Департамент торговых идей

Inflation weakened in June to 0.2% from 0.5% in May. In annual terms, it was 5.4%, the highest level since October 2018. Rise in prices weakened slightly against the background of lower prices for vegetables and a slight slowdown in the group of non-food products. Increased wages and numerous other social initiatives of the government, as well as high inflation and devaluation expectations create the basis for inflationary pressure. 

1Q2019 revenues from crude oil transportation increased by 13% yoy, exceeding T50bn and having the main effect on revenue growth up to T59.8 (+ 14% yoy). 

The Board of Directors of KAP made a decision to proceed with the early redemption of bonds and and on the issue of new bonds on KASE in accordance with plans previously disclosed in the IPO Prospectus:

On Monday, Nostrum announced the launch of a strategic review by the Board of Directors (BoD), which, in our understanding, means the need to look for new opportunities to increase Nostrum’s shareholder value.

On June 19, 2019 Kazakhtelecom placed bonds on KASE in the amount of KZT80 bn (with maturity - 7 years, coupon rate - 11.5%). According to our expectations, these funds, together with the funds available on the company's balance sheet, would be used to acquire 49% stake in Khan Tengri Holding B.V (JV Tele2-Altel).

To remind, after acquiring a 75% stake in Kcell at the end of last year, on May 23, 2019, Kazakhtelecom signed an agreement with Tele2, according to which the former acquires JVTele2-Altel from the latter. According to the Tele2 press release, also published on May 23, 2019, the cost of the 49% stake in the JV Tele2-Altel was estimated at $267.13 mn (about KZT101.3 bn). In addition, the press release also states that the parties have agreed to repay the shareholder loan in the amount of KZT80 bn. Thus, to finance the above transaction (purchase of shares and repayment of the loan) Kazakhtelecom required funds in the amount of approximately KZT181.5 bn.

On May 22, 2019, Kazakhtelecom entered into an agreement to open a credit line with the Halyk Bank of Kazakhstan, under which Kazakhtelecom received a loan in the amount of KZT80.8 bn to refinance a shareholder loan. As the result, taking into account the amount of cash available on the balance sheet (as of 01.04.2019, the amount of cash on the Company's balance sheet amounted to KZT47 bn), the funds raised as a result of issuance of bonds (KZT80 bn) as well as the loan received (KZT80.8 bn), Kazakhtelecom provided itself with sufficient funds to complete the above transaction.

As of today, gold rose in price by 5% for the last week, reaching the level of 1 406.88 USD/ounce, which is the highest price since 2012. Various factors have served to increase the value of the precious metal: trade tensions between the United States and China, strengthening expectations of rate reduction by US Federal Reserve and the presence of geopolitical instability connected with the events in the Middle East and in Hong Kong.

DBK opened a credit line to KAZ Minerals in the amount of USD600 mn for a period of up to 15 years at a dollar rate of LIBOR + 3.9% for the implementation of the Aktogay-2 expansion project. 

In January-May 2019, the STEI reached 3.7% yoy, which is lower than in 2017 (5.8% yoy) and 2018 (5.1% yoy) the same period. According to our estimates, commodity sector’s contribution to the STEI, including transportation and sales of commodity sector products, was 2.14pp, which is about 58% growth.

We maintain our Hold recommendation on Cameco shares, slightly reducing our 12M target price from the previous CAD17.0/share to CAD14.9/share, still not noting the obvious growth triggers in the horizon of one year and evaluating neutral results for 1Q2019. At the same time, our expectations of a strong potential for a rise in uranium prices are strengthened in the long term due to China’s interest in nuclear energy, which stimulates the consumption of uranium resources. Without noticing serious risks due to the contractual nature of Cameco sales, we remain neutral with respect to investing in Cameco shares in the near future, whereas in the long term Cameco shares are rated higher than the market due to the high concentration of the uranium producers market.

On 3 June 2019, the National Bank of the Republic of Kazakhstan (NBK) decided to maintain the base rate at 9.0% with a band of liquidity provision and withdrawal at the level of +/- 1%.