Oil stocks under attack


Market the day before

On March 18, trading dynamics were multidirectional. In the evening session, the index of the Moscow Exchange dropped below the psychological mark of 3500 points. HeadHunter shares (HHRU 2,592.8, + 4.77%) became the growth leaders on the back of good reporting and forecast. Among the outsiders were TCS securities (TCSG 4 332.4, -3.60%). The USD / RUB pair was trading near the 74.00 mark, despite the sharp drop in oil prices.

Market and company news

X5 Retail (FIVE 2 667.5, + 3.57%) will report for 2020 under IFRS. Revenue reached RUB 1,929 billion, EBITDA could reach RUB 250 billion, consensus profit forecast – RUB 42 billion. At the end of the current year, revenue may increase by 10%, to 2.1 trillion rubles. EBITDA margin will remain at 10%, net margin at 2.5%. Risks include food and general inflation, as well as food price regulation. We estimate the influence of these factors on the retailer’s business as moderate. We keep our “buy” recommendation, target: RUB 3,100. at the end of the year.

The Bank of Russia will hold a regular meeting on monetary policy. We expect the key rate to remain at the current level. The reasons for its increase are maturing, but, in our opinion, there is no need for an urgent revision. The situation on the money and foreign exchange markets is calm, and a premature rate hike will only slow down the economic recovery. Most likely, a one-step rate hike can be expected in May-June.

Trading Ideas

Surgutneftegaz ap (SNGSP 40.095, -0.46%), spec. purchase, purpose: 45 rubles. The company’s quotes have not yet won back the rise in oil prices. At the same time, a dividend surprise is not excluded. In the medium term, the paper acts as a protection against the depreciation of the ruble, in the long term, it is able to realize its positive potential against the background of a serious fundamental underestimation.

Expectations

We expect multidirectional dynamics. The external background is calm. However, a strong correction in oil may lead to a drop in quotations of securities of the oil and gas sector by 2-3%. Forecast for the USD / RUB pair: a corridor of 74.00–74.50. The reference point for the Moscow Exchange index: the range of 3450-3500 points.

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