Equity Daily Research www.bcsgm.com

Wednesday, 17 June 2020 Market

Market data Recovery bets v 2nd wave of COVID-19

… … Ahead: Cautious optimism. The optimism stems from signals that the worst may Dow Brent Shanghai* RTS be over for the world’s largest economy (record surge in US retail sales – +17% ▲ ▲ ▼ ▲ m/m in May, plans for a new $1tn stimulus injection) and hence a boost to global 2.04% 2.13% -0.13% 1.73% growth and demand, and yet another positive trial of a potential COVID-19

RTS Index Index trading volume, $mn treatment. However, recovery optimism will be tested by the resurgence of new 1,320 1,430 COVID infections in Beijing and US, both of which had increasingly re-opened

1,300 1,360 segments of their economies.

1,280 1,290 Core news 1,260 1,220 Economics 1,240 1,150 Economics: Industrial output down more than expected on OPEC+ deal – Mixed. 1,220 1,080 A disappointing headline. However, if one excludes the large falls in oil and gas 09 Jun 10 Jun 11 Jun 15 Jun 16 Jun

RTS Last 30dma 60dma 180dma output (OPEC+ deal) and low demand for natural gas (warm winter), then the data Volume, $ bn 1.17 1.33 1.18 1.25 shows steady improvements in output of many key segments – a positive.

Metals & Mining RTS Sectors Indices – 1D Change GMKN (Buy)/RUAL (Sell): Divis to be discussed once fuel spill losses known – Neutral.

We do not expect the fuel spill to lead to changes in ’s dividend Utilities 2.6% policy and estimate the total direct impact at c$200mn (0.4% of Norilsk’s MCap). Oil&Gas 1.9% Alrosa (Buy): Current crisis to affect dividend payments – Expected. The halt of Financials 1.9% diamond trading in 2Q20 should pressure full year EBITDA and FCF. We expect RTS 1.7% 2020 DY at 5-7%, depending on the diamond market’s recovery in 3Q-4Q20. Telecoms 1.7% Met&Min. 0.9% TMT/Retail Consum. 0.5% DSKY (Hold) / AFKS (Hold): , RCIF sell 16% Detsky – S-T -ive DSKY, +ive AFKS.

Placement was partly expected (lock-up ended in May); it may pressure DSKY until Equity Indices the SPO is complete, but would raise stock liquidity (MSCI weight increase). For Value 1D 1W 1М YTD RTSI 1,243 1.73% -3.2% 12% -20% Sistema, cRb9bn cash inflow will be handy, given COVID risks. MOEX 2,748 1.08% -1.7% 6% -10% MSCI EM 990 2.44% -2.0% 10% -11% S&P 3,125 1.90% -2.6% 9% -3%

DJIA 26,290 2.04% -3.6% 11% -8% NASDAQ 9,896 1.75% -0.6% 10% 11% DAX 12,316 3.39% -2.4% 18% -7% FTSE 6,243 2.94% -1.5% 8% -18% Hang Seng* 24,337 -0.11% -2.8% 2% -14% Shanghai* 2,929 -0.13% -0.8% 2% -4% Nikkei* 22,461 -0.25% -2.5% 12% -5% S&P Future* 3,118 -0.96% 3.0% 11% -2% * Data as of 07:27 Moscow time Commodities Price, $ 1D 1W 1М YTD Brent 40.7 2.13% -0.3% 24% -38% WTI 38.4 3.39% -1.4% 30% -37% Gold 1,727 0.08% 0.7% -1% 14% Silver 17.5 0.43% -0.4% 5% -2% Nickel 12,940 3.52% 1.0% 10% -8% Copper 5,759 1.97% 0.1% 12% -6% Aluminum 1,587 2.12% 0.9% 11% -12%

FOREX/Bonds Rates Value 1D 1W 1М YTD BCS GM Reports (Click to access) USD/RUB 69.70 0.17% 1.5% -5% 12% EUR/RUB 78.52 -0.45% 0.8% -1% 13% ‘The Chart’: – Price rises post lockup to SPO level ... 2nd SPO possible = EUR/USD 1.126 -0.52% -0.7% 4% 1% Overhang risk Yield 1D 1W 1М YTD UST-10 0.75% 3 -7 11 -117 Bund-10 -0.45% 0 -14 9 -26 Today’s Calendar (full calendar inside) EMBI+spread 428 -19 12 -81 130 Russia 30 -UST 107 -24 1 -44 43 None Russia 42 3.22% -15 -7 -34 -35 See BCS recommendations, valuations, market data

Disclaimer: This research report is produced and distributed by the Research Department of BrokerCreditService Ltd [Registered Name: BrokerCreditService Ltd, Registered Number: 1025402459334, Registered Office: 37 Sovetskaya str., Novosibirsk 630099, Russia, BrokerCreditService Ltd is regulated by the Central Bank of Russia and holds FFMS licenses No. 154-04434-100000 of 10.01.2001 for brokerage services, No. 154-04449-010000 of 10.01.2001 for dealing on own account, No. 154-04462-001000 of 10.01.2001 for managing securities portfolios and No. 154-12397-000100 of 23.07.2009 for safekeeping and administration of financial instruments]. This is ‘non independent research’ and is for information purposes only. Neither the information nor any opinion is intended to be or should be construed as an offer, a recommendation or an invitation to make an offer to buy or sell any financial instrument. No representation or warranty (including future performance), expressed or implied, is made as to its accuracy and reliability. This research constitutes neither investment, legal, tax advice nor other advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report and the latter shall not rely on it in making an investment or other decision. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument and suitability of the financial instruments or strategy discussed in this report. In accordance with US SEC Regulation AC, important US regulatory disclosures and analyst certifications can be found on the last page of this report. BrokerCreditService Ltd and/or an affiliate has or expects to receive fees for the provision of investment/corporate banking service for TMK. BrokerCreditService Ltd or an affiliate company may own one percent or more of equity securities of TMK, but does not hold more than five percent of the share capital of TMK. Neither BrokerCreditService Ltd, nor any affiliate has managed or co-managed any public or private offering or acted as a market maker or corporate broker for TMK. BrokerCreditService Ltd acts independently when producing research and does not share draft of research reports or communicate changes in rating or targets to the issuer ahead of publication.

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Equity Daily

Wednesday, 17 June 2020

MOEX Russia Index / MSCI Russia Market

MOEX Russia Index MSCI Russia Recovery bets v 2nd wave 3,400 950 3,200 850 Ahead: Cautious optimism. The optimism stems from signals that the worst may 3,000 750 be over for the world’s largest economy (record surge in US retail sales – +17% 2,800 650 m/m in May, plans for a new $1tn stimulus injection) and hence a boost to global 2,600 550 growth and demand, and yet another positive trial of a potential COVID-19 2,400 450 treatment. However, recovery optimism will be tested by the resurgence of new 2,200 350 COVID infections in Beijing and US, both of which had increasingly re-opened 2,000 250 segments of their economies. Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 US up, Asia down. US (S&P 500 +1.90%, DJIA +2.04%, NASDAQ +1.75%). Asia this RTS Futures morning (Hang Seng -0.11%; Shanghai -0.13%, Nikkei -0.25%). S&P 500 Futures OPEN 124260 CURRENT c 124950 ▲ (-0.96%), Brent futures this morning $40.23/bbl, lower than the open. S&P 500 Review / Trader’s Comment: hopes of more central bank stimulus by and large 3,400 dictated the direction of trade. This, despite signs of a 2nd wave of COVID in China and US; albeit, the lack of volume suggests that the jury remains out as to 3,200 whether this should be the case (-14% v norm). The commodity complex bid up, 3,000 buoyed by expectations of further governmental expenditure. The retailers were 2,800 broadly on the back foot: MGNT -0.89%, FIVE -0.39%; DSKY (-1.33%) was sold off

2,600 throughout the session on SPO angst (AFKS +2.83% launched the placement after the close). In the M&Mers the Golds (PLZL -1.66%, POLY -0.21%) underperformed 2,400 on the usual ‘risk-on’ trade. Their industrial counterparts were solid as the 2,200 underlying metals advanced. SBER (+0.21%) faded as the 100day resistance held Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 firm; TCS (+5.02%) charged, but was curtailed by an uptick in supply north of $19. Brent, (Futures) $/bbl. Overall a solid day – only the retailers ended in the red.

