BCS Express experts identified the main trends and selected 5 stocks of Russian companies that may be of interest in the medium term.
Growth plans in place
At the end of July Tape reported strong financial results for the first half of the year: revenue grew by 20% y/y, online sales added 159% y/y, gross profit grew by 26% y/y. Index EBITDA and net profit came under pressure due to the ongoing integration of the networks “Bill”, “Semya”, as well as the online service “Utkonos”. The company expects that margins will improve following lowering the cost of embedding networks in Lenta’s business.
It is important that the company confirmed its plans to double its revenue to RUB 1 trillion. by 2025. This means that Lenta plans to grow faster than the market in the coming years. Business scaling drivers should be the development of the online segment, as well as, possibly, continued activity in the M&A market.
Medium term goal: 950–1000 rubles
Everything is not so bad
Last week BSP announced the payment of unexpected dividends. The situation is interesting in that the banking sector in 2022 massively refused to pay dividends for last year due to macroeconomic instability and pressure on capital. BSP’s decision reflects a more stable situation in the sector and the possibility of a return to the payment of dividends by the largest banks in the near future.
From this point of view, we propose to pay attention to the shares Sberbank. Papers have strongly corrected since the beginning of the year due to the refusal of payments, the pressure of sanctions. Now the main negative is already embedded in the price of shares, and potential drivers, for example, lower interest rates and cheaper funding costs, have not yet been won back. In addition, Sberbank has historically been distinguished by high capital requirements, which makes it possible to feel stable even in times of crisis for the industry.
In the short term, it is difficult to identify drivers for a pronounced growth in the paper, but with the appearance of positive news in the sector, the potential for revaluation is impressive.
Medium term goal: 160–170 rubles
Cheap promotions
Actions Lukoil remain among the most undervalued in the Russian oil sector. An important factor in Lukoil’s attractiveness is its generous dividend policy. The company refused to pay dividends for 2021, but noted that the board of directors of the company plans to consider before the end of 2022 the issue of recommendations on the payment of dividends from the company’s retained earnings in 2021. In our opinion, the likelihood of such payments is increased.
In addition, earlier Lukoil used a share buyback program. Buyback has not been held lately, but if it is resumed, then the paper may receive an incentive to grow faster than the market. With the appearance of positive news on dividends, the paper may accelerate the rise.
Medium term goal: 4750–5000 rubles
Internal defensive history
From internal stories, it is worth paying attention to stocks GC “Mother and Child”. The company, despite macroeconomic turbulence, continues to develop and build new hospitals – in June a new clinic was opened in Butovo, a medical center in Novosibirsk was renovated. Outpatient clinics in Yekaterinburg and Moscow are in the process of launching, work is underway on the construction of the Lapino-3 nuclear medicine center.
According to the results of the first half of the year, the net debt of the Mother and Child Group of Companies was negative. In addition, the company intends to consider the possibility of paying dividends before the end of the year. The decision to pay out might become a strong driver for the shares, once once more emphasizing the company’s stability and confidence in the development prospects.
Medium term goal: 500–550 rubles
Positive conjuncture
Ordinary shares are interesting in light of the growth in coal prices in the first half of 2022 Mechel. The company plans to present operating and financial results in August, which might be record-breaking. Moreover, due to the weakening of the ruble at the end of the first half of the year, the company will reflect a profit from the revaluation of foreign currency loans and borrowings, which will further increase net income.
At the beginning of the second half of the year, coal prices corrected, but remain high – regarding 70% above the average levels of 2018-2020. For Mechel, this means that if prices remain close to current levels, 2H 2010 financial results will worsen h/h, but remain high compared to the levels of recent years. In addition, thanks to strong financial results, the company should significantly reduce its debt burden, which has been Mechel’s key problem in recent years. On the horizon of several months, expectations for Mechel shares are positive.
Medium term goal: 160–175 rubles
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