholders meeting, where shareholders will vote on the composition of the new board. Ahead of its IPO, the company will probably introduce two new independent directors. The two new candidates are David Logan, who serves on the International Advisory Council of Thames Water and as non-executive director of European Nickel, and BP Russia President Peter Charow. The last big payout. The board proposes paying USD0.034/share in dividends for 2006 (a yield of 3.6%). Thus the full-year dividend payout for 2006 reached roughly 100% of net profit. Most likely, this was the last sweet payout the company will make ahead of its IPO, which is expected to take place in 2Q07. The record date of the dividend payment is February 12. News is priced in. We believe the published financial results are in line with expectations and will have no impact on MMK shares. We reiterate our Hold recommendation on MMK with 2007 year-end DCF value of USD0.82/share. MMK: 2006 RAS figures in line with estimates USD mn
2006 RAS
2005 RAS
y-o-y
2006E GAAP
GAAP/RAS
2005 GAAP
Sales
5,913
5,212
13.5%
6,228
3.2%
5,380
GAAP/RAS 5.3%
COGS
3,764
3,456
8.9%
3,688
-0.3%
3,447
-2.0%
Gross profit
2,150
1,755
22.5%
2,540
10.1%
1,933
18.1%
Operating profit
1,835
1,491
23.1%
1,778
-11.3%
1,323
-3.2%
Pretax
1,797
1,406
27.9%
1,907
-6.3%
1,317
6.1%
Net
1,359
1,055
28.9%
1,430
-10.2%
947
5.2%
Operating margin
31%
29%
29%
Net margin
23%
20%
23%
2
25% 18% Source: MDM estimates, Company data
March 1, 2007
Morning Call
TMK: A positive story with a new angle Analysts: Michael Kavanagh, Andrey Litvin e-mail: [email protected]
2007E 3,767 1,091 645 n/a n/a n/a 29% 17% 1.9 6.6 11.2
2008E 4,485 1,526 948 19% 40% 47% 34% 21% 1.6 4.7 7.6
7,194 Com., mn 218 7,194 Pref., mn 0% Total, mn 218 Source: Datastream, IBES consensus
1M Perf. -8.6%
3M Perf. 14.8%
12M Perf.
Price performance, USD
60%
40
50%
35
40%
30
30% 20%
Price Rel. to RTS
25
10%
20
0% Feb 07
2006E n/a n/a n/a
12M High/Low 38/21.6
Jan 07
Rating Not Rated
Dec 06
MCAP, USD mn EV, USD mn Free float
FV, USD n/a
Nov 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 33.00
Oct 06
Bloomberg ticker TMKS LI Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Company serves up good news for investors. On Wednesday morning, TMK hosted a breakfast with analysts to discuss the company’s operating performance in 2006, with the company’s CFO, Vladimir Shmatovich, as the main speaker. Apart from positive comments on the pipe market and a reiteration of the company’s high valueadded expansion strategy in OCTG pipes, Shmatovich introduced a new angle to TMK’s growth story with a positive outlook for large diameter (LD) welded pipes in Russia. Positive 2006 trading update in line with expectations. On Tuesday, TMK reported that 2006 revenues were expected to reach approximately USD3.3 bn (up 13% y-o-y), in line with both market expectations and earlier guidance. Without further disclosure, the company commented that there was a material improvement in margins. During the conference with analysts on Wednesday, TMK mentioned that 2006 EBITDA may come in at USD790 mn, implying a 24% margin (the company uses a bottom-up calculation method). Based on a more conventional top-down approach (operating profit plus DD&A), we estimate that EBITDA may reach about USD760-770 mn (23% margin). This implies that 2H06 EBITDA margin was lower than the 25% reported in 1H06, which we attribute to rising raw material prices. TMK is due to publish full results in May 2007. Increased production and an improved mix. In 2006, TMK shipped 3.02 mn tons of tubular goods, a 3% increase over 2005; however, high value-added OCTG shipments increased by more than 16%. TMK is continuing to upgrade its high value-added seamless pipe production capacity as part of its strategic investment plan to 2010, under which it will add 1.1 mn tons of capacity. This program is approximately 30% complete. Strong demand and positive outlook. TMK reported strong demand for its products from both Russian and foreign customers, with no changes foreseen in the near future. Sales outside Russia grew by more than 8%. Shipments to the United States grew by over 90%, while deliveries to the Middle East increased by approximately 7%. In conclusion, the news is positive for the stock. Stripping away the current turmoil in world equity markets, we believe investors will welcome the upbeat comments from TMK, with the renewed positive view on welded LD pipes potentially adding upside to the stock. We would view any weakness in the share price as a buying opportunity.
