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[loganair] 13/9/2016 09:10

Speaking at a meeting with President Vladimir Putin, Nikolay Tokarev, the CEO of Transneft, said that the export of Russian oil products currently exported through terminals in the Baltic states will be handled at Russian ports and all export volumes will be handled at Russian marine terminals by 2018.


This is excellent news for St Petersburg, but terrible news for the Balitc states losing so much revenue.

[a0148009] 12/9/2016 17:26

loganair thank you for all your informative posts I have modest holdings in family portfolios. The substantial discount to improving performance of top Russian assets I think is still attractive.
AO

[loganair] 12/9/2016 09:40

Magnit (JRS 2nd Largest Investment) on Friday reported its trading update for August. Revenue increased 13.8% YoY to RUB90.1 bln ($1.4 bln). The convenience store segment, the company’s main business unit, demonstrated similar growth rate of 14.2% (vs. 13.8% YoY in July) to RUB 66.5 ($1.0 bln), while sales at the hypermarket division dropped again, contracting 2.9% YoY (vs a 1.9% decline YoY in July) to RUB12.9 bln ($199 mln). The Magnit family segment saw sales rise 29.0% YoY (33.2.9% YoY in July) to RUB4.8 bln ($74 mln), while sales at the drogerie segment rose 52% YoY (vs. 53% YoY in July) to RUB5.9 bln ($90 mln).

Russia seems to be having similar problems to hear in the UK where the larger sized supermarkets are struggling while convenience stores are growing at a very good rate.

[its the oxman] 08/9/2016 10:04

JRS share price also going in a good direction. Starting to feel more confident here.

[quepassa] 08/9/2016 09:51

Thanks for update.

[loganair] 08/9/2016 08:49

Sberbank (JRS Largest Holding) yesterday released August RAS figures. Net income rose 5% MoM, with ROAE rising to 21.9% from 21.2% in July; this is the sixth month of 20%+ ROAE. Net interest income fell 3% MoM while net fees, by contrast, were stronger MoM, and YoY growth topped 20% in 8M16.

[loganair] 06/9/2016 09:06

PMI´s are all up and Inflation down. It seems to me that the Russian economy is going is a good direction.

[loganair] 06/9/2016 09:05

Inflation decelerates to 6.9% YoY in August - Consumer prices post zero growth in August ... Yesterday Rosstat reported zero inflation on a monthly basis for August. This August recorded the lowest monthly inflation for the month since 2011. Thus inflation decelerated for the second month in a row to 6.9% YoY in August from 7.2% YoY in July.

[loganair] 05/9/2016 08:42

Russia’s services PMI reached 53.5 in August, Markit reported this morning. The figure is in line with the Bloomberg consensus. The Composite PMI was printed at 52.9 Both figures are well above 50, which indicated improvements in the economy.

[loganair] 01/9/2016 09:38

The Russian manufacturing PMI for August released this morning by Markit was printed at 50.8. The Bloomberg survey expected 50.1 – the July figure was 49.5. The data indicate that the situation in Russian manufacturing is slowly improving.

[loganair] 30/8/2016 09:08

Target price raised 35%. Following the publication of Sberbank’s (SBER RX – Buy) (JRS Largest Holding) 2Q16 IFRS results and the updated 2016 outlook by the management, we have upgraded our profitability projections for this year. We have raised our 2016 NI forecast by 19% in ruble terms and ROAE to 18% from 15% previously (the updated management target is 17-19%). This implies somewhat lower profitability in 2H16 after the 21% ROAE delivered in 1H16; however, the latter figure was supported by one-off gains (such as the sale of a subsidiary and some recovery in provisions). Although the lack of lending growth is a cause of concern, the bank does deliver a decent NIM, which management guided to remain relatively stable this year. Moreover, there are signs of improvement in cost efficiency and asset quality. For 2017-18, we now see net income 13-19% higher than our previous forecast. We also lowered the risk-free rate by 60 bps and incorporate our latest macro forecast, which envisages a 3-6% stronger average ruble rate in 2017-18 than our previous forecast. As a result, we raised our target price by 35% to $2.7/common share and upgraded our recommendation to Buy.

[quepassa] 29/8/2016 10:41

Thanks. Yes understood that they are positive on Russia.

Just curious they say NEUTRAL ALLOCATION - as that would seem to indicate that they would not be building a position further at that specific moment in time.

