Russia's RTS Index futures - liquid tradable instrument.

This is a discussion on Russia's RTS Index futures - liquid tradable instrument. within the Indices forums, part of the Markets category; Good morning! Boring summer-thin markets by all means. Probably a good point to step back and reflect on the fact ...

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Old Aug 17, 2010, 7:48am   #49
 
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Morning Comment - 17.08.2010.

china white started this thread Good morning! Boring summer-thin markets by all means. Probably a good point to step back and reflect on the fact that we are trying to recovery from the longest and deepest recession since the 1930s! Not only that but also from the sort of % swings from heaven to hell (2000-03 and 2008-09) matched again only by the Great Depression! And for that matter, we are doing quite well in this bumpy recovery!

RUSSIA:
- Sberbank (SBER) RAS numbers over 7M10 - achieving the targets. NEUTRAL We keep our BUY recommendation for Sberbank shares;

- Lukoil (LKOH) purchases its 7.6% stake from ConocoPhillips. POSITIVE Lukoil buys 64,638,729 its shares from ConocoPhillips;

- Novatek (NVTK) launches new infrastructure at Yurkharovskoye. NEUTRAL Yesterday Novatek announced that it completed and launched an unstable gas condensate de-ethanization unit at its Yurkharovskoye field and a 326 km unstable gas condensate pipeline connecting the field with Novatek's Purovsky gas condensate processing plant. The new unit and pipeline will allow Novatek to de-ethanize and transport up to 3 mn tn of unstable gas condensate p.a. This will enable Novatek to eliminate the risks and costs associated with using third-party infrastructure and services and, thus, is generally positive news;

- MRSK of Siberia (MRKS) and MRSK of South (MRKY) posted 1H10 RAS financials. NEUTRAL We consider the results of MRSKs' as neutral and expect significant improvement in performance of companies following the transition to RAB-regulation;

- AVTOVAZ (AVAZ) posted good 2Q10 RAS financials as expected. NEUTRAL Car maker released quarterly net income for the first time since 3Q08 mostly due cash-for-clunkers strong sales;

- Rostvertol (RTVL) received net loss in 2Q10. NEGATIVE We put under review our recommendation for Rostvertol. The whole company's financial results for 1H10 showed positive y-o-y dynamic. Rostvertol's revenue advanced by 78% y-o-y to $119 mn, operating income - by 61% y-o-y to $16.3 mn, net income - by 23% y-o-y to $3.3 mn. Such improvements happen mostly due to strong 1Q10. We put under review our recommendation for Rostvertol (our end-2010 target price was $0.03/share). Currently the helicopter producer trades with a 36% discount to foreign peers on a basis of 2011E P/E of 7.4;

- Bamtonnelstroy (BTST) published weak 1H10 results. NEGATIVE Profit decreased due to construction works reduction and long construction periods.

TRADING ACTIVITY:
Yesterday we had a bit more active day with more sellers around. Domestic accounts were better sellers in chips since the very opening driven by negative sentiment of the overseas markets; in utilities activity was subdued - we had local clients selling KZBE (foreign account bought), VRAO, while foreigners were selling OGKE; have crossed some VSMZ (foreign account bought); close to the bell we were selling TNBP and BRZL (despite strong earnings release) for locals, at the same time we had buyers in BRZL's parent company HRG CN, that rallied by almost 12% yesterday in Toronto on very good 2Q results.

Do not get bored trading today!
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Old Aug 17, 2010, 9:39am   #50
 
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Let us not be scared of 17 August! :)

china white started this thread There is something ill-ominous about 17 August as 2 charts attached might attest to

Let us try to get thru it with flying colours! Good day to everyone!
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Old Aug 18, 2010, 7:57am   #51
 
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Morning Comment - 18.08.2010.

china white started this thread Good morning! As we expected MSCI Russia has not been changed. MRKH was not included into the index and we expect MRKH will be weak compared to RTS in the next couple of weeks.

