Moscow Exchange Index benchmark: 3650-3700 points


Market the day before

Trading dynamics were mixed. The growth leaders among the most liquid instruments were Mechel shares (MTLRP 85.00, + 5.59%). Outsiders in view of the closure of the register of shareholders to receive dividends turned out to be securities of PIK Group (PIKK 979.6, -4.79%). The USD / RUB pair dropped to 74.

Market and company news

Rusagro (AGRO 918.0, + 0.42%) will present its financial results for the first quarter. As follows from the operating statements of the holding, its revenue amounted to 50.9 billion rubles. EBITDA is forecasted at the level of 9.2 billion rubles, profit – at around 4.8 billion rubles. The main driver of growth in the company’s financial performance is the increase in food prices, which, despite the measures taken by the state, is difficult to stop. The trend is global in nature, and administrative restrictions mainly relate to retail. A negative driver for the company is the increase in export duties. However, in our view, the impact of this factor on Rusagro’s business is limited due to higher prices. The company’s debt burden, which is about 3x EBITDA, will decrease as revenue increases. Net profitability for the year may reach 11%, and EBITDA margin is expected to be around 19%. Sales for the year are forecasted in the range of 156-162 billion rubles.

Trading Ideas

Mail.Ru (MAIL 1 507.4, -0.13%), spec. purchase, purpose: 1800 rubles. We believe that the negative as a whole has been played out. Fundamental factors do not correspond to the decline in quotations by 37% in eight months and by 12% in a year. Stocks are down on the back of negative performance by high-tech companies in the US, but Russian IT giants have never been as overvalued in terms of profit and book value as their foreign counterparts.

Expectations

We expect mixed dynamics. Forecast for the USD / RUB pair: range 73.00-74.00. The reference point for the Moscow Exchange index: 3650-3700 points.

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