3
Morning Call
March 1, 2007
UES: Funding changes made to long-term investment program Analyst: Alexey Gogolev, e-mail: [email protected]
1.7
60% 50% 40% 30% 20% 10% 0% -10% -20%
Price Rel. to RTS
1.3
0.9
Jan 07
Feb 07
Dec 06
0.5 Oct 06
48,224 Com., mn 41,042 60,286 Pref., mn 0% Total, mn 41,042 Source: Datastream, IBES consensus
12M Perf. 69.1%
Price performance, USD
Nov 06
MCAP, USD mn EV, USD mn Free float
19% 4% 1.9 10.3 41.1
3M Perf. 22.1%
Sep 06
2008E 41,383 8,948 2,179 12% 19% 22% 22% 5% 1.5 6.7 22.1
Aug 06
2007E 36,881 7,503 1,792 18% 28% 53% 20% 5% 1.6 8.0 26.9
Jul 06
2006E 31,210 5,863 1,175
1M Perf. -0.8%
Jun 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
12M High/Low 1.29/0.54
May 06
Rating Not Rated
Apr 06
FV, USD n/a
Mar 06
Price, USD 1.18
Mar 06
Bloomberg ticker EESR RU Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Composition of investment program changed. Yesterday, UES announced the details of its investment program for the period to 2010. The company will build thermoelectric power plants with a total capacity of 28,800 MW and hydropower plants with 4,900 MW of capacity before 2010. The investment program is worth USD115 bn, the figure that UES chief executive Anatoly Chubais announced two weeks ago. However, the source of financing has been changed: UES now plans to raise USD14 bn from additional share issues by its generating units; USD38 bn will be financed from own funds; future borrowing will bring in USD17 bn; while the share of federal budget funds has shrunk to USD8 bn. Investment program too ambitious? It remains to be seen whether UES will be able to raise enough financing from share issues, as the market price of the generating units’ shares is already high. At the same time, financing the investment program from own funds may prove difficult, as it would require a substantial increase in tariffs, a politically contentious issue. We believe the idea may not be so popular, particularly during the pre-election period.
4
March 1, 2007
Morning Call
Comstar: MGTS posts 2006 RAS results in line with expectations, 2007 guidance disappoints Analyst: Elena Bazhenova, Ekaterina Generalova e-mail: [email protected]
Total, mn 418 Source: Bloomberg, MDM estimates
9
10% 0%
8
-10%
7
-20%
6
-40% Jan 07
4 Feb 07
-30%
Dec 06
5
Nov 06
418
12M Perf. n/a
Price Rel. to RTS
Oct 06
ADRs, mn
10
Sep 06
3,745 4,837 35%
3M Perf. 23.9%
Price performance, USD
Aug 06
2008E 1,582 658 325 12% 14% 16% 42% 21% 3.1 7.4 11.5
Jul 06
2007E 1,411 579 281 20% 23% 61% 41% 20% 3.4 8.4 13.3
1M Perf. 0.3%
Jun 06
2006E 1,174 470 174 26% 22% 73% 40% 15% 4.1 10.3 21.5
12M High/Low 9.7/4.9
Apr 06
Rating Buy
May 06
MCAP, USD mn EV, USD mn Free float
FV, USD 11.60
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 8.96
Mar 06
Bloomberg ticker CMST LI Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Preliminary 2006 RAS results in line with expectations. Vedomosti reported today that MGTS’s revenues under RAS rose 17% in ruble terms and 22% in dollar terms to USD794 mn in 2006. Net income fell 32% in ruble terms and 29% y-o-y in dollar terms to USD221 mn. Stripped of the effect of one-offs, bottom line organic growth was 6% y-o-y in ruble terms to RUB3.6 bn. The results were in line with our expectations. 2007 guidance disappoints. Management expects revenue to increase 9% y-o-y in ruble terms in 2007, whereas our estimate is for 17% growth. The company blamed this on the negative impact of interconnect reform. Guidance may negatively impact our Comstar estimates. We were surprised by the 2007 guidance given our expectation that tariff reforms should have a positive impact on revenues. We will seek clarifications before making any changes to our estimates. For now, we retain our Buy recommendation on Comstar and USD11.6 per GDR 2007 target price. Fundamentals aside, the privatization/restructuring of Svyazinvest remains the key make-or-break development for Comstar.