One thing I noticed this week is that more and more "Bearded Prophets of Apocalypse" are entering the market. Once they get a couple of pips on the shorts they just opened, they double up. Fully in line with our notion that the level of pessimism is uber high in the market - and that happening in an ecosystem with 1) huge (and increasing) liquidity, 2) relatively good results from not only fancy gadgeteers but also from brick-n-mortar pillars of production; and 3) central bankers' determination to be there when they are needed. I, for one, think this may be a perfect set-up for another bubble.

AT THE VERY LEAST the market won't drop significantly before those clever prophets are squeezed out - and we are DEFO not there yet!

The more I look at this set-up, the more I feel that the global economic recovery may even accelerate as growth in developing nations counters a slowing pickup in the UK, US and quite possibly Japan. That increasing liquidity will probably help shield developed economies including the above from a double-dip recession.


RUSSIA:

* Severstal (SVST LI) has found a buyer of North American assets. POSITIVE. Renco Group is a potential buyer. According to Interfax citing foreign media sources, Severstal has reached a preliminary arrangement on the company's North American assets sale (Severstal Warren, Severstal Sparrows Point and Severstal Wheeling) to Renco Group holding company controlled by Amercian businessman Ira Rennert. As expected, the deal will be officially announced this week.

* Uralsib Bank (USBN) 1H2010 RAS financials - loan portfolio growth, stabilization of credit quality. NEUTRAL. Growth of operating profit was offset by high costs and taxes.

* Novatek (NVTK) provides an operating update and guidance. POSITIVE. Forecasting 12% y-o-y production growth in 2011. Yesterday, Novatek held a conference call on 2Q10 IFRS results, providing operating update and guidance. . Based on the current production level, Novatek confirmed that it will achieve higher end of production guidance for 2010 and is forecasting 12% y-o-y production growth (to 41-42 bcm) in 2011. More clarity on Yamal LNG project expected this year.

TRADING ACTIVITY:

Yesterday liquids were well bid during the day due to speculative liquidity which is galore, all of a sudden. SBER, VTBR, GMKN were clear prima donnas yesterday, we still see selling pressure in LKOH; strong demand for metals & mining sector on the SVST & RASP news; fertilizers were also in demand especially URKA & AKRN supported by global M&A news; most of those swings looked to us as highly speculative plays. In utilities sector we continue to be buyers of TGKE, F, I, G, KZBE, have buyers in OGKB, E, have traded a lot of OGKA, though have a big seller there at the moment; started to see some healthy demand for telecoms especially in RTKMP; we continue to be buyers in SVST, VSMZ, see sellers in VSMO; in helicopters keep on trading all 3 of them - RTVL, KHEL, UUAZ - the first two were being sold, while UUAZ is still in demand.

G'day to y'all!
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Old Aug 19, 2010, 8:24am   #52
 
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Morning Comment - 19.08.2010.

china white started this thread Good morning! Let us take a closer look at M&A department where things are brewing big time. You cannot underestimate the importance of this department for gauging market direction - as even M&A speculation is a confidence builder, say nothing about the amount of actual deals taking place. And confidence is "the weakest link" in today's environment.

BHP's Potash Raid puts this year on course to be the busiest for natural resources deals. Courtesy of a Bloomberg compilation - commodities companies, including miners, oil producers and chemical makers, have announced $362 billion of takeovers so far in 2010. If they maintain that pace, they will eclipse the record $576 billion of deals announced in 2007. Resources deals constitute 28 percent of this year's $1.26 trillion merger market, DOUBLE (!) their average share during the previous 10 years.

Why? Answer is clear - cheap money used to finance all-cash deals allowing to add reserves more cheaply than exploration. In addition, valuations haven't rebounded as fast as commodity prices - and there is a long way UP before they catch up, even if commodity prices tank.

Let us re-visit another "glove compartment" - IPO market. Attached is a chart of 5 most successful and 5 most unsuccessful IPOs over the past year - measured by % return over the past 6 months. And if you take into account the fact that by market cap the biggest winner is Hyatt, at 7 bil USD, and the biggest loser is Cobalt at 3 bil USD, and the only reason why CIE is a loser is because it happened to fish in the same waters as BP - you'll get the picture of IPO market slowly but steadily once again becoming a VERY lucrative "glove compartment"

I entirely agree with Mr Bittles that "the stock market got pretty oversold and is due for a rally".


