Guideline for the Moscow Exchange index: a corridor of 3600-3700 points


Market on the eve

The trading dynamics were multidirectional. The growth leaders were shares of Rosneft (ROSN 548.7, + 1.2%). The outsiders were the shares of the Moscow Exchange (MOEX 178.38, -4.9%) due to the increased volatility of global inflation forecasts. The USD / RUB pair was trading at less than 74.00.

Market and company news

Rosneft (ROSN 548.6, + 3.12%) is to publish financial results for the 1st quarter. We expect the company to report revenue and EBITDA slightly above consensus at RUB1,900bn. and 465 billion rubles. respectively. At the same time, according to our forecasts, the profit of the oil producer will amount to RUB 130 bn, which, on the contrary, is slightly worse than market expectations. Our estimate takes into account the fact that at the end of 2020 this indicator showed increased volatility after the sale of a number of assets. Rosneft’s net profitability for the year may exceed 10% and approach the maximum values ​​in 10 years. Debt burden will be reduced below 3x EBITDA. The projected profit should be at least 875 billion rubles. at the end of 2021 and about 1 trillion rubles. in 2022. We do not note the risks associated with a possible violation of the company’s dividend policy, according to which payments must be at least 50% of the profit. Our target for paper on the horizon is 12 months – 680 rubles. excluding dividends.

The EIA has downgraded the forecast for the growth of global oil demand for 2021 to 5.4 million barrels per day. (-0.2 million barrels per day). At the same time, according to updated UN estimates, this year the world GDP is expected to grow by 5.4%, which is 0.7 percentage points. above January expectations. As a result, OPEC predicts an increase in oil demand by 6 million barrels per day, up to 96.5 million barrels per day. At the same time, in the May report, the cartel significantly revised downward its expectations for oil production for countries outside the organization (by 0.35 million barrels per day). Thus, the estimated shortage of black gold in the world market by the end of 2021 will amount to 2 million barrels per day. Despite the short-term risks, the forecast deficit levels are traditionally regarded as a very significant factor supporting the medium-term growing trend in oil prices.

Trading Ideas

Aeroflot (AFLT 65.9, -0.63%), spec. purchase, purpose: 74 rubles. We expect the company to resume ticket sales to many destinations, including overseas, and to increase the number of flights in the summer. If strict quarantine restrictions are lifted in European countries, Aeroflot’s traffic may reach record levels in the 3rd quarter of 2021. The resumption of flights to the countries of Southern Europe may be announced as early as the coming week.

Expectations

We expect mixed dynamics. Forecast for the USD / RUB pair: range 73.50-74.50. The reference point for the Moscow Exchange index: a corridor of 3600-3700 points.

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