I just can't square away , out of curiosity, why they say neutral allocation and then buy more exposure.

Very pleased that they have bought more.

ALL IMO. DYOR.
QP

[loganair] 29/8/2016 10:29

Why Russia Won't Collapse:

In a column earlier this year when the oil price was falling through the $30-level, quite a few people thought that Saudi Arabia, Venezuela and Russia would crumble. The Saudi’s are still standing, Venezuela is almost falling off a cliff (and only the continuous gold sales are avoiding a bankruptcy for the time being) but Russia? Russia is still there, and the economy which was in a slow-down modus earlier this year is picking up steam again.

Indeed, even though the Russian Central Bank hiked the key interest rates halfway 2014, it took appropriate action and immediately reduced the interest rates again to give the domestic economy more oxygen.

The revival is obviously closely correlated with the oil price as the wellbeing of the Russian economy depends on the export of oil. This brings hard dollars into the country’s treasury to help the Central Bank to maintain a healthy ratio of foreign currency on the balance sheet (or to buy more gold, see later).

In the second quarter of the current calendar year, the economy shrank by just 0.6% which was a better performance than what the market analysts were expecting (-0.8%), and it looks like the stabilization in June (with a 0%-change in the Gross Domestic Product) was a positive surprise for most market watchers. However, if we look at the oil price, you can indeed see oil was gaining strength in June which does explain the excellent performance during that month.

Does that mean the Russian economy is back in trouble after experiencing a weak July on the oil market? Not really. The export data will very likely come in strong, but the industrial production data from Russia seem to be still relatively weak despite a huge double-digit percentage increase in the production of machinery and equipment.

What’s even more interesting is that the policy of the Russian boycotts against western products as a counter-measure against the imposed sanctions is having a (very!) counter-productive effect. Not only did the agricultural output increase by in excess of 3% in the first seven months of the year, the YoY performance in July was exceptionally strong with a 4.9% increase in the total produce output.

Despite the temporary reduction in inflowing US Dollars in the first quarter (and first half), the Central Bank continued to purchase more physical gold. Granted, you can notice a certain slowdown in the gold purchases as the most recent date (up until May of this year) indicate the central bank has purchased less than 650,000 ounces of gold, but keep in mind that still represents an investment of almost one billion dollar in a quarter wherein the country’s economy was still shrinking.

If there’s one lesson to be learnt here, it’s the lesson you should not underestimate a wounded animal. The West thought Russia would collapse or would have to sell its gold to survive the oil glut, just like Venezuela. The West thought the Russian population would revolt against the current regime if it would notice the boycotts against western products, but nothing could be further from the truth as the agricultural output is increasing, and the increasing oil price will reduce the pressure on the economy and the country’s annual budget. The budget deficit is expected to be 3% this year, but will already improve to a deficit of just 1% next year, based on a price of less than $55 per barrel of Brent oil.

[loganair] 29/8/2016 09:49

QP - City of London have been steadily building their holding in JRS over the past couple of years when back then they held around 14%. It seems to me that over this time they have been very positive when it comes to Russia´s long term future.

[quepassa] 26/8/2016 17:12

Thank you.

This is City of London's July Emerging Markets Quarterly write-up.

Funny they say therein that for Russia "Despite the lowest P/E at 7.2 in the EM space, we thus maintain our neutral allocation."



Perhaps their view on Russia changed since July.

Interestingly, they moved to OVERWEIGHT for Brazil.

ALL IMO. DYOR.
QP

[loganair] 26/8/2016 16:54

City of London Investment Management increases its holding in JRS to 27%.

[loganair] 26/8/2016 16:50

ROAE at more than three-year high - Sberbank (JRS Largest Investment) reported its 2Q16 IFRS results yesterday. Net income was 16% above the consensus, while ROAE almost reached 23% while the consensus stood at 19%. NIM increased 30 bps QoQ supported by lower funding costs (both on the corporate and retail side, and also helped by the redemption of the CBR funding). The bank also posted higher “other income” mostly thanks to the sale of Krasnaya Polyana company (a RUB12 bln gain). Fees were 3% below forecast and the YoY growth of 11% for 1H16 lags full-year guidance (mid-to-high teens).