80 For the Day: Brent crude (+2.13% to $40.7/bbl), ruble depreciated against the US 70 dollar to 69.70, RTS (+1.73%) and MOEX Russia (+1.08%). 60 50

40 30 20 Mark S Bradford, [email protected] 10 Trading Comment: Stuart Samuels, [email protected] Jun 19 Sep 19 Dec 19 Mar 20 Jun 20

Brent Futures OPEN 40.61 CURRENT c 40.23 ▼

RTS: Sector Performance 1D change Utilities 2.6% Oil&Gas 1.9% Financials 1.9% RTS 1.7% Telecoms 1.7% Met&Min. 0.9% Consum. 0.5%

YTD change

Utilities -4% Met&Min. -7% Telecoms -8% Consum. -9% Financials -19% RTS -20% Oil&Gas -27%

Source: Bloomberg

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Equity Daily

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Event watch Date Company Event Comment 18 June Conference call with The company will discuss its 1Q 20 financials and focus on the short-term outlook and implications arising from management recent OPEC+ deal. 19 June CBR meeting Policy decision In recent weeks, the CBR has several times guided that another rate cut might be coming, even not ruling out a 100bp cut. The low current inflation (3% y/y in May) does give the bank much more room for maneuver. We expect the CBR to cut the benchmark rate by between 50bp (55% probability) and 100bp (45% probability) 4.5-5%. By YE20, we forecast official rate at 4.5% with inflation at 4.2% y/y. 19 June Wiener Borse Effective date No changes were made to the RDX and RDXxt, thus, no implication for Russian stocks. CEE&CIS indices 19 June MVIS Russia Effective date No additions or deletions from MVIS Russia, but some minor adjustment to index constituents. Still, given high liquidity of the stocks, no impact on Russia. 22-30 June VTB Abbreviated IFRS for May Monthly IFRS results will provide an advanced insight into 2Q20 IFRS – important, given the current, volatile environment. 22-30 June Globaltrans Russia railways operating We do not expect any company specific catalysts in the coming quarter, but Russian Railways cargo transportation results volumes and turnover will provide insight into the scale of industry shrinkage in 2Q20 – we expect weak railway cargo operating results, decline in volumes may exceed 10%. June BoD recommendation for 2019 The company announced FY19 DPS of Rb11.200/sh, but the dividend may be paid by installments – 50% in 2020 dividends and 50% in the next three years. 2 July Monthly trading volume data MOEX proved its resilience to macro weakness with record volumes in 1Q20 – a clear winner from volatility. However, numbers in 2Q20 may be weaker in comparison. 7 July Ferrexpo 2Q20 Production Report We expect Ferrexpo’s pellet output to increase q/q and y/y in 2Q20, as the upgrade program at the company’s facilities has been finalized. 7 July Sberbank RAS for previous month RAS results will reveal the early signs of the impact from RUB depreciation and macroeconomic weakness. 10 July 2Q20 Operating Results & The company is likely to show softening of sales q/q, while realized steel prices are expected to decline. Trading update 10 July Alrosa June Diamond Revenue We expect the company’s sales to worsen until May, as the diamond industry is effectively paralyzed now – we see recovery in rough diamond sales only from June. 14 July MMK 2Q20 Trading Update MMK’s sales may be hit by maintenance works at its mill and slowing domestic demand. We expect average realized prices to slide. 15 July NLMK 2Q20 Operating Results & We expect the company’s realized steel prices to slide, while sales to be hit by deteriorated domestic demand. Trading update 16 July Alrosa 2Q20 Trading Update We expect sales to materially deteriorate q/q, as COVID quarantines have crippled diamond market supply chains. 16 July Detsky Mir 2Q20 Trading Update Retail sales and LFLs will be in spotlight. The company was identified as a systemically important organization, which should support the company’s sales given the quarantine measures. 16 July ECB meeting Policy decision Rate cut unlikely, preferring ‘PEPP’ to combat COVID-19. ECB adopted €750 billion Pandemic Emergency Purchase Program (18 Mar) to counter risks to monetary transmission (via support liquidity and funding conditions for households, businesses and banks) and EZ economic outlook stemming from COVID-19. PEPP in force at least until end-2020; assets may be added, increased – a function of COVID-19. 21 July RusHydro 2Q20 Operating Results We expect low snowfall this winter to pressure spring/summer water flows – HPP production dynamics should flatten vs 1Q20’s very strong levels and come in closer to the L-T average. 23 July Severstal 2Q20 IFRS Results Though the weaker ruble is likely to partially offset, the decline in realized prices and sales should negatively affect financials q/q. 24 July CBR meeting Policy decision On 20 March, CBR kept key rate at 6% to support the ruble, embattled by COVID-led economic decline. On 3 April, CBR waxed S-T hawkish citing inflationary pressures, but stressed a rate cut could come in the medium term. BCSe – we now expect CBR to keep key rate unchanged at 6% throughout 2020 (vs BCSe that CBR will cut 50bp to 5.75%), even if that will breach the CBR’s real rate target of 2-3%. We retain our YE20 inflation forecast of 5%, but expect CPI to moderate to 4% in 2021. 20-24 July NLMK 2Q20 IFRS Results We expect the company’s financials to weaken q/q, despite support on the cost side due to the ruble’s devaluation. 20-24 July 2Q20 Operating Results & The focus in the operating results will be the potential 3-4% decrease in production due to spread of COVID-19 Trading Update infection on one of the company’s main asset Olimpiada. 20-24 July Highland Gold Mining 2Q20 Trading Update We expect only a slight increase in gold output and sales y/y. 27 July Lenta 2Q20 Trading Update & IFRS Investors will focus on LfL performance, sales and EBITDA dynamics, which will be largely affected by market Results competition and consumer demand. 28 July 2Q20 RAS Results We expect output in fossil fuel generation may be under pressure again due to lower demand from the COVID outbreak, though normalization of HPPs’ production may offset partly. Electricity price dynamics will be key to understanding 2Q20 financials.

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Economics

Economics

Industrial output down more than expected on OPEC+ deal – Mixed BCS Take: A disappointing headline. However, if one excludes the large falls in oil and gas output (OPEC+ deal) and low demand for natural gas (warm winter), then the data shows steady improvements in output of many key segments – a positive. News: Rosstat – Industrial production in Russia fell 9.6% y/y in May. This was significantly below our (-6%) and consensus expectations (-6.8%) and lower than the dynamic seen in April (-6.6% y/y). However, the sole factor that led to a deeper contraction in industry was the mining sector: in May, its output fell 13.5% y/y vs -3.2% y/y recorded in April. This happened due to large drops in the output of crude oil (-14.5% y/y) and natural gas (-16.6% y/y) – the result of oil production cuts as Russia entered the new OPEC+ deal, as well as the consequence of a significant deterioration in demand for gas after the warm winter. Manufacturing output has stabilized. At the same time, the dynamic in the manufacturing industry has shown significant improvements: in May, its output was down 7.2% y/y (v -10% in April), but on an m/m basis it remained flat. Last month, a few segments of manufacturing posted y/y gains (including food- processing, chemicals and pharmaceuticals), while in other key segments, monthly dynamic turned positive (textiles and clothing, wood-processing, metallurgy, electronics, tools and machinery and automotive – car production jumped by over 70% m/m). Analysis: Despite disappointing headline number, the data is positive. The deeper than expected contraction in industry is solely related to the performance in O&G sector where a combination of political and climate factors triggered large cuts in output. At the same time, production dynamic in the rest of industry has shown clear signs of improvement: according to Rosstat, in seasonally-adjusted terms, industrial production in May fell 1.3% m/m vs a fall of 6.9% m/m in April. That is a sign that Russian industry, as well as the economy at large, started to show more signs of life – a trend that we expect to gain pace in 2H20. We reiterate our forecasts: this year, we expect a 2.7% drop in industrial output and - 3.7% decline in Russia’s GDP.