RUSSIA:

- Core shareholder of LSR Group (LSRG LI) raised his stake to 62%. NEUTRAL. Expected news. Given SPO details, which were announced earlier in June, we do not expect considerable changes in the shareholder structure of LSR Group. In our view, news is neutral and will not have any impact on the share performance. We keep our BUY recommendation for LSR Group with the target price $11.4 per GDR and $57 per share;

- The Russian Railway freight transportation still outperforms the market in 7M10. NEUTRAL. But subsequently we expect to see the slowdown of freight traffic as a result of high base and slower growth rate of Russian industrial production due to drought;

- Bank Vozrozhdenie (VZRZ): 2Q10 IFRS results review. POSITIVE;

- Gazpromneft (SIBN) 2Q10 US GAAP: under pressure of costs. NEGATIVE.


TRADING ACTIVITY:

Yesterday we had a bit more active day with buyers and sellers equilibrium in terms of activity. Clients tend to avoid trading chips these days, though some guys were cutting their long exposure in ROSN (via derivatives), SBER, TRNFP; had sellers in TNBP, TRMK, AFKS after market opening; close to the noon domestic accounts were buying KMAZ, NMTP, AVAZ, IRKT, IRGZ; in utilities we had sellers in KRSB, OGKA, buyers in IRGZ, TGKI, KZBE, but start to see more sellers in distribution and territorial generation shares; yesterday we crossed pretty big size in a basket of utilities supply companies; in telecoms we crossed nice size in RTKMp & NNSI and continue to be sellers of NNSI; have buyers in PKBA.

In Frontier markets we were buyers of energos across the board - had a bid for quality size in CentrEnergo (CEEN UK), 2-way market in DonbasEnergo (DOEN UK). In steel sector we had a 2-way interest in size in ZaporizhStal (ZPST UK).

Good trading to you!
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Old Aug 20, 2010, 7:49am   #53
 
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Morning Comment - 20.08.2010.

china white started this thread Good morning! Disappointing day yesterday by all means - but I would not change a word in my yesterday's comment. Stock prices are still low, balance sheets are strong, cash flow is strong. There's a lot of cash in health care, commodity companies, and perhaps most importantly, in technology sector. I am happy for McAfee share holders, but what is a real McCoy here is that this is Intel's BIGGEST EVER acquisition!

Yep we can shave off another 2% on S&P in one day and yield to newspaper commentators calling it Armageddon . But the more they drum up pessimism in an economy where things are not that bad really - and with this sort of M&A activity I'd actually call them quite good - you will probably need to be very much on your toes if you short this market into the Fall


RUSSIA:

- OGK-3 (OGKC) is considering additional share issue. NEGATIVE. The amount of mandatory investment program for OGK-3 is estimated at more than RUR100 bn. This is approximately by RUR17 bn more than the amount of cash, which was received during the additional share issue (RUR82 bn), placed by OGK-3 in 2007 for financing the investment program. We view the news as negative as if the company confirms SPO plans, it may put pressure on its quotes. However, we can say definitely that in the case of a negative resolution of the situation around RUSIA Petroleum OGK-3 will borrow much more. We note that at present the major part of the OGK-3 income is formed by investment funds on the balance sheet. Thus, in the coming years the company is poised to turn from the owner of net cash position into the company with the significant debt, which can also raise investors' concern regarding the upcoming SPO, especially if we take into account the quality of OGK-3 assets (one of the lowest capacity utilization rate among OGCs - 40% in 2009);

- MirLand Development (MLD LN) 1H10 IFRS results: still in the development stage. NEUTRAL. Generally they are neutral and in line with our expectations. The company is in the development stage and weak revenue is not the indicator of its inefficiency. Now more attention should be paid to asset value and efficiency of borrowings spending;

