Daily Market Comments

24 октября 2008 года

- Bank of Moscow posted strong 1H 08 IFRS results yesterday that beat our expectations. Assets growth was above the sector's average for the period.
- Cherkizovo's principal shareholder Igor Babaev plans to invest USD 300mn in a new milk production project. The new company may become one of the large diary production companies over time, but we don't think it would be able to compete with Wimm-Bill-Dann and affect its market position. It would not be consolidated into Cherkizovo, so no effect on its financial results.
- Dixy started to SPO 18.2mn of shares in the form of GDRs on the LSE. We do not expect any demand for the stock. To finance its growth in 2009 the company might resort to raising additional debt. If so, we expect its debt ratios to deteriorate from current levels.
- The export duty for scrap in Russia is due to be set at EUR 36 per ton in 2009. We think this should support a decline in scrap prices in 2009 to USD 200 per ton, decreasing Russian steelmakers' costs by 5-6%. We recommend a Buy on Russian steelmakers.
- Belon's CEO reiterates that he plans an IPO in London in 2009. We expect that going forwards the company may experience problems with financing, possibly leading to MMK increasing its stake in the company to a controlling one.
- There is an increasing likelihood that TNK-BP could lose the Kovytka field without any payment.
- Nizhnekamskneftkhim (NKNC) does not plan to use government support in refinancing its debt, according to the company's General Director. If this is the case, then we see no other option for the company than raising equity financing in any form.
- Transneft may be allowed to set 2009 tariffs so that net debt/EBITDA would not exceed 2x. We think that regular annual cost-plus tariff revisions would be enough to satisfy this requirement. No change in valuations on the news.
- Crude export duties can be set on a biweekly basis from December 08 instead of the current two-month basis. 4Q 08 netback could be similar to 1Q 07 and no major downward revisions for 2008 net income would be necessary. No impact on longterm valuations.
- PotashCorp reported strong 3Q 08 IFRS financial results with EPS increased five-fold to USD 3.93. They see at least a USD 100 increase in potash prices in 4Q 08. Good news for Uralkali.
- GAZ is in talks with materials suppliers to postpone payments. A move aimed at decreasing current inventories in GAZ without raising additional debt. Neutral news.