Vladimir Tikhomirov, PhD [email protected]

Metals & Mining

GMKN RX RUAL RX Norilsk Nickel/UC Recommendation BUY SELL Target price 23,689 20.4 Divis will be discussed once fuel spill losses confirmed – Neutral Last price 19,472 27.3 Upside 22% -25% BCS Take: We do not expect the fuel spill to result in changes in Norilsk Nickel’s Excess return 9% -47% dividend policy and estimate the total direct impact at c$200mn (0.4% of Norilsk Currency RUB RUB ADTV 3m, $mn 108.4 5.0 Nickel MCap). MCap, $mn 43,929 5,950 EV, $mn 45,791 815 News: UC Rusal will discuss Norilsk Nickel divis once size of losses confirmed. EV/EBITDA, 20E 5.8 2.2 According to the company’s statement, UC Rusal is ready to consider specifying P/E adj., 20E 8.3 6.6 the size of Norilsk Nickel’s payments once shareholders are informed of the exact Source: Bloomberg, BCS GM size of the losses the company incurred due to the recent Artic fuel spill. The company said it expects further negotiations on Norilsk Nickel’s dividend policy to GMKN RX RUAL RX MOEX Russia Index be held in the format outlined in the agreement rather than through public 153 discussion that would have a significant impact on the share price. 133 113 93

73 Jun 19 Sep 19 Dec 19 Mar 20

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ALRS RX Alrosa Recom'd BUY MCap, $mn 6,765 LP, RUB 63.9 EV, $mn 7,246 Current crisis to affect dividend payments – Expected TP, RUB 71.8 ADTV 3m, Shares, $ mn 22.1 BCS Take: The halt of diamond trading in 2Q20 should pressure the company’s full Upside 12% year EBITDA and FCF. We expect the company’s 2020 DY at 5-7%, depending on Excess return 0% 20E 21E the extent of the diamond market’s recovery in 3Q-4Q20. Free float 34% EV/EBITDA, x 4.7 6.3 Free float, $mn 2,298 P/E adj., x 8.1 12.6 News: Alrosa’s CEO said the current crisis will affect the company’s dividends. Source: Bloomberg, BCS GM Interfax reported. Separately, Alrosa’s CEO Ivanov said he hopes Alrosa’s profitability will recover after activity in the diamond market resumes. He added ALRS RX, RUB MOEX Russia Index, RUB that if the market recovers faster than the company expects, then it will still have 101.3 the opportunity to sell from diamonds from inventories, allowing the company’s 91.3 profitability to start recovering to historical levels (40-50%). 81.3 Kirill Chuyko, [email protected] 71.3 Oleg Petropavlovskiy, [email protected] 61.3 Artem Bagdasaryan, [email protected] 51.3 Jun 19 Sep 19 Dec 19 Mar 20

TMT /Retail

AFKS RX DSKY RX Detsky Mir/Sistema Recommendation HOLD HOLD Target price 15.0 100 Sistema, RCIF selling 16% Detsky Mir – S-T -ive DSKY, +ive AFKS Last price 16.9 96.8 Upside -12% 3% BCS Take: Placement was partly expected (lock-up ended in May); it may pressure Excess return -30% -14% DSKY until the SPO is complete, but would raise stock liquidity (MSCI weight increase). Currency RUB RUB For Sistema, cRb9bn cash inflow will be handy, given COVID risks. ADTV 3m, $mn 9.1 4.5 MCap, $mn 2,351 1,028 News: Sistema announced the placement of c118mn Destky Mir shares last night. EV, $mn - 1,279 EV/EBITDA, 20E - 4.5 The amount corresponds to a 16% stake and the placement is made via P/E adj., 20E - 11.6 accelerated book-building. The selling shareholders are Sistema and RCIF. If the Source: Bloomberg, BCS GM share offer is realized in full, Sistema’s stake in Detsky Mir will decline from 33% to 20%, RCIF’s from 8% to 5%. The lock-up for Sistema’s and RCIF’s remaining 213 AFKS RX DSKY RX MOEX Russia Index shares is 90 days. 193 173 Results of the placement, including pricing, have not yet been released, but 153 according to Bloomberg, the placement was oversubscribed. 133 Analysis: MSCI Small Cap impact – Detsky Mir weight could be upped. As a result 113 of this placement, if 118mn shares are sold, Detsky Mir’s weight in MSCI Small 93 Cap would be upped by c174bps to 9.4%, driving passive money inflows of 73 Jun 19 Sep 19 Dec 19 Mar 20 c$1.7mn ($4.4mn 3M ADTV). In this case, changes should be implemented in two full business days after the information is made publicly available.

Maria Sukhanova, [email protected] Dmitriy Skryabin, [email protected] Maria Lukina, [email protected] Yulia Goldina, [email protected]

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Recommendations, Valuations & Market Data

Last Target MCap, EV, EV/EBITDA P/E adj. DY 1D 1W 1M 3M 6M 12M YTD 52WL 52WH 3mADTV Company Ticker Rec. Upside Currency Price price $ mn $ mn 20E 21E 20E 21E 12MF $mn

RTSI RTSI$ Index USD 1,243 159,485 1.7% -3% 12% 29% -18% -7% -20% 832 1,647 1,289 MOEX Russia IMOEX Index RUB 2,748 159,370 1.1% -2% 6% 21% -9% 0% -10% 2,113 3,220 1,266