- AFI Development (AFID LI) 1H10 financials:
asset revaluation resulted in paper loss. NEUTRAL. BUY recommendation confirmed. We do not provide forecasts for 1H10 mainly due to fluctuating periods of revenue recognition which depend on terms of commission. In some cases, projects are commissioned in a year after their completion due to bureaucratic hurdles in construction sector of Russia. Therefore, we prefer NAV-based method of valuation. We forecast end-2010 NAV at $1,540 mn. We keep our BUY rating for AFI Development with a target price of $1.5 per share;

- India plans to order another 59 helicopters on Kazan Helicopters (KHEL). POSITIVE. New order flows of $300 mn is expected to fall on 2012-2013. Total order could amount to $700 mn. Taking into account that the company is fully loaded for 2010-2011, we believe that delivering of additional 59 helicopters will fall on 2012-2013. Altogether it makes strong support to Kazan Helicopters' shares, which are currently traded with a 50% discount to foreign peers on a basis of 2011E EV/EBITDA of 5.3;

- MHP (MHPC LI) reported benign 2Q10 IFRS financials. POSITIVE. The leading Ukrainian poultry producer, reported its 2Q10 and 1H10 IFRS financials, which appeared to be strong and broadly in line with market expectations.


TRADING ACTIVITY:


More traders come back from their hols and as a result we are starting to have more flows, though most of yesterday's activity came from domestic accounts. I would call yesterday's session more or less predictable as sellers came about once the exchange bell rang - till noon we were sellers of couple of baskets of blue chips from our custody clients on exchange; were working to sell OGKA on MICEX, later on crossed up a good block with foreign account; we had sellers in fertilizers AKRN, URKA; buyers in UFOSP, UFNCP; from the day before we had buying interests in PKBAP, TGKI from foreign accounts - they were filled also in the morning and we turned net sellers there as our internal clients brought more of this stuff to get rid of; yesterday domestic accounts came with bids in regional telecoms - had bids in KUBN, KUBNP, ESMOP, URSIP, though had sellers in ENCOP at the same time; in utilities sector still have buyers in KZBE and TGKG (we were net sellers of the stock for a while), we had a strong buying interest in a basket of utility supply companies; sellers of MRKV; in metals sector had only sellers in NLMK, UNKL; had a buyer in GGOK, were in touch with sellers of VSMZ, VSMO, pipe producers, TRMK; in evening trading hours sellers came with SNGS, SNGSP, TATN - most of it was executed on exchange.

GOOD TRADING TO YOU!
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Old Aug 23, 2010, 8:12am   #54
 
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MARKETS vs. ECONOMY: Morning comment - 23.08.2010

china white started this thread Good morning. You'd normally expect to see something like "Markets AND (not VS) Economy" in the header for a morning comment, however my wording is not a typo at all.

If you look at markets alone, things are looking up and the stocks are very attractive. Reasons for that are: 1) Loads of cash sitting on the sidelines waiting to be put into action, 2) as a result, a plethora of M&A deals where the bidder is willing to pay a hefty premium to the target's share price (if British Gas indeed gets snapped up at 16 quid, this will be the mother of such hefty premia), and, 3) most importantly, strong corporate earnings. Currently, 75% of the 484 companies in the S&P 500 that have reported have beaten Wall Street expectations, compared with a quarterly average of 62%, according to Thomson Reuters. I have rarely seen such a wicked bundle of mega positive bits for the markets.

BUT - there is a clear decoupling of markets from economy now. Some clever men are saying there is a 50/50 chance of economy dipping into recession and deflation from this juncture - I will argue we have not YET come out of the recession AND we ARE effectively in a deflationary environment already. I will leave deflation for tomorrow's comment - at the end of the day this is a morning comment for God's sake :-), not an article in FT - but I will comment here why we are still DEEPLY in the recession. Answer in fact is very short - job growth, or the lack of it.