5
Morning Call
March 1, 2007
RBC: Board approves spin-off of IT business Analysts: Elena Bazhenova, Ekaterina Generalova e-mail: [email protected]
12M Perf. 23.7%
13
30%
12
20%
11
10%
10
0%
9
Nov 06
Oct 06
Jan 07
-30% Feb 07
6 Dec 06
7
-10% Price Rel. to RTS -20%
8
Sep 06
1,327 Com., mn 119 1,286 Pref., mn 46% Total, mn 119 Source: Datastream, IBES consensus
3M Perf. -1.8%
Price performance, USD
Aug 06
2008E 304 100 67 22% 23% 43% 33% 22% 4.2 12.9 19.9
Jul 06
2007E 248 81 47 31% 47% 43% 33% 19% 5.2 15.9 28.4
1M Perf. -9.2%
Jun 06
2006E 189 55 33 80% 76% 57% 29% 17% 6.8 23.3 40.4
12M High/Low 12.1/6.57
Apr 06
Rating Not Rated
May 06
MCAP, USD mn EV, USD mn Free float
FV, USD n/a
Mar 06
Financials, USD mn Revenue EBITDA Net income Revenue growth EBITDA growth Net income growth EBITDA margin Net margin EV/Revenue EV/EBITDA P/E
Price, USD 11.13
Mar 06
Bloomberg ticker RBCI RM Equity
Tel: + 7 495 795 2521
Source: Bloomberg
Move should prove value accretive for shareholders. RBC said yesterday that its board had approved the spin-off the company’s IT business via the distribution of shares in the new company, Armada, to RBC’s current shareholders. Armada shares will be offered to RBC shareholders on a pro-rata basis at USD0.26 (RUB6.69) per share. The company said Armada’s charter capital will consist of 1 mn common shares. With anticipated earnings of USD2.56 mn we believe Armada will trade well above the implied capitalization of USD2.6 mn, making the spin-off value accretive for RBC shareholders. Share purchase orders are to be submitted between March 12 and April 23. The cut-off date was set for March 7. An EGM scheduled for April 21 will let shareholders vote on the spin-off. Armada to start trading OTC in April. RBC shareholders will be offered 95% of Armada stock, while the remaining 5% will be reserved for an options program for Armada’s management. Armada plans to start trading OTC on April 24. It plans MICEX and RTS listings and a depositary program later this year. Considering Armada’s earning potential, reaching a market capitalization of USD75-100mn looks realistic to us. Spin-off should help RBC to crystallize the full value of its IT businesses. We view the spin-off as positive as it will help RBC to crystallize value and the newly traded entity should prove value accretive for current RBC shareholders. The spin-off should also help mitigate the negative impact of the launch of new internet entertainment project on RBC’s margins and cash flow.
6
March 1, 2007
Morning Call