Oil & Gas (DR) OGZD LI HOLD 16% USD 5.61 6.5 64,391 115,380 5.6 4.6 7.3 6.2 7.9% 2.0% -5% 14% 28% -30% -22% -32% 4.08 8.42 45.9 Gazprom GAZP RX HOLD 19% RUB 197 233 64,831 115,820 5.6 4.6 7.3 6.3 7.8% 1.2% -4% 7% 17% -22% -15% -23% 164 271 154.0 (DR) NVTK LI HOLD 10% USD 155 170 47,045 27,264 10.5 8.7 18.4 19.5 1.7% 3.1% -2% 13% 46% -24% -24% -24% 88.5 219.8 18.8 NOVATEK NVTK RX HOLD 14% RUB 1,075 1,221 46,876 27,095 10.5 8.6 18.3 19.4 1.7% 1.5% 0% 7% 30% -16% -18% -15% 716 1,380 31.1 (DR) ROSN LI HOLD 16% USD 5.32 6.2 56,403 123,120 7.7 6.0 17.6 9.0 2.7% 2.9% -9% 13% 56% -25% -16% -26% 2.88 7.85 16.2 Rosneft ROSN RX HOLD 20% RUB 371 445 56,565 123,283 7.7 6.0 17.7 9.1 2.7% 1.4% -8% 6% 44% -17% -9% -17% 234 486 77.4 (DR) LKOD LI HOLD 7% USD 77.7 83 50,634 50,563 5.1 4.4 26.0 9.5 9.3% 3.1% -1% 17% 39% -22% -4% -22% 46.7 109.1 61.4 LUKOIL LKOH RX HOLD 11% RUB 5,392 5,960 50,522 50,451 5.1 4.3 25.9 9.5 9.3% 2.4% -1% 10% 27% -13% 4% -13% 3,754 6,717 139.3 (DR) SGGD LI SELL -19% USD 5.71 4.6 20,400 -20,898 neg. neg. 2.4 9.1 1.7% 2.7% -3% 5% 64% -25% 48% -29% 3.13 8.75 4.6 Surgutneftegas SNGS RX SELL -17% RUB 40.0 33.0 20,519 -20,779 neg. neg. 2.4 9.1 1.7% 1.5% -2% -1% 53% -17% 59% -21% 24.8 54.2 40.1 Surgutneftegas pref. SNGSP RX SELL 9% RUB 34.9 38 3,860 -20,779 - - - - 2.8% 1.0% 2% -3% -3% -6% -15% -8% 30.8 43.6 18.0 Gazprom Neft (DR) GAZ LI HOLD 19% USD 25.3 30 23,873 27,013 5.2 4.2 10.8 6.6 7.1% 2.0% -3% 17% 46% -24% -18% -25% 15.5 37.8 1.3 Gazprom Neft SIBN RX HOLD 21% RUB 356 431 24,103 27,244 5.3 4.3 10.9 6.6 7.0% 1.3% -1% 12% 35% -16% -11% -15% 240 470 11.5 Tatneft (DR) ATAD LI HOLD 10% USD 50.0 55 18,156 19,673 8.6 7.5 13.9 10.8 2.7% 1.1% -2% 19% 43% -34% -30% -32% 28.5 80.4 14.4 Tatneft TATN RX HOLD 13% RUB 581 658 18,191 19,708 8.6 7.5 13.9 10.8 2.7% -0.1% -1% 12% 31% -26% -24% -24% 385 830 47.8 Tatneft pref. TATNP RX HOLD 11% RUB 560.5 620 1,188 19,708 - - - - 2.9% -0.6% -3% 13% 32% -25% -10% -24% 365.5 777.5 11.8 Bashneft BANE RX - - RUB 1,835 - 4,684 9,740 - - - - - 1.7% 1% 4% 29% -6% -11% -5% 1,240 2,095 0.5 Bashneft pref. BANEP RX - - RUB 1,452 - 3,707 9,740 - - - - - 1.7% -1% -1% 18% -16% -18% -16% 1,041 1,865 2.5 Transneft pref. TRNFP RX HOLD 22% RUB 135,200 165,000 3,021 23,100 3.6 3.4 6.0 5.1 4.2% 0.4% -2% 4% -7% -21% -14% -24% 128,700 179,100 9.2 Russneft RNFT RX - - USD 6.5 - 1,912 3,392 - - - - 0.0% 0.2% 0% 8% -3% -19% -24% -18% 399 602 0.1

Banking Sector P/BV P/E Sberbank SBER RX BUY 35% RUB 208 280 64,452 1.0 0.9 6.8 5.7 9.0% 0.2% -4% 13% 6% -14% -13% -18% 174 268 238 Sberbank (DR) SBER LI BUY 31% USD 11.9 16 64,383 1.0 0.9 6.8 5.7 9.1% 1.1% -6% 20% 16% -23% -21% -28% 8.62 17.43 57.3 Sberbank pref. SBERP RX BUY 14% RUB 193 220 2,776 0.9 0.8 6.3 5.3 9.8% 1.2% -3% 12% 9% -12% -7% -15% 162.0 238.5 29.2 VTB VTBR RX HOLD 0% RUB 0.037 0.037 6,869 0.6 0.5 8.4 4.5 7.3% 0.1% -2% 8% 22% -21% -9% -20% 0.03 0.05 23.9 VTB (DR) VTBR LI HOLD 0% USD 1.03 1.03 6,649 0.5 0.5 8.1 4.3 7.6% 1.4% -4% 14% 27% -31% -19% -30% 0.71 1.60 1.1 TCS Group TCS LI HOLD -25% USD 18.7 14.0 3,735 2.4 2.0 11.1 8.5 3.2% 5.0% 6% 29% 42% -9% 11% -12% 10.40 26.55 6.2 TCS Group (DR) TCSG RX HOLD -16% RUB 1,304 1,095 3,735 2.4 2.0 11.1 8.5 3.2% 5.0% 8% 23% 30% 1% - 0% 832 1,685 7.2 Bank St.Petersburg BSPB RX BUY 33% RUB 42.7 57 299 0.2 0.2 3.7 3.0 5.5% 2.6% -2% 8% -2% -15% -16% -24% 38.87 58.45 0.4 Halyk Bank HSBK LI BUY 28% USD 11.7 15 3,416 1.0 0.9 5.2 4.6 9.0% 2.6% 1% 37% 25% -13% 1% -12% 7.04 16.35 1.3

Diversified Financials Moscow Exchange MOEX RX BUY 29% RUB 116 150 3,799 5,095 10.9 10.6 11.2 11.1 7.8% -0.1% 1% 2% 33% 6% 30% 8% 81.0 128.3 26.1