In the attachment you will find a little-known (and too bad it is that little-known!) civilian employment-population ratio - in contrast to the better-known unemployment rate, which measures the percentage of working-age Americans who are actively seeking jobs but do not have one, the civilian employment-population ratio measures the percentage of working-age Americans who have a job, whether they are seeking one or not. This distinction matters because the state of an economy affects whether someone looks for a job at all. Bad times discourage potential workers from seeking jobs; boom times encourage marginal workers to seek them. Looking at this ratio, America is suffering its largest drop since World War II. In 2007, a little over 63% of adult Americans had jobs. Recent report shows that only about 58.4% do, a decline of nearly five percentage points. While the unemployment rate remains steady at 9.5%, the employment-population ratio continues to fall each month. In April it was 58.8%, in May 58.7%, and in June 58.5%.

Since America has about 238 million civilian adults of working age, this decrease means that we have nearly 12 million (!!!) fewer jobs today than if the employment-population rate were still at its 2007 level of 63%. No other recession in the past 60 years saw such rapid job destruction in either absolute or percentage terms. In the 1979-82 recession, unemployment topped out at a higher rate, 10.8%, but the employment-population ratio declined by only three percentage points, to 57% from 60%.

And those clever men are saying there is a 50/50 chance of a double-dip recession? We are actually - in many ways - still at the bottom of the recession! Worst thing is that today's leaders will NOT do what was available to Reagan and Maggie in 1982 - I am talking Reagan's tax cuts in 1983 and 1986 tax reform that lowered the top marginal income tax rate to 28%, allowing America to employ the millions of late baby boomers, women and immigrants who sought jobs. That led to the employment-population ratio recovering in less than two years after hitting bottom - the sort of momentum that continued for the rest of the decade (see chart attached).

The result is obvious - companies are more inclined to put loads of money that they have into mergers and acquisitions to grow, with the net result being more job loss than creation. Is there light at the end of the tunnel? Yes, and perhaps an unusual one - health-care reform. Companies are also slow to hire because they are still unclear on how much health-care reform is going to cost per employee. If that is cleared up favourably - it will be a massive burden off hiring shoulder!

And now back to why I am bullish in this grim environment. Health-care reform may help loads, but at the end of the day, it is strong corporate earnings that'll fix the hiring (and spending). And that is the bit we have firmly in place. The only reason why (with this gloomy reality in jobs market) we are not sitting at the bottoms of March 2009 is that the markets tend to run ahead of the economy. And - with this sort of corporate earnings - they have much more way to run!



THINGS TO WATCH THIS WEEK: Last Thursday saw a surprise jump in initial jobless claims to 500,000, with those numbers subject to revision this coming Thursday. Coupled with an anticipated downward revision to the second-quarter GDP, many are wondering if the 500,000 figure was an anomaly or something more troubling. On the earnings front, I want to see how the ex-darling of NASDAQ, JDS Uniphase reports on Wednesday and how Tiffany sees its high-income-bracket customer base spending on Friday.



RUSSIA:

- Blackout in St Petersburg. NEGATIVE for FEES. Electricity supply of several areas of St. Petersburg was disrupted on Friday at about 18:40 Moscow time due to the accident, according to preliminary data, occurred at one of the power substations of Federal Grid Company (FEES). There was no electricity in most parts of the city and region during a few hours. After emergency protection system worked out four TGC-1's (TGKA) thermal power plants were stopped. We believe that before the announcement of official reason it is premature to make any conclusions. However, this fact once again confirms the need to increase investments into power sector. We believe that in short term news may be negative for FGC's (FEES) performance, while in the long term we may expect from the government further steps aimed at improving the situation in the industry, as well as possible staff reshuffles;

- 2009 FRP tenders raise government's concern. NEGATIVE. The FAS will be on the watch. Experts, who supervise pharmaceutical industry, investigated the government FRP tenders held in 2009 and now suspect that the Ministry for Health and Social Development acted in price collusion with the largest pharmacy producers and distributors (among which there are apparently Pharmstandard and Protek). The investigation found that unfair terms set during the tenders led to artificially smaller number of participants and high prices that implies inefficiency of such pricing mechanism in terms of budget savings. We now expect FAS inspectors to implement further investigation. This may be negative for those pharma companies, which may be exposed as unfair participants. We remind that FRP budget in 2009 totaled RUR80 bn (about $2.5 bn) or 16% of the total Russian pharma market. In particular, Pharmstandard sales of anticancer drug Velcade (the company acted as distributor) under the government tender in 2009 totaled $115 mn or about 15% of the company's total sales. We expect more details to follow;

- UTair (TMAT) shows positive operating data in July 2010. POSITIVE.

