Департамент торговых идей

Aeroflot Group demonstrated an increase in revenue growth as the result of the high production indicators due to FIFA World Cup, which took place in Russian Federation in the summer of 2018, as well as significant control of operating expenses, despite the substantial increase in the cost of jet fuel in the second half of 2018. Although there are geopolitical risks and pressure put on operating expenses as the result of the high cost of jet fuel, the strategic development of Aeroflot in all niches of the air transportation market, the expansion of the route network and optimization measures implemented to control costs should have a positive impact on Aeroflot's financial results. Considering the attractive dividend payouts, we recommend to Buy Aeroflot shares with 12M TP 130 RUB/share.

As the result of the decision of the extraordinary Board of Directors’ meeting held on 11 February 2019, Kazakhtelekom approved a new methodology for determining the value of shares repurchased by the Company. According to the new methodology, repurchase of the shares at the request of the shareholders is executed at the weighted average price, which prevails on the Organized Securities Exchange, where shares are traded, less a 20% discount of the amount received. The calculation of the weighted average price for each type of stock is determined based on transactions completed in the last 180 calendar days preceding the date of the events.

At the end of 2018 Cameco's revenue decreased by 3% yoy to $Cdn2,092mn, while sales of uranium showed an increase of 7% yoy to $Cdn1648mn, and revenue from the fuel services increased by 0.3% yoy to $Cdn314mn. Revenue decreased due to the stronger decline in income of "Other" segment, where, due to the restructuring of marketing activities, sales in the NUKEM sector (trading) were reduced, which led to a threefold decrease in other income to $Cdn94mn.

Despite the achievement of  historic highs by Lukoil shares, justifying our Buy recommendation, we continue to expect further strengthening of LKOH positions. We condition our optimism with the expected strong results for 2018, in response to which it is likely that high dividends will be announced and that shares will continue to be repurchased as part of the buyback in order to increase the shareholder value of the company. In addition to short-term growth drivers, we are positive in terms of the stability of cash flows generated by the company even under adverse conditions for oil companies. Actualizing our calculations for the operational results of 2018, we increase our 12M TP from 5,296rub/share to 6,792rub/share and recommend to Buy Lukoil shares.

We continue to publish a series of reports on oil and gas industry of the Republic of Kazakhstan as the end of 2018 and updated statistical data for 2017. If in 2017 crude oil output, including gas condensate, in the Republic of Kazakhstan increased by 10.5% y/y and amounted to 86.2 million tons or 1.8 million barrels per day, in 12 months of 2018 oil and gas condensate output reached a record of 90.36 million tons, having increased by 4.8% y/y. A significant increase in crude oil output in 2017 resulted from reaching the level of commercial production at the Kashagan oil field from 180 thousand barrels per day at the beginning of the year to 270 thousand barrels at the end with an annual production output of 8.35 million tons of oil. In 2018, oil output was increased to 330-340 thousand barrels per day, however, the set target of the first phase of 370 thousand was not reached due to intake capacity of the reservoir. According to forecasts of the Ministry of Energy of the Republic of Kazakhstan, oil output in 2019 will be 89 million tons. Over 12 months of last year, natural gas production increased by 4.5% y/y and amounted to 55 mn cubic meters.

We consider the main events of 2018 in the banking sector to be the merger of two systemically important banks (KKB+Halyk), withdrawal from the system as a result of revoking licenses of three troubled banks (Qazaq banki, Bank of Astana, Eximbank), write-offs of previously hidden distressed debts, a significant deterioration in financial state Tsesnabank.

In 2018, the banking system continued to demonstrate stagnation, which resulted in a decline in the share of banking sector assets in the economy (GDP) from 45% in 2017 to 43% in 2018 (53% in 2016) and low growth rates of deposits and loans, despite good economic growth (+4.1% real GDP growth). Also in 2018, the general trend of the direction of banks towards serving the population, both in attracting deposits and in lending, increased in the banking system. This situation arises as a result of the preservation of structural problems in the economy, the dominance of the commodity sector with the weak SME segment, the accumulated internal problems of the banking system, and the significant predominance of the state in the economy.

According to the preliminary data of the NBK, current account balance in 2018 struck in surplus of US925 mn (0.5% of GDP). Current account deficit narrowed throughout 1Q and 2Q of 2018 and reached a surplus in 3Q and 4Q 2018 amidst energy exports growth to 71.5 mn tons (+ 2.4% q/q –prelim estimate) as well as uptrend of oil prices to US71.7 per barrel of crude (+ 31% y/y).

Quarterly data shows that in 3Q2018 a surplus of US180.2 mn (for the first time since Q4 2014) expanded significantly in 4Q2018 to a record high US1.4 bn (prelim estimate). Expansion of current account surplus in 4Q2018 was favored by outpacing growth in exports (+ 3.7% q/q) over imports (-1.0% q/q) that positively affected trade balance (+ 3.7% q/q). Shrunken surplus of secondary income account by 39.1% q/q also supported current account surplus.

In 2018 average daily hydrocarbon production increased by 4% yoy to 2.3mn boepd. The main growth trigger is still the gas projects in Uzbekistan.

According to Russian Accounting Standards, the Company’s revenue amounted to 504 697mln RUB (+13% y/y). The cost of sales reached 499 683mln RUB (+25% y/y). General, selling and administrative expenses declined by 15% y/y totaling to 29 816mln RUB. The Company’s gross and net profit amounted to 5 013mln RUB (-89% y/y) and 2 796mln RUB (-90% y/y), accordingly.

According to Russian Accounting Standards, the Company’s revenue amounted to 504 697mln RUB (+13% y/y). The cost of sales reached 499 683mln RUB (+25% y/y). General, selling and administrative expenses declined by 15% y/y totaling to 29 816mln RUB. The Company’s gross and net profit amounted to 5 013mln RUB (-89% y/y) and 2 796mln RUB (-90% y/y), accordingly.