Metals & Mining Severstal CHMF RX UR - USD 12.6 - 10,594 10,594 - - - - 5.6% 0.1% -7% 6% 7% -5% -22% -6% 777 1,099 15.4 Severstal (DR) SVST LI UR - USD 12.6 - 10,539 10,539 - - - - 5.6% 0.6% -9% 13% 15% -15% -27% -17% 9.8 17.4 4.9 EVRAZ EVR LN UR - GBP 3.0 - 5,482 5,482 - - - - 11.5% 4.2% -3% 18% 21% -24% -58% -26% 203 700 11.3 NLMK NLMK RX UR - USD 1.9 - 11,486 11,486 - - - - 8.9% 1.4% -3% 12% 23% -4% -27% -7% 101 176 13.6 NLMK (DR) NLMK LI UR - USD 19.3 - 11,537 11,537 - - - - 8.9% 2.4% -3% 19% 35% -13% -32% -17% 12.3 27.3 3.7 MMK MAGN RX UR - USD 0.57 - 6,314 6,314 - - - - 13.2% -1.6% -6% 7% 13% -4% -14% -5% 32.0 47.5 8.0 MMK (DR) MMK LI UR - USD 7.38 - 6,248 6,248 - - - - 13.1% -2.9% -9% 13% 23% -14% -21% -15% 5.10 9.99 0.7 TMK TRMK RX HOLD 2% RUB 59.64 61.0 885 1,716 3.6 5.3 13.4 21.9 n/a -0.3% 0% 4% 57% 16% -3% 3% 36.5 62.7 4.5 TMK (DR) TMKS LI HOLD 4% RUB 234.2 244.0 869 1,700 3.6 5.2 13.1 21.5 n/a 0.4% -2% 10% 77% 4% -10% -9% 1.75 3.94 0.5 Norilsk Nickel GMKN RX BUY 18% USD 280 330 43,929 45,791 5.8 7.5 8.3 11.7 10.1% 2.2% -4% -4% 14% -1% 33% 2% 14,060 22,952 106.9 Norilsk Nickel (DR) MNOD LI BUY 18% USD 28.0 33 43,956 45,818 5.8 7.5 8.4 11.7 10.1% 2.9% -5% 2% 22% -11% 23% -9% 19.5 35.4 43.9 Polymetal (DR) POLY LN HOLD 9% GBP 14.6 16 8,592 9,688 6.5 6.6 9.2 9.5 5.7% -0.3% 0% -13% 32% 24% 63% 23% 900 1,737 36.1 Polymetal POLY RX HOLD 9% RUB 1,281 1,402 8,579 9,676 6.5 6.6 9.2 9.5 5.7% -0.2% 0% -15% 26% 31% 75% 32% 729 1,568 19.0 Polyus (DR) PLZL LI HOLD 16% USD 74.9 87 19,749 21,130 6.5 6.4 9.0 8.9 2.6% -0.3% -2% -11% 36% 34% 68% 30% 43.5 84.1 12.1 Polyus PLZL RX HOLD 21% RUB 10,345 12,495 19,613 20,994 6.4 6.3 8.9 8.8 2.6% -1.7% -1% -16% 30% 48% 81% 46% 5,560 12,350 36.7 HGM HGM LN HOLD 23% GBP 2.27 2.8 1,040 1,136 3.7 3.8 5.4 5.7 1.8% 1.2% -3% -12% 32% 24% 25% 18% 151 271 3.0 Petropavlovsk POG LN HOLD 7% GBp 27.05 29 1,128 1,204 2.4 2.5 4.3 4.2 n/a -2.3% 3% 0% 79% 107% 219% 114% 8.70 27.80 5.0 (DR) MTL US SELL n/m USD 1.86 0.00 387 6,846 19.1 16.5 neg. neg. n/a -2.1% -6% 16% 23% -1% -11% -8% 1.30 3.33 0.2 UC Rusal 486 HK SELL -28% HKD 3.04 2.2 5,959 824 2.3 1.9 6.6 10.7 n/a 5.6% -3% 14% 17% -17% -1% -20% 2.1 4.9 1.9 UC Rusal RUAL RX SELL -27% RUB 27.3 20 5,950 815 2.2 1.9 6.6 10.6 n/a 1.7% -2% 8% 15% -7% 8% -12% 20.4 39.2 5.0 KAZ Minerals KAZ LN UR - GBP 4.52 - 2,677 2,677 - - - - n/a 4.4% 1% 10% 56% -18% -20% -17% 269.1 615.2 8.0 Ferrexpo FXPO LN SELL -44% GBP 1.97 1.10 1,459 1,001 2.7 5.4 8.8 n/m 8.7% 6.4% 3% 39% 82% 25% -25% 25% 101.7 281.1 3.6 Raspadskaya RASP RX - - RUB 108 - 1,090 523 - - - - - 0.8% -1% 1% 25% 6% -21% 1% 83 148 1.6 ALROSA ALRS RX BUY 9% USD 0.92 1.00 6,765 7,246 4.7 6.3 8.1 12.6 5.9% 0.7% -2% 6% 7% -21% -25% -24% 54.0 91.9 22.2 0 Fertilizers PhosAgro (DR) PHOR LI HOLD 20% USD 13.32 16.0 5,175 6,975 7.1 6.9 9.4 10.2 2.8% -0.7% -4% 8% 42% 6% 5% 4% 9.2 14.1 5.1 PhosAgro PHOR RX HOLD 25% RUB 2,747 3,447 5,113 6,913 7.0 6.8 9.3 10.0 2.9% -0.2% -2% 0% 27% 15% 13% 14% 2,099 2,875 3.2 Acron AKRN RX - - USD 78.47 - 3,124 ------2.2% -3% -7% -1% 13% 20% 14% 4,514 6,194 1.324 0 Retail (DR) MGNT LI UR - USD 12.47 - 6,354 6,354 - - - - 6.9% -0.9% 0% 20% 71% 8% -9% 2% 6.5 15.3 4.5 Magnit MGNT RX UR - RUB 3,950 - 5,785 5,785 - - - - 7.6% -0.9% 1% 12% 50% 21% 8% 15% 2,337 4,004 27.6 (DR) FIVE LI UR - USD 33.3 - 9,038 9,038 - - - - 4.7% 0.2% 10% 14% 39% -4% 3% -4% 20.5 37.2 8.9 X5 Retail Group FIVE RX UR - RUB 2,321 - 9,056 9,056 - - - - 4.7% -0.4% 12% 7% 32% 8% 12% 9% 1,643 2,390 10.3 Lenta LNTA LI - - USD 2.42 - 1,178 2,746 - - - - - 0.6% -5% 19% 34% -23% -28% -20% 1.6 3.5 0.22 O'Key OKEY LI - - USD 0.80 - 215 955 - - - - - 0.0% 0% -4% -18% -38% -53% -38% 0.5 1.7 0.04 M Video MVID RX - - RUB 411 - 1,060 2,884 - - - - - 0.7% -2% 19% -7% -25% -3% -21% 337 604 1.59 Detsky Mir DSKY RX HOLD 3% RUB 96.8 100 1,028 1,279 4.5 4.0 11.6 12.2 5.5% -1.3% -2% 15% 15% 2% 14% -3% 74.7 119.1 4.5 Obuv Rossii OBUV RX BUY 131% RUB 34.7 80 56 226 5.0 4.0 3.5 2.4 0.0% 2.7% -4% 17% 10% -17% -41% -19% 27 64 0.21

Agriculture Rusagro AGRO LI - - USD 9.3 - 1,248 2,318 ------0.9% -1% 12% 48% -7% -20% -11% 5.6 12.0 0.1 Cherkizovo GCHE RX - - RUB 1,768 - 1,117 1,933 - - - - - 0.2% 3% 6% 2% 5% 7% 2% 1,669 2,079 0.11 Note: Prices are calculated using SPOT and expected inflation differential

6

Equity Daily

Wednesday, 17 June 2020

Stock performa nce BCS

Last Target MCap, EV, EV/EBITDA P/E adj. DY 1D 1W 1M 3M 6M 12M YTD 52WL 52WH 3mADTV Company Ticker Rec. Upside Currency Price price $ mn $ mn 20E 21E 20E 21E 12MF $mn

RTSI RTSI$ Index USD 1,243 159,485 1.7% -3% 12% 29% -18% -7% -20% 832 1,647 1,289 MOEX Russia IMOEX Index RUB 2,748 159,370 1.1% -2% 6% 21% -9% 0% -10% 2,113 3,220 1,266

Real Estate LSR Group (DR) LSRG LI BUY 36% USD 1.89 2.58 973 1,290 4.3 3.9 5.4 5.2 4.8% 5.0% 3% 19% 23% -23% -19% -21% 1.23 2.88 0.4 LSR Group LSRG RX BUY 18% RUB 676 800 1,000 1,317 4.4 4.0 5.5 5.4 4.6% 3.7% 3% 16% 13% -10% -9% -12% 510 923 2.2 PIK Group PIKK RX HOLD 10% RUB 410 450 3,891 4,034 8.3 6.7 5.1 4.3 5.7% 2.3% 4% 12% 11% 4% 11% 2% 334 441 0.6 Etalon Group ETLN LI HOLD 1% USD 1.38 1.40 407 697 3.8 3.5 6.5 6.4 12.3% 3.8% 3% 22% 4% -19% -27% -21% 1.0 2.3 0.4 Etalon Group ETLN RX HOLD 3% RUB 95 98 404 694 3.8 3.5 6.5 6.3 n/a 2.4% 4% 16% -2% - - - 78 146 0.5