- Rosneft (ROSN) to develop a gas field in UAE. NEUTRAL. Investing in the UAE gas field Sharjah. Rosneft and Crescent Petroleum (United Arabic Emirates) will invest $630 mn in exploration of a UAE gas field Sharjah. In May this year, Rosneft acquired 49% in this project for an undisclosed amount. The plot's gas reserves are currently estimated at 70 bcm of natural gas and 16 mn tn of condensate. If the exploration is successful, production may be launched in 2013. The gas will be sold domestically and exported. Crescent Petroleum currently has projects in United Arab Emirates, Oman, Yemen, Egypt and Pakistan; and also previously in Canada, Yugoslavia, France, Tunisia and Argentina. Unlike Lukoil, Rosneft has limited exposure overseas (currently, only exploration projects in Kazakhstan and Algeria). Further international expansion and partnership with players from different geographic regions would benefit the company, in our view.



TRADING ACTIVITY:

On Friday we had extremely low trading activity, though most of our flows remained unchanged except for blue chips where tend to have high frequency trades for our arbitrage clients. In utilities we kept on buying TGKs - 6,7,9,11, had a seller in TGK5; some demand came back into distribution sector with bids around MRKHP, MRKK; at the moment we have a 2-way market in size in OGK1; buyer in IRGZ; in metals sector we continue to be sellers of VSMZ, UNKL; have some sellers in infrastructure names.

Good week ahead to you!
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Old Aug 24, 2010, 7:45am   #55
 
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Morning comment - 24.08.2010

china white started this thread Good morning! Very brief – as I doubt we will have anything vibrant in the market today with most interesting things to happen later on in the week – see yesterday’s comment {NSN L7LFFK3PWT1C <GO>} for Bloomberg users.



RUSSIA:

- Food retailers’ 2Q10 financials. Looking for new impetus for growth. This morning Magnit has announced 1H10 IFRS financials, which came below both our expectations and market consensus on the margins side. Also today we expect Dixy to publish 1H10 IFRS results, while X5 Retail Group report is due on 26 August. These companies are expected to hold conference-calls with analysts to provide more details of operations and update management guidance. Companies’ 2Q10 trading updates, which came earlier, were generally on the positive side. Just as a reminder, Magnit showed spectacular 3.4% y-o-y jump in 2Q10 discounters LFL traffic growth, which came as a result of investments into prices and has turned 1H10 LFL traffic dynamics to a positive area for the first time since 2008. Dixy demonstrated continuing recovery in sales per sqm, but remained still weaker than expected though has considerably speeded up its store openings, which resulted in 41 stores opened in 1H10 (vs. company guidance to open 100 new stores this year). X5 Retail Group’s discounters remained strong, but with downward LFL traffic growth at 6% y-o-y in 2Q10 despite further price investments; hypermarkets traffic seem to stop dropping at the expense of deep discounts, while supermarkets remained the weakest part of the chain (but we expect the favorable effect on traffic to come in 3Q10 after more aggressive pricing policy has been implemented since June);

- Mechel (MTL US) to expand into Brazil. NEUTRAL. Mechel is negotiating to purchase metals assets from Brazil’s Cosipar. Particularly, Mechel could purchase two blast furnaces in Usipar project and one blast furnace Cosipar’s key plant. Reportedly, the potential buyer is Mechel’s main beneficiary Igor Zyuzin as Mechel is restricted from acquisitions under restructured debt covenants. Neutral for Mechel. We regard this news as neutral for Mechel. Total capacity of Usipar blast furnaces amounts 1 mn tons of pig iron and may increase up to 3 mn tons. By acquiring assets in Brazil, Mechel is likely to achieve synergy effect with North American Bluestone Coal, which it bought in May, 2009. We recommend a BUY on Mechel’s ADR with the target price of $29.5.