Stock performance summary Company name Oil and gas Gazprom Novatek Rosneft Lukoil TNK-BP Holding Surgutneftegaz Gazprom Neft Tatneft Bashneft Transneft pref Ritek Telecoms and technology MTS AFK Sistema VimpelCom Comstar Rostelecom Golden Telecom MGTS Uralsvyazinform Volga Telecom Sibirtelecom NorthWest Telecom Center Telecom Southern Telecom Dalsvyaz Bashinformsvyaz RBC CTC Media Rambler Media Utilities UES OGK-2 OGK-3 OGK-4 OGK 5 OGK-6 Metals and mining Norilsk Nickel Polyus Gold Severstal Evraz Group Mechel NLMK MMK TMK VSMPO Industrials, consumer, banks Sberbank Rosbank X5 Seventh Continent Magnit Wimm-Bill-Dann Lebedyansky Baltika (euro) Razgulay Severstal Auto AvtoVaz Irkut Veropharm Apteka 36.6 Kalina Oriflame (euro) RTS Index
Last price, USD
1D
1WK
1M
3M
12M
YTD
12M High/Low
10.23 54.50 8.44 79.36 2.23 1.19 4.21 4.30 14.30 2,195.77 9.00
-3.2% -2.2% -3.3% -2.3% -1.8% -3.3% -2.1% -4.4% -2.7% -3.8% -6.3%
-4.1% -1.6% -2.6% -0.4% -1.3% -2.5% -4.5% 2.1% 0.0% -4.9% -6.3%
-7.3% -2.7% -7.7% -3.6% -0.9% -6.2% -7.4% -0.9% -5.9% -10.1% -6.3%
-12.1% -17.4% -7.8% -12.0% -9.0% -14.0% 0.0% -11.3% -13.9% -9.4% -14.3%
22.7% 67.4% n/a -7.9% -34.4% -25.6% -15.8% -27.9% -18.2% -14.8% -10.0%
-11.7% -14.2% -9.6% -9.2% -14.1% -22.9% -8.2% -6.9% -10.6% -4.3% -19.6%
12.94/7.75 66/31.5 9.47/7.37 95.23/63.01 3.47/2.09 1.85/1.07 5.5/3.59 6.4/3.5 18.5/11.77 2523.42/1669.71 11.2/8
51.29 28.55 80.46 8.96 8.04 54.21 25.15 0.07 6.00 0.11 1.60 0.73 0.18 3.90 0.21 11.13 21.10 45.81
4.1% -4.2% 1.9% -5.7% -0.2% 3.4% -2.2% 0.5% -4.2% -3.9% 2.3% 0.0% 0.0% -4.9% -6.7% -4.1% 3.5% -1.4%
-7.1% -9.4% -6.9% -2.6% -2.4% -6.0% -0.5% -2.9% -2.0% 0.0% 1.0% 2.4% 1.4% -4.9% -6.7% -8.0% 7.7% -1.7%
-8.3% -6.4% -7.4% 0.3% -1.7% 1.3% -7.2% -9.0% -5.2% -2.6% -1.3% -2.4% 5.5% -5.3% -6.7% -9.2% -1.9% 5.2%
7.5% 2.7% 4.2% 23.9% 26.2% 36.7% 13.2% 43.7% 30.4% 17.5% 15.7% 6.1% 23.3% 14.7% 12.9% -1.8% -7.5% 36.2%
38.7% 12.8% 80.1% n/a 120.7% 80.5% 20.4% 40.4% 37.9% 24.7% 23.3% 5.2% 14.1% 9.9% -16.0% 23.7% n/a 97.0%
2.2% -10.8% 1.9% 6.7% 5.7% 15.7% 1.0% 2.1% -0.8% -1.3% 0.0% -2.4% 1.4% -6.3% -7.7% -3.0% -12.1% 35.7%
56.97/26.22 32.9/18.1 90.18/38.59 9.7/4.9 8.39/3.02 59.05/21.73 27.23/16.64 0.07/0.03 6.6/2.85 0.12/0.06 1.61/0.78 0.76/0.4 0.18/0.1 4.3/2.5 0.25/0.16 12.1/6.57 27.25/14 47.5/21.63
1.18 0.16 0.15 0.10 0.14 0.15
-3.8% -3.3% -0.3% -3.4% -0.3% -4.6%
-4.9% -2.8% -1.3% -3.4% -2.7% -8.5%
-0.8% 2.8% 2.4% -2.5% 4.1% 6.5%
22.1% 29.2% 44.7% n/a 23.3% 34.4%
69.1% n/a n/a n/a 84.4% n/a
8.8% 14.4% 21.6% 23.1% 9.9% 34.4%
1.29/0.54 0.17/0.09 0.16/0.06 0.12/0.05 0.14/0.07 0.17/0.08
180.00 50.50 13.45 33.10 31.40 26.00 0.95 33.00 307.50