[loganair] 25/8/2016 11:25

Recovery in profitability much better than expected - EBITDA margin contracts 0.3 ppt YoY but grows 3.6 ppt QoQ to 5.6%. DIXY Group (JRS 12th Largest Investment) published strong 2Q16 IFRS results yesterday. The profitability margins improved much more than the market expected relative to the previous quarter, which was very weak. Revenue increased 24% YoY to RUB84.1 bln ($1.3 bln), in line with forecasts. EBITDA increased 18% YoY to RUB4.7 bln ($72 mln), beating the market estimate by 49% and exceeding the top market estimates, as forecasts were quite conservative following the poor performance in 1Q16. The EBITDA margin still shrank 0.3 ppt to 5.6%, which however was 1.8 ppt better than market expectations. Net income grew 13% YoY to RUB1.1 bln ($16 mln).

[loganair] 10/8/2016 11:34

Magnit (JRS 2nd Largest Investment) published a trading update for June yesterday. Revenues increased 13.8% YoY (13.5% YoY in June) to RUB92.9 bln ($1.4 bln). The company’s convenience stores, its main business segment, expanded at the same rate: 13.8% (vs. 13.3% YoY in June) to RUB68.8 ($1.1 bln), while the contraction in sales at hypermarkets slowed to 1.9% YoY (vs a contraction of 2.1% YoY in June) to RUB13.6 bln ($211 mln). Sales in the Magnit family segment rose 33.2% YoY (up 28.9% YoY in June) to RUB5.0 bln ($78 mln), while sales in the drogerie segment increased 53% YoY (down from 63% YoY in June) to RUB5.6 bln ($86 mln).


Sale increasing at nearly twice the rate of inflation, so real growth being recorded.

[knowing] 08/8/2016 14:35

MOSCOW--Russia has left the phase of economic recession and will grow slowly later this year, the central bank said Monday.

In a monthly report on economic trends, the Bank of Russia said it expects gross domestic product to grow 0.4% in the third quarter from the previous quarter, and by 0.5% in the fourth quarter.

"The economy is expected to step on the trajectory of slow growth in the coming months if there are no external shocks," the report said.

Russia's economy contracted 3.7% last year, under pressure from a drop in oil prices and Western sanctions. For the whole of 2016, the economy is likely to shrink further before posting a low growth rate in 2017.

The central bank also said there are risks that inflation, which is gradually slowing, won't decelerate to the bank's target of 4% in 2017 if consumer demand recovers and risks related to budget spending remain.

[loganair] 05/8/2016 12:59

EBITDA beats estimates, capex sharply down YoY - Novatek (JRS 7th Largest Investment) published 2Q16 IFRS results. Revenues grew by 13% YoY and declined 9% QoQ in ruble terms to RUB127 bln ($1.93 bln), 2% above consensus estimates. EBITDA for subsidiaries, as calculated by the company, rose by 24% YoY and declined 9% QoQ to RUB46 bln ($0.7 bln), 5% above consensus estimates. In dollar terms, EBITDA declined by 1% YoY and increased 10% QoQ. The EBITDA margin widened by 3.1 ppt YoY and narrowed by 0.1 ppt QoQ to 36.3%. Net income was RUB45.9 bln ($0.7 bln), up 10% YoY and down 60% QoQ, 5% above consensus estimates.

[loganair] 01/8/2016 14:20

Interesting to read that if Donald Trump wins the US Pesidential elections he says he'll recognize Crimea as part of Russia and lift the sanctions against them.

If this was to happen could add 0.6% to Russia's GDP for 2017.

[loganair] 01/8/2016 10:55

Qatar Investment Authority has just bought a 24.99% stake in St Petersburg airport.

“Despite the current difficulties in Russia, we continue to regard this as an attractive market.”

Since the Northern Capital Gateway consortium started operations, passenger traffic at LED has risen from 8.4m in 2010 to 13.5m in 2015.

[loganair] 01/8/2016 10:28

The CBR BoD expectedly left the key rate unchanged at its meeting on Friday. In its press release, the bank admitted that although inflation is under control and can achieve the CBR target of 4% in 2017, risks remain for the Russian economy. The bank has to retain an appropriate key rate level to stimulate savings among the population and to lower inflation to the targeted levels.

[loganair] 30/7/2016 13:35

International auditing firm PricewaterhouseCoopers reported that, according to its estimates, economic crime in Russia had dropped 20 percent since 2014. The auditors said that this progress could be caused by anti-corruption measures and the enhanced role of internal audit within organizations.