Utilities - Generators RusHydro HYDR RX SELL -36% RUB 0.83 0.53 5,191 8,503 5.4 5.1 8.8 8.3 4.6% 5.6% 7% 30% 68% 58% 38% 50% 0.48 0.83 11.6 RusHydro (DR) HYDR LI SELL -36% USD 1.14 0.73 4,868 8,180 5.2 4.9 8.3 7.8 4.9% 6.7% 5% 32% 67% 44% 29% 31% 0.60 1.14 0.4 Inter RAO IRAO RX BUY 120% RUB 5.00 11 5,297 2,888 1.6 1.5 4.3 3.8 n/a 0.8% -1% 7% 12% 7% 11% -1% 4.05 6.50 17.3 Unipro UPRO RX BUY 15% RUB 2.79 3.2 2,528 2,550 5.6 6.1 8.9 10.3 8.1% 1.8% -1% 6% 15% 3% 12% 0% 2.32 3.14 3.8 Enel Russia ENRU RX - - RUB 0.99 - 504 624 - - - - 8.8% 2.4% 0% 9% 26% 8% -14% 8% 0.73 1.18 0.6 TGK-1 TGKA RX - - RUB 0.01 - 732 1,095 - - - - - 1.6% 1% 18% 33% -2% 29% 2% 0.01 0.02 1.9 Mosenergo MSNG RX - - RUB 2.08 - 1,190 1,484 - - - - 8.0% -0.5% -3% 9% 38% -11% -15% -8% 1.43 2.64 0.8 OGK-2 OGKB RX - - RUB 0.72 - 1,135 1,645 - - - - - 2.0% 2% 14% 46% 10% 42% 27% 0.44 0.74 2.3 TGK-2 TGKB RX - - RUB 0.004 - 88 183 - - - - - 1.1% -3% -4% 14% 76% 75% 76% 0.00 0.01 0.31 Quadra TGKD RX - - RUB 0.003 - 76 503 - - - - - 0.2% 0% 0% 15% 5% -12% 0% 0.00 0.00 0.03 Irkutskenergo IRGZ RX - - RUB 11.86 - 812 2,012 - - - - - 1.9% 0% -5% 21% -14% -29% -15% 7.90 17.98 0.06

Utilities - Grids RusGrids RSTI RX - - RUB 1.56 - 4,444 16,029 ------0.1% 0% 21% 54% 21% 9% 12% 0.89 1.74 9.7 RusGrids pref. RSTIP RX - RUB 2.14 - 64 ------0.5% -10% 11% 91% 42% 23% 31% 1.02 2.43 0.6 Federal Grid Co. FEES RX BUY 33% RUB 0.19 0.25 3,429 6,336 3.0 3.0 2.6 2.7 5.1% 1.6% 3% 2% 25% -4% 0% -7% 0.14 0.24 8.3 Moscow UTD MSRS RX - - RUB 1.13 - 788 2,080 - - - - - 0.9% 0% 7% 25% 1% 44% -6% 0.72 1.28 0.08 MRSK Center MRKC RX - - RUB 0.27 - 165 825 - - - - - 3.8% 3% 14% 25% -8% -6% -14% 0.20 0.33 0.12 Lenenergo LSNG RX - - RUB 6.06 - 750 20,366 - - - - - 0.0% -2% - 7% -16% 5% -14% 5.62 7.34 0.08 Lenenergo pref. LSNGP RX - - RUB 155.80 - 19,293 ------0.2% -8% - 30% 28% 41% 27% 101.55 172.15 1.3 MRSK North-West MRKZ RX - - RUB 0.05 - 68 287 - - - - - 1.5% -4% 1% 13% -4% -27% -7% 0.04 0.07 0.03

Diversified Holdings AFK Sistema (DR) SSA LI HOLD -21% USD 4.8 3.8 2,314 - - - - - 0.8% 3.1% -2% 28% 64% 0% 69% -2% 2.65 6.05 0.9 AFK Sistema AFKS RX HOLD -12% RUB 17.0 15 2,351 - - - - - 0.8% 2.8% 0% 21% 50% 12% 83% 11% 9.42 19.40 9.2

Telecommunications MTS MTSS RX BUY 7% RUB 328.0 350 8,357 15,244 4.9 4.8 10.3 9.7 8.9% 1.3% 0% 3% 23% 7% 21% 3% 254.0 348.1 22.3 MTS (DR) MBT US BUY -4% USD 9.3 9 8,226 15,114 4.9 4.8 10.2 9.5 8.9% 0.0% -2% 8% 35% -5% 9% -9% 6.4 11.0 36.3 VEON VEON US HOLD -5% USD 1.8 1.7 3,145 12,933 3.5 3.4 6.4 5.4 13.0% -1.6% 2% 27% 21% -29% -26% -29% 1.3 3.2 9.2 VEON, NL VEON NA HOLD -3% USD 1.8 1.7 3,084 12,872 3.5 3.4 6.3 5.3 n/a 3.2% 2% 14% 22% -29% -28% -29% 1.1 2.9 0.2 RTKM RX HOLD -3% RUB 82.6 80 3,880 5,680 3.6 3.4 17.1 14.7 6.0% -0.1% -3% 1% 23% 4% 6% 5% 64.0 92.0 4.0 Rostelecom pref. RTKMP RX HOLD -4% RUB 74.7 72 156 - - - - - 6.7% 0.4% -1% 6% 24% 11% 21% 6% 58.5 83.0 0.5

Media YNDX US HOLD -13% USD 43.5 38 14,302 13,374 15.3 11.9 30.9 22.1 0.0% 1.5% 4% 12% 41% 2% 15% 0% 28.9 48.6 93.1 Yandex YNDX RX HOLD 1% RUB 3,009 3,030 14,204 13,276 15.2 11.8 30.7 21.9 n/a 1.4% 4% 6% 27% 12% 22% 12% 1,898 3,104 25.3 Mail.Ru Group MAIL LI BUY 6% USD 18.9 20 4,094 4,341 7.7 6.6 13.5 10.8 n/a 1.7% 1% 12% 43% -7% -20% -15% 12.9 25.7 2.0 Qiwi QIWI US BUY 23% USD 14.7 18 915 844 6.1 4.2 9.1 5.9 6.3% 4.9% -3% 19% 23% -30% -24% -23% 9.27 24.68 4.7 HeadHunter HHR US HOLD -31% USD 23.1 16 1,156 1,199 20.8 16.6 32.7 24.4 2.5% 2.2% 2% 39% 63% 7% 37% 10% 12.7 25.4 1.7

Industrials AFLT RX UR - RUB 89.6 - 1,431 1,431 - - - - 3.5% 2.2% -3% 26% 30% -15% -8% -13% 57 120 30.9 Globaltrans GLTR LI BUY 28% USD 5.8 7.5 1,044 1,504 4.4 4.1 6.5 5.9 14.3% 0.7% 1% 9% 7% -31% -36% -34% 5.1 9.5 0.9 Globaltruck GTRK RX HOLD 32% RUB 41.8 55 35 86 5.2 4.0 11.8 4.8 n/a 1.1% -2% 1% 31% -28% -40% -29% 29 70 0.1 United Wagon CompUWGN RX - - RUB 240 - 400 1,186 ------0.6% -1% -1% -1% -28% -40% -23% 203 417 0.019 Global Ports GLPR LI - - USD 2.7 - 523 1,288 ------1.4% -2% 3% 1% -21% 3% -19% 2.1 3.8 0.045 NCSP (DR) NCSP LI - - USD 11.5 - 2,953 3,489 - - - - - 13.9% 14% -6% -15% -28% 31% -23% 8.1 16.0 0.031 NCSP NMTP RX - - USD 0.16 - 3,067 3,603 - - - - - 21.3% 18% 27% 38% 32% 43% 23% 7.4 11.1 0.557 Sollers SVAV RX - - RUB 256 - 126 206 - - - - - 0.2% -1% -2% 21% -6% -18% -8% 199 325 0.058 Note: Prices are calculated using SPOT and expected inflation differential