-0.1% -5.6% 1.9% -0.6% -0.8% -3.7% -0.8% 0.0% -3.6%
-1.4% -8.3% 0.7% 0.0% -3.5% -7.8% 0.5% -6.5% -0.8%
2.9% -1.9% 5.1% 14.1% 8.3% 0.4% 8.6% -8.6% 4.2%
18.8% -1.0% 14.5% 33.2% 25.0% 9.2% 21.2% 14.8% 20.6%
103.5% n/a 3.5% 47.8% 20.1% 24.4% 33.1% n/a 41.3%
14.7% 2.4% 20.1% 28.8% 23.2% 11.8% 8.6% -5.7% 4.9%
189/83 67.5/37.5 14.15/10 35.1/20.5 33.8/19.01 29.46/18 1.07/0.65 38/21.6 330/170
3,750.00 6.32 28.70 27.61 39.50 66.00 80.50 34.77 4.25 31.00 80.00 0.99 37.00 60.00 47.20 29.19 1,858.14
1.9% -2.7% -1.0% -0.7% -3.2% 1.9% -0.6% -4.7% -2.3% -6.1% 0.0% -2.5% -4.1% -4.8% 0.4% -2.0% -2.5%
6.1% -7.3% -1.0% -1.4% -3.3% -1.4% -0.6% -4.4% 1.9% -2.5% 0.0% -3.9% -3.6% -3.2% -5.6% -2.3% -1.9%
8.2% -6.9% 6.6% 6.2% 1.3% -1.2% 9.5% 2.2% -0.5% 5.6% 8.1% -7.5% -4.4% 0.0% 3.7% -4.9% -1.9%
50.6% 10.7% 8.3% 3.2% 16.2% 31.4% 0.3% 9.3% 9.0% 16.8% 18.9% -2.0% 20.5% 16.6% 2.6% 4.6% 4.4%
145.9% n/a 79.4% 10.4% n/a 180.3% 8.1% 17.6% 19.7% 28.6% 20.1% -3.4% n/a 76.5% -7.3% -2.0% 28.1%
8.7% -13.2% 10.4% 3.4% 10.6% -0.8% 0.6% 4.0% 6.3% 2.5% 17.6% -4.3% 16.5% 3.0% -8.4% -4.1% -3.3%
3780/1370 7.54/3.84 29.9/14.5 28.3/17.5 41.9/20.15 69.1/23.55 81.3/45 36.65/26.14 6.35/3.5 33.8/17.75 80/35 1.22/0.85 39.85/23.5 63/30 55/34.5 32.44/22.73 1970.77/1234.82 Source: Bloomberg
7
Morning Call
March 1, 2007
Stock valuation summary Company name Oil and gas Gazprom Novatek Lukoil Rosneft TNK-BP Holding Surgutneftegaz Gazprom Neft Tatneft Bashneft Transneft pref Ritek Aggregate - oil and gas Utilities UES Mosenergo OGK-2 OGK-3 OGK-4 OGK 5 OGK-6 Aggregate - utilities Telecoms and technology MTS AFK Sistema VimpelCom Aggregate - mobile telecoms Comstar Rostelecom Golden Telecom MGTS Uralsvyazinform Volga Telecom Sibirtelecom NorthWest Telecom Center Telecom Southern Telecom Dalsvyaz Bashinformsvyaz Aggregate - fixed line telecoms RBC CTC Media Rambler Media Aggregate - media Metals and mining Norilsk Nickel Polyus Gold Severstal Evraz Group Mechel NLMK MMK TMK VSMPO Aggregate - metals and mining Industrials, consumer, banks Sberbank * Rosbank* Aggregate - banks X5 Magnit Seventh Continent Lebedyansky Baltika (euro) Wimm-Bill-Dann Aggregate - FMCG Razgulay Severstal Auto AvtoVaz Irkut Apteka 36.6 Veropharm Kalina Oriflame (euro) Aggregate valuation FF-adj. MCAP W.A. valuation
8
MCAP, USD mn
2006E
P/E 2007E
2008E
2006E
EV/EBITDA 2007E
2008E
2006E
EV/Revenue 2007E
232,267 16,546 67,531 89,400 35,339 48,725 19,982 9,762 2,431 14,514 898 537,396
11.4 31.4 8.3 23.3 4.8 11.0 5.8 7.5 5.0 6.0 8.3 11.2
10.9 24.1 9.1 28.3 9.5 13.7 6.0 7.4 4.3 5.0 8.1 11.5
11.4 17.5 9.4 31.4 11.9 13.1 7.5 8.2 5.0 4.5 8.6 11.7