[I]TRADING ACTIVITY: [/B]

Our yesterday’s flows were almost unchanged, domestic accounts contributed the bigger part of our trading activity. We kept on buying TGKs – 5,6,7,9,11, 2 times we crossed nice blocks in TGK6 turning from buyer to seller and vice versa; in utilities sector after a long pause our buyer in MRKU came back bidding for blocks, we would also bid for MRKK, MRKHP; in telecoms buyer goes in KUBN, ESMO, RTKMp; yesterday we were also sellers of AKRN, VRPH, IRKT – all crossed between domestic and foreign accounts; we were working to sell GAZP & SBER all day long into the close at careful discretion.

GOOD TRADING TO YOU!


This note has link {NSN L7N92Y3PWT1C <GO>} on Bloomberg
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Old Aug 25, 2010, 8:10am   #56
 
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Morning comment - 25.08.2010

china white started this thread Good morning and let me be company-specific in this morning comment – I will never bombard you with obvious facts when I don’t feel any new spice in my morning meal


RUSSIA:

- 1H10 dividends of Polyus Gold (PLZL) to amount RUR8.52 per share. NEUTRAL. Polyus Gold is to pay interim dividends for 1H10. Polyus Gold 1H10 interim dividends are expected to be RUR8.52 per share. Total dividends should amount to RUR1,624 mn that implies dividend yield at 1%;

- Chelyabinsk Pipe (CHEP) to increase charter capital twice. The price is not set yet. Chelyabinsk Pipe’s shareholders approved at EGM on 20 August, 2010 an increase of charter capital through additional share issue in amount of 472,382,880 ordinary stock. The issue is placed under public subscription. The price will be announced by the board after state registration of the issue and the expiry of pre-emptive rights period. Thus, the company’s capital will double to 944,765,760 shares. Record date for taking part in EGM was on 15 July;

- Alliance Oil (AOIL SS) reports 2Q10 IFRS results – challenging quarter again. NEGATIVE;

- Volga TGK (VTGK) 2009 IFRS net income more than doubled. POSITIVE. Results have improved. Volga TGK (TGK-7) increased its net profit in 2009 by 2.3 times. For 2009 Volga TGK posted net profit of RUR4.47 bn vs. RUR1.9 bn a year earlier. Volga TGK’s revenue grew by 9.5% to RUR52.39 bn. Operating expenses increased by 3% to RUR47.22 bn;

- Shareholder structure may be changed. It should be noted that at the moment FGC owns about 30% of Volga TGK and plans to transfer this stake to InterRAO. IES Holding stake in Volga TGK currently is about 40% and there is reason to believe that IES aims to increase its stake up to a controlling one and will endeavor to continue the consolidation. Уesterday, Kommersant reported that Lamesa Holding SA, which may be affiliated to IES Holding, last month increased its stake in Volga TGK to 6.38% from 3.37%. If IES increases its stake to 50%, it will be obliged to make a buy-out offer to Volga TGK’s minority shareholders. We consider financial results of Volga TGK as positive and believe that despite Volga TGK looks pricey based on genco’s key parameter EV/kW of $ 360/kW (average for TGK is $ 240/kW), quotes of the company is likely to continue growing;

- Magnit (MGNT LI) 1H10 IFRS results: margins suffered, but do not be upset! See note attached.

- FAS allowed SUEK consolidate 100% of voting shares Kuzbassenergo (KZBE) and Yenisei TGK-13 (TGKM). POSITIVE.


TRADING ACTIVITY:

Yesterday we had much activity: more buyers came with bids for regional telecoms, we crossed a good block in RTKMp, ESMO, we would still bid for the rest of them; in utilities sector – we are buyers in MRKU / still sellers in MRKV and MSRS; we were sellers of SBER & GAZP all day long and into the closing, though we had also a big buyer in VTBR; at the end of the day we had buyers in SILV and more bids came for telecoms.

Good trading to you!

Bllomberg link for this note is {NSN L7P5113PWT1C <GO>}
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