Source: Bloomberg, BCS GM

7

Equity Daily

Wednesday, 17 June 2020

Commodities

Commodity Close 1D 1W 1M 3M 6M 12M YTD 52WL 52WH Energy Brent ($/bbl) 40.7 2.1% 0% 24% 37% -38% -34% -38% 16 72 WTI ($/bbl) 38.4 3.4% -1% 30% 34% -36% -27% -37% -38 64 Gas, USA ($/tcm) 50.8 -12.3% -19% -14% -25% -40% -40% -32% 51 103 Gas, Europe ($/tcm) 63.1 1.7% 17% 17% -37% -56% -50% -54% 10 411 Metals Gold ($/oz) 1,727 0.1% 1% -1% 14% 17% 29% 14% 1,333 1,765 Silver ($/oz) 17.46 0.4% 0% 5% 35% 2% 17% -2% 11.64 19.65 Palladium ($/oz) 1,938 0.0% -1% 3% 21% -2% 32% 0% 1,384 2,884 Platinum ($/oz) 825 0.5% -1% 5% 24% -11% 3% -15% 564 1,042 Nickel ($/t) 12,940 3.5% 1% 10% 10% -8% 9% -8% 11,040 18,625 Copper ($/t) 5,759 2.0% 0% 12% 11% -6% -1% -6% 4,577 6,301 Zinc ($/t) 2,004 2.4% 0% 3% 4% -12% -22% -13% 1,772 2,660 Aluminum ($/t) 1,587 2.1% 1% 11% -3% -10% -9% -12% 1,420 1,833 Agricultural Wheat ($/bu) 5.93 0.0% 2% 0% 3% 0% 0% -1% 5.58 6.30 Corn ($/bu) 3.08 -0.6% 0% 4% -12% -18% -30% -18% 2.87 4.59 Cotton ($/pound) 0.56 0.0% -3% 0% 2% -13% -10% -15% 0.45 0.69 Soybean ($/bu) 8.54 -0.2% 0% 4% 6% -6% 0% -9% 8.07 9.35

Source: Bloomberg, BCS GM

Equity Indices

Index Close 1D 1W 1M 3M 6M 12M YTD 52WL 52WL date 52WH 52WH date MSCI EM 990 2.4% -2% 10% 19% -9% -2% -11% 758 19/03/2020 1,147 20/01/2020 DJIA 26,290 2.0% -4% 11% 30% -7% 1% -8% 18,592 23/03/2020 29,551 12/02/2020 S&P 500 3,125 1.9% -3% 9% 31% -2% 8% -3% 2,237 23/03/2020 3,386 19/02/2020 Nasdaq 9,896 1.7% -1% 10% 43% 12% 27% 11% 6,861 23/03/2020 10,020 10/06/2020 FTSE 100 6,243 2.9% -1% 8% 21% -17% -15% -18% 4,994 16/03/2020 7,687 30/07/2019 DAX 12,316 3.4% -2% 18% 41% -8% 2% -7% 8,442 16/03/2020 13,789 17/02/2020 22,517 4.6% -2% 12% 32% -6% 7% -5% 16,553 19/03/2020 24,084 17/01/2020 BOVESPA 93,531 1.3% -3% 21% 31% -16% -5% -19% 63,570 19/03/2020 119,528 24/01/2020 Shanghai Composite 2,933 1.5% -1% 2% 5% -2% 2% -4% 2,660 19/03/2020 3,116 14/01/2020 Hang Seng Index 24,363 2.5% -3% 2% 6% -11% -10% -14% 21,696 19/03/2020 29,056 20/01/2020

Source: Bloomberg, BCS GM

8

Equity Daily

Wednesday, 17 June 2020

Depositary Receipts_BCSlist Commodity Close 1D 1W 1M 3M 6M 12M YTD 52WL 52WH Energy Brent ($/bbl) 40.7 2.1% 0% 24% 37% -38% -34% -38% 16 72 WTI ($/bbl) 38.4 3.4% -1% 30% 34% -36% -27% -37% -38 64 Gas, USA ($/tcm) 50.8 -12.3% -19% -14% -25% -40% -40% -32% 51 103 Gas, Europe ($/tcm) 63.1 1.7% 17% 17% -37% -56% -50% -54% 10 411 Metals Gold ($/oz) 1,727 0.1% 1% -1% 14% 17% 29% 14% 1,333 1,765 Silver ($/oz) 17.46 0.4% 0% 5% 35% 2% 17% -2% 11.64 19.65 Palladium ($/oz) 1,938 0.0% -1% 3% 21% -2% 32% 0% 1,384 2,884 Platinum ($/oz) 825 0.5% -1% 5% 24% -11% 3% -15% 564 1,042 Nickel ($/t) 12,940 3.5% 1% 10% 10% -8% 9% -8% 11,040 18,625 Copper ($/t) 5,759 2.0% 0% 12% 11% -6% -1% -6% 4,577 6,301 Zinc ($/t) 2,004 2.4% 0% 3% 4% -12% -22% -13% 1,772 2,660 Aluminum ($/t) 1,587 2.1% 1% 11% -3% -10% -9% -12% 1,420 1,833 Agricultural Wheat ($/bu) 5.93 0.0% 2% 0% 3% 0% 0% -1% 5.58 6.30 Corn ($/bu) 3.08 -0.6% 0% 4% -12% -18% -30% -18% 2.87 4.59 Cotton ($/pound) 0.56 0.0% -3% 0% 2% -13% -10% -15% 0.45 0.69 Soybean ($/bu) 8.54 -0.2% 0% 4% 6% -6% 0% -9% 8.07 9.35

Source: Bloomberg, BCS GM

Preferred Shares (BCS) Ticker Price, RUB Ticker Price, RUB Pref. (Disc.)/Prem. Avg 6M (Disc.)/Prem.

Surgutneftegas SNGS RX 40.0 SNGSP RX 34.9 -12.7% -7.8% Bashneft BANE RX 1,835 BANEP RX 1,452 -20.9% -15.3% Bashneft TATN RX 581 TATNP RX 561 -3.5% -5.2% Transneft - - TRNFP RX 135,200 - -

Mechel MTLR RX 67.2 MTLRP RX 85.3 26.8% 11.8% Mechel (ADR) MTL US 129 MTL/P US 43 -66.7% -72.5%

Sberbank SBER RX 208 SBERP RX 193 -7.0% -8.2%

Rostelecom RTKM RX 83 RTKMP RX 74.7 -9.6% -11.5%

RusGrids RSTI RX 1.6 RSTIP RX 2.14 37.7% 23.4%

GAZ Group GAZA RX 386.0 GAZAP RX 322 -16.6% -12.9%

Source: Bloomberg, BCS GM

9

Equity Daily

Wednesday, 17 June 2020

Fixed Income (bonds table)