8.5 23.5 5.6 12.8 5.0 4.5 4.9 3.4 2.6 4.0 4.8 7.2
7.8 19.3 6.1 15.0 6.6 5.1 5.0 3.8 2.4 3.3 4.5 7.2
7.9 14.5 6.2 16.0 7.7 4.9 5.8 4.4 2.7 2.9 4.6 7.0
13.1 31.4 8.9 26.0 5.7 7.9 7.1 5.8 4.2 6.6 9.5 11.5
3.3 7.0 1.1 2.9 1.4 1.4 1.3 0.7 0.7 1.8 1.0 2.1
3.1 5.4 1.1 3.0 1.6 1.4 1.3 0.8 0.8 1.6 1.0 1.9
48,224 6,926 3,994 4,394 4,839 3,184 3,812 75,372
41.1 n/a 73.3 n/a n/a n/a 64.9 20.8
26.9 n/a 36.1 76.7 61.2 50.9 47.7 25.1
22.1 164.1 21.1 41.7 25.9 35.4 29.5 26.5
10.3 29.2 31.6 46.8 38.1 51.4 25.8 16.9
8.0 25.0 21.0 34.7 27.7 22.6 20.4 12.8
6.7 21.8 13.4 21.8 16.4 16.6 16.2 10.3
1.9 3.2 4.3 5.9 5.4 4.7 4.1 7.2
1.6 2.7 3.5 5.0 4.5 3.4 3.5 2.3
1.5 2.6 2.9 4.1 3.7 2.8 3.0 2.0
20,448 13,775 16,504 50,727 3,745 6,577 1,987 2,368 2,499 1,808 1,665 1,687 1,429 675 510 205 25,155 1,327 3,197 688 5,212
13.8 16.8 18.5 16.3 21.5 62.6 n/a 13.7 24.5 15.2 9.9 22.2 37.6 21.1 12.7 35.5 25.1 40.4 29.3 92.2 54.0
12.0 14.4 14.0 13.5 13.3 30.6 13.7 10.1 18.2 13.6 7.6 14.3 20.4 16.9 10.6 26.9 16.4 28.4 21.0 34.2 27.9
11.2 13.2 12.0 12.1 11.5 26.8 11.7 9.6 14.0 11.3 6.8 13.7 13.6 15.0 7.3 21.4 13.6 19.9 15.6 20.9 18.8
7.2 6.8 7.7 7.2 10.3 15.6 8.7 8.5 8.2 6.5 6.2 7.7 6.2 7.0 5.2 5.6 8.0 23.3 17.3 64.2 34.9
6.5 6.0 6.6 6.4 8.4 10.8 6.6 6.4 6.7 5.5 5.0 5.8 5.1 6.1 4.3 5.1 6.3 15.9 12.9 26.4 18.4
6.1 5.9 6.0 6.0 7.4 9.7 5.6 6.0 5.9 4.9 4.5 5.3 4.5 5.6 3.4 4.7 5.6 12.9 9.6 16.0 12.9
3.6 2.9 3.8 3.4 4.1 3.1 2.3 3.6 2.8 2.5 2.2 2.7 2.1 2.4 1.8 1.5 2.6 6.8 8.0 15.2 10.0
3.3 2.5 3.2 3.0 3.4 2.8 1.8 2.9 2.4 2.1 1.8 2.2 1.8 2.1 1.4 1.4 2.2 5.2 6.0 10.1 7.1
3.1 2.3 2.9 2.8 3.1 2.6 1.4 2.7 2.2 1.9 1.7 2.0 1.6 1.9 1.2 1.3 2.0 4.2 4.5 6.8 5.2
34,380 9,646 13,553 11,609 4,238 15,582 9,604 7,194 3,690 131,110
6.6 7.9 9.6 8.5 6.9 7.4 6.7 n/a 16.0 16.8
7.3 48.5 8.5 6.9 5.1 7.7 6.8 11.2 12.5 16.1
8.2 79.1 9.0 8.3 6.4 7.6 7.1 7.6 n/a 18.1
4.1 25.7 4.1 5.2 4.0 4.7 4.4 n/a 10.1 12.4
4.6 29.9 3.6 4.4 3.1 4.4 4.3 6.6 8.1 10.0
5.4 40.4 3.9 5.1 3.9 4.5 4.5 4.7 n/a 10.0
2.8 12.0 1.2 1.5 0.9 2.2 1.4 n/a 3.7 4.3
3.0 11.9 0.9 1.3 0.8 2.0 1.3 1.9 3.1 3.8
3.2 12.0 0.9 1.3 0.8 1.9 1.3 1.6 n/a 3.3
74,100 4,547 78,647 6,213 2,844 2,071 1,643 4,152 2,904 19,827 451 1,054 2,345 783 480 370 378 1,459 930,766 257,608
25.3 31.1 17.3 61.9 45.9 31.1 19.2 14.8 32.5 34.3 20.5 19.5 18.3 8.0 n/a 19.7 12.2 14.3 12.1 14.6
19.4 20.8 13.4 31.5 28.4 23.4 15.9 9.8 20.2 21.5 7.0 14.4 15.9 6.4 75.5 13.7 10.3 12.4 12.3 13.7
16.3 14.1 10.9 22.5 18.3 17.3 13.3 8.5 15.1 15.9 5.9 9.8 9.0 5.2 44.2 10.8 9.1 9.9 12.7 13.7
6.3 4.4 8.2 25.1 27.8 16.8 13.1 8.6 14.8 17.7 8.3 8.2 5.7 5.7 25.3 13.6 8.3 10.2 7.3 8.0
3.2 3.0 6.3 15.1 17.1 12.1 9.9 7.0 10.4 11.9 5.4 6.5 5.3 4.8 12.9 9.7 7.1 8.8 6.6 7.3
2.7 7.2 5.7 4.7 2.5 5.3 4.0 3.1 4.6 3.5 2.9 2.2 11.2 2.0 1.4 1.1 11.2 1.2 0.9 0.6 8.9 2.0 1.4 1.0 8.1 2.5 1.8 1.5 6.5 2.8 2.0 1.7 8.3 1.9 1.5 1.3 9.0 2.1 1.5 1.2 4.9 1.1 0.9 0.8 4.7 1.1 0.9 0.6 n/a 0.5 0.5 0.5 4.1 1.3 1.1 0.9 9.1 1.3 0.9 1.1 7.8 3.8 2.8 2.3 6.2 1.3 1.1 1.0 7.6 1.5 1.4 1.3 6.5 2.3 2.2 2.1 7.4 9.8 3.1 2.9 Source: MDM estimates, IBES consensus *P/BV shown in EV/EBITDA columns
2008E
March 1, 2007
Morning Call
Key commodities London WTI Crude Oil Index – PRICE INDEX, USD/bbl
LME-Copper, Grade A Cash – A.M. OFFICIAL, USD/ton
80
Source: Bloomberg
Source: Bloomberg
Gold Bullion, USD/oz
Jan-07
Feb-07
Dec-06
Nov-06
Oct-06
Sep-06
Jul-06
Aug-06
Jun-06
Apr-06
Feb-06
Feb-07
Jan-07
10,000 Dec-06
15,000
300 Nov-06
350 Oct-06
20,000
Sep-06
25,000
400
Aug-06
450
Jul-06
30,000
Jun-06
35,000
500
May-06
550
Apr-06
40,000
Mar-06
45,000
600
May-06
LME-Nickel Cash – A.M. OFFICIAL, USD/ton
650
Feb-06
Jan-07
Source: Bloomberg
Mar-06
MB-Steel HR Coil CIS, USD/ton
Feb-07
Dec-06
Oct-06
Nov-06
Sep-06
Feb-06
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Jul-06
Aug-06
Jun-06
Apr-06
May-06
Mar-06
Feb-06
50
Jul-06
55
Aug-06
60
Jun-06
65
Apr-06
70
May-06
75
Mar-06
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000
Source: Bloomberg
MB-Platinum Matthey, USD/oz
750
1,400
700
1,300
650
1,200
600
1,100
550
Source: Bloomberg
Jan-07
Feb-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
Apr-06
Mar-06
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
800 Apr-06
400 Mar-06
900 Feb-06
450
Feb-06
1,000
500
Source: Bloomberg
9
Morning Call
March 1, 2007
MDM Bank
Investment Division 33/1 Kotelnicheskaya Nab. Moscow, Russia 115172
Head of Equities Vladimir Bril [email protected] +7(495) 228-3516
Institutional Sales Vladimir Bril Tanja Djurdjevic Mark Van Loon Alexey Kaminsky Ivan Legenchuk Kate Korolkevich
[email protected] [email protected] [email protected] [email protected] [email protected] [email protected]
[email protected] +7(495) 795-2521 Bloomberg: MDMG Reuters Dealing: MBWM, MDMB http://www.mdmbank.com
Head of Research Alex Kantarovich, CFA [email protected]
Metals & Mining Michael Kavanagh Andrey Litvin
Oil & Gas [email protected] [email protected]
Strategy, Economics, Banking
Nadia Kazakova, CFA [email protected] Andrey Gromadin, CFA [email protected]
Telecoms & Technology
Alex Kantarovich, CFA
[email protected]
Elena Bazhenova
[email protected]
Peter Westin
[email protected]
Ekaterina Generalova
[email protected]
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