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RMG - Weekly, Oct 15 - 19, 2012, NEWS & OUTLOOK.





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15.10.12 MSRS RX During the conference call management of MOESK improved its guidance for 2012 financials. New guidance for revenue, EBITDA and net income exceeds our forecasts by 5%, 13% and 28%, respectively. Revenue from connection services is now expected at levels significantly worse than we assumed. Taking account of the new assumptions, our target price for MOESK indicatively decreases by 15% to R1.3 ($0.042).

MRKH RX, MRKHP RX MRSK Holding is to place 16.9b common shares (35% of issued shares) at R2.16 per share via SPO. Market's reaction was negative because some investors had expected the price at R3.08 (equal to the issue price about a year ago).

16.10.12 FEES RX, MRKH RX, MRKHP RX Merger of FGC and MRSK Holding has been cancelled and a managing company for both electricity grids will be settled in order to synchronize their technologic policies and investment programs. The new scheme eliminates the risk of an unfair swap ratio and low repurchases prices. Moreover, the President approved the privatization of one or two pilot MRSKs in 2013.

PIKK RX (PIK LI), LSRG RX (LSRG LI) PIK Group and LSR Group reported solid 9M operationals. PIK gross cash collections were up by 20% y-o-y in 9M, while LSR Group reported 41% y-o-y growth. Both companies reiterated their FY 2012 forecasts.

GLTR LI TIHL sold 5.74% stake in Globaltrans for $195m. The funds raised will be directed for the private investment projects of TIHL's holders.

NMTP RX, (NCSP LI) NCSP reported 3.5% y-o-y growth of cargo turnover mainly on the back of grain volumes.

TGKD RX, TGKDP RX Quadra released 1H 2012 IFRS demonstrating generally the same tendencies as the majority of other generating companies, which reported their results earlier. In 4Q the company is planning to commission 220 MW of new capacities, thus finishing half of its 1092 MW investment program.

17.10.12 POLY LN Polymetal increased output by 7% q-o-q in 3Q, and production for 9M totaled 818Koz, up 46% y-o-y. Gold sales rose by 61% q-o-q to 197Koz, while silver sales went up by 17% to 7.6moz. Revenue in 3Q increased by 41% q-o-q to $530m and amounted to $1.28b for 9M. Company revised up its FY2012 production plan by 5% to 1050Koz.

INTE LI Integra took a seismic company out of its assets (worth about 1/3 of total assets). The company was merged with IGSS, and Integra's 36% stake the latter was distributed as dividends. Record date was on October 19.

18.10.12 EVR LN Evraz Group steel production in 3Q decreased 3% q-o-q mainly due to lower production at Czech and South African subsidiaries. Rolled products output rose by 1.8% to 3.7mt, while mining division demonstrated 1.9% decline in iron ore products and 19.5% rise in coking coal yield. Average selling prices for steel products dropped by 3-13%.

PGIL LN Polyus Gold Int. gold production rose by 9% y-o-y to 1.2moz in 9M 2012 on the back of output growth at Olimpiada (+11%), Blagodatnoye (+8%) and Kuranakh (+21%). In 3Q company produced 479Koz of gold, which was 3% lower q-o-q mainly due to persistent electricity supply disruptions at Olimpiada. Production guidance for FY 2012 was confirmed at 1.6moz and preliminary estimate of 9M revenue is at $1.97b.

NLMK RX (NLMK LI) NLMK crude steel production in 3Q fell by 2% q-o-q to 3.76mt and finished products output declined by 6% to 3.79mt. Sales of finished products were flat q-o-q at 3.8mt, as declining sales of flat steel (-6.9%) were compensated by increased slab sales (+14%) to export markets. Management expects to maintain steel production volumes in 4Q and has reiterated full year production guidance at 15mt.

MVID RX published trade update for 3Q and 9M 2012. Revenue growth slowed to 23% in 9M from 27% still outpacing our forecast of 20% revenue increase in FY 2012.

DGBZ RU, DGBZP RU Dorogobuzh will hold an EGM on December 7 to approve dividends for 2011 at R1.2 ($0.04) per preferred share. Preferred shares offer a 7% dividend yield based on current quotes. The cut-off was October 19.

VRAO RX, HYDR RX Eastern RAO reported 1H 2012 IFRS. Revenue with government grants increased by 5% to R72.6b ($2.3b) y-o-y, while EBITDA fell by 35% to R5.7b ($183m). At the bottom line the company saw a R886m ($29m) loss (adjusted for one-offs) compared to net income of R8.6b ($277m) a year earlier. The results were consolidated in RusHydro semiannual IFRS.

19.10.12 MAGN RX (MMK LI), BLNG RX Production of crude steel by MMK in 3Q rose by 2% q-o-q to 3.35mt and finished products output remained flat at 3mt. Notably output of subsidiary in Turkey fell by 26% due to unprofitable price levels. Domestically crude steel production rose by 6% q-o-q, while finished products output advanced by 3% to 2.8mt on the back of 7-8% growth of long and HVA sales growth. Coking coal out by Belon recovered by 67% q-o-q to 1.25mt and company stated intention to achieve same level of production of concentrate as in 2011.

MVID RX The BoD of recommended EGM to approve interim dividends of R30 (approx. $1) per share, implying yield of 11%. Ex-dividend date is October 23. EGM will be held on December 5.

PHOR RX (PHOR LI), APAT RU, APATP RU BoD of Phosagro approved share capital increase via issuance of 13.5m (10.8% of issued shares) common shares. The company says further decisions on the increase are subject to the decision on swap of Apatit shares for the parent-company stock which is considered as possible.

URKA RX (URKA LI) Following PotashCorp Uralkali downgraded its production plan for 2012 by 7% to 9.7mt due to uncertainty regarding contracts with China and India.

MSTT RX Mostotrest signed R35b (~$1b) contract with Moscow authorities to upgrade existing and build new transport facilities, in particular, transport links with the Skolkovo Innovation Centre. The contract is already reflected in our valuation, but we are pleased that by confirmation of this large order.

22.10.12 GLPR LI Globalports consolidated 25% of VSC buying the stake for $230m, reportedly using a loan from TIHL (major shareholder). We admit there is a considerable but reasonable premium for the asset: the whole company was priced at $920m which was generous as Globalports is valued by the market at $2.1b. VSC can boast a substantial potential for capacity increase as we see it as one of the key drivers for company growth.

URKA RX (URKA LI) The BoD of Uralkali will consider today distributing of 53% share of 1H net income as interim dividends. We estimate the yield at around 2% per common share.

TNBP RX, TNBPP RX, ROSN RX (ROSN LI) Rosneft has arranged purchase of AAR and BP stakes in TNK-BP for total $54-56b, including cash and Rosneft shares. We believe there is a risk of changes in dividend policy of TNK-BP Holding.


25.10.12 MGNT RX (MGNT LI) Magnit to release 9M 2012 financial results.

PHST RX (PHST LI) Pharmstandard is to report 9M 2012 trade update.

MAIL LI will disclose 3Q 2012 trading update.

26.10.12 CHMF RX (SVST LI) Severstal will release 3Q 2012 operational results.


Rye, Man & Gor Securities

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Publication:Russian Banks and Brokers Reports
Date:Nov 27, 2012
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