Yield chg. 1D, Duration, Moody's S&P Fitch Volume, YTM BID ASK Coupon Maturity b.p. years rating rating rating $mn USD-denominated bonds RUSSIA 23 1.40% -11 3.00 Baa3 BBB- BBB 110.8 111.1 4.88% 3,000 16/09/2023 RUSSIA 30 1.89% -21 2.77 Baa3 BBB- BBB 115.6 116.1 7.50% 2,603 31/03/2030 RUSSIA 42 3.24% -15 13.85 Baa3 BBB- BBB 136.6 137.4 5.63% 3,000 04/04/2042 ALFARU 21 1.77% -9 0.83 Ba1 BB+ BB+ 104.7 105.5 7.75% 1,000 28/04/2021 SBERRU 21 1.58% -14 0.97 Baa3 - BBB 103.6 104.5 5.72% 1,000 16/06/2021 SBERRU 22 1.93% -4 1.53 Baa3 - BBB 106.4 107.0 6.13% 1,500 07/02/2022 VEBBNK 20 -0.38% -21 0.06 - BBB- BBB 100.3 100.5 6.90% 1,600 09/07/2020 VTB 20 0.71% -1 0.32 Baa3 BBB- WD 101.6 102.1 6.55% 827 13/10/2020 ALRSRU 20 0.85% 48 0.37 Baa2 BBB- BBB- 102.3 102.8 7.75% 494 03/11/2020 CHMFRU 22 2.30% 0 2.17 Baa2 BBB- BBB 107.6 108.6 5.90% 634 17/10/2022 GAZPRU 22 2.07% -4 1.61 Baa2 BBB- BBB 107.1 107.8 6.51% 1,300 07/03/2022 GAZPRU 28 3.04% -4 6.33 Baa2 BBB- BBB 112.4 113.4 4.95% 900 06/02/2028 GAZPRU 34 3.60% -3 9.23 Baa2 BBB- BBB 153.8 155.1 8.63% 1,200 28/04/2034 GAZPRU 37 3.68% -3 10.94 Baa2 BBB- BBB 144.8 146.2 7.29% 1,250 16/08/2037 GMKNRM 20 0.97% -30 0.36 Baa2 BBB- BBB- *- 101.2 102.1 5.55% 1,000 28/10/2020 LUKOIL 20 1.01% 12 0.39 Baa2 BBB BBB+ 101.6 102.4 6.13% 1,000 09/11/2020 LUKOIL 22 1.88% -4 1.86 Baa2 BBB BBB+ 108.7 109.7 6.66% 500 07/06/2022 LUKOIL 23 2.20% 1 2.66 Baa2 BBB BBB+ 106.0 106.9 4.56% 1,500 24/04/2023 MOBTEL 20 -27.56% -283 0.01 Ba1u BB+ BB+ 100.0 100.6 8.63% 307 22/06/2020 MOBTEL 23 2.52% 3 2.74 Ba1u BB+ BB+ 106.6 107.4 5.00% 500 30/05/2023 NVTKRM 21 1.13% 9 0.60 Baa2 BBB BBB 103.0 103.8 6.60% 650 03/02/2021 NVTKRM 22 2.20% 1 2.35 Baa2 BBB BBB 104.9 105.8 4.42% 1,000 13/12/2022 ROSNRM 22 2.33% -1 1.64 Baa3 BBB- WD 102.7 103.6 4.20% 2,000 06/03/2022 RURAIL 22 1.93% -14 1.70 Baa2 BBB- BBB 106.1 107.1 5.70% 625 05/04/2022 SIBNEF 22 2.42% 4 2.12 Baa2 BBB- BBB 103.6 104.9 4.38% 1,500 19/09/2022 SIBNEF 23 2.52% 2 3.13 Baa2 BBB- BBB 110.7 112.1 6.00% 1,500 27/11/2023 VIP 21 1.29% -9 0.60 Ba2u BB+ BBB- 103.5 104.4 7.75% 262 02/02/2021 VIP 22 2.26% -1 1.58 Ba2u BB+ BBB- 108.4 109.0 7.50% 417 01/03/2022 VIP 23 2.64% -4 2.42 Ba2u BB+ BBB- 108.1 108.8 5.95% 529 13/02/2023 Federal loan bonds (RUB-denominated) RUB bn OFZ 26215 4.69% -4 2.71 Baa3 BBB BBB 106.8 106.9 7.00% 250,000 16/08/2023 OFZ 26207 5.18% -5 4.99 Baa3 BBB BBB 116.9 116.9 8.15% 350,000 03/02/2027 OFZ 26212 5.30% -7 5.66 Baa3 BBB BBB 111.2 111.3 7.05% 350,000 19/01/2028

A ‘*+' mark indicates that the bond is on the Positive Watch, a ‘*-‘ mark indicates that the bond on the Negative Watch

Source: Bloomberg, BCS GM

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Equity Daily

Wednesday, 17 June 2020

Russia Calendar Corporate

Date Sector Company Event 18 June Oil & Gas Tatneft Conference call with management 19 June Russia CBR meeting Policy decision 19 June Strategy Wiener Borse CEE&CIS indices Effective date 19 June Strategy MVIS Russia Effective date 22-30 June Financial Services VTB Abbreviated IFRS for May 22-30 June Industrials Globaltrans Russia railways operating results June Oil & Gas Transneft BoD recommendation for 2019 dividends 2 July Financial Services Moscow Exchange Monthly trading volume data 7 July Metals & Mining Ferrexpo 2Q20 Production Report 7 July Financial Services Sberbank RAS for previous month 10 July Metals & Mining Severstal 2Q20 Operating Results & Trading update 10 July Metals & Mining Alrosa June Diamond Revenue 14 July Metals & Mining MMK 2Q20 Trading Update 15 July Metals & Mining NLMK 2Q20 Operating Results & Trading update 16 July Metals & Mining Alrosa 2Q20 Trading Update 16 July Retail Detsky Mir 2Q20 Trading Update 16 July Eurozone ECB meeting Policy decision 21 July Utilities RusHydro 2Q20 Operating Results 23 July Metals & Mining Severstal 2Q20 IFRS Results 24 July Russia CBR meeting Policy decision 20-24 July Metals & Mining NLMK 2Q20 IFRS Results 20-24 July Metals & Mining Polyus 2Q20 Operating Results & Trading Update 20-24 July Metals & Mining Highland Gold Mining 2Q20 Trading Update 27 July Retail Lenta 2Q20 Trading Update & IFRS Results 28 July Utilities Unipro 2Q20 RAS Results

Note: Dates may be subject to change by the company

BCS GM Recent Reports

Date Category Type Sector Company Reports (Available by subscription) 16 June Equity The Chart Retail Detsky Mir Price rises post lockup to SPO level – 2nd SPO possible = Overhang risk 15 June Equity Index Alert Strategy 0 MVIS Jun’20 Rebalance Review: No Impact on Russia 15 June Equity Economic Digest Economics 0 Sanction threat rears head, but S-T risk is low 15 June Equity Week Ahead Strategy 0 Macro, Oil, Equity / FI Strategy 15 June Equity Equity Strategy Strategy 0 Best S-T stocks to Out/Underperform 11 June Equity Under Review Retail X5 Retail/Magnit COVID hit overstated 11 June Equity Flows Strategy 0 Institutionals selling to Retail & ETFs 10 June Fixed Income Placement Preview TMT Veon Fair YTM for new 5Y RUB at 6.20-6.30% 9 June Equity Trading Idea Closed M&M 0 Short Severstal: Iron ore, export HRC prices surge – Current downside limited 9 June Equity Equity Strategy Strategy 0 RTKM replaces SVST on U/P list 8 June Equity Economic Digest Economics 0 Unbridled optimism exacerbates risks 8 June Equity Equity Strategy Strategy 0 Best S-T stocks to Out/Underperform 8 June Equity Trading Idea Closed M&M 0 Short NLMK: Closing on Stop Loss 8 June Equity Week Ahead Strategy 0 Macro, Oil, Equity / FI Strategy 5 June Equity An Economist’s View Economics 0 Recovery Plan: A Bit Of Everything 4 June Equity Trading Idea Retail X5 Retail/Magnit FIVE LI vs MGNT LI: MGNT outpaces FIVE on 1Q20 IFRS – Run unstainable in 2Q20 4 June Equity Alert M&M Norilsk Nickel Norilsk fuel spill overblown, but a hit to ESG 4 June Equity Flows Strategy 0 Euphoric Retail Gets an ETF Boost 4 June Equity Desk Note O&G 0 Base Case: Low price, M2M Downside 3 June Equity Downgrade Fertilizers Phosagro A Hold on Outperformance, No S-T triggers 2 June Equity Update Financials Moscow Exchange Promising Year, Good Dividends 2 June Equity Dividend Strategy Strategy 0 The (prolonged) Dividend Season Is Here 1 June Equity Economic Digest Economics 0 Russia searching for a crisis cure 1 June Equity Equity Strategy Strategy 0 Best S-T stocks to Out/Underperform 1 June Equity Week Ahead Strategy 0 Macro, Oil, Equity / FI Strategy

11

Research Department +7 (495) 785 5336 Head of Research Deputy Head of Research, Equity Deputy Head of Research, FI Head of Production Kirill Chuyko Slava Smolyaninov Maria Radchenko Mark S Bradford [email protected] [email protected] [email protected] [email protected] +7 (495) 213 15 26 +7 (495) 213 15 02 +7 (495) 213 15 35 +7 (495) 785 53 36 (ext. 14681)

Chief Economist Market Analysis Fixed Income Head of Russian Product Vladimir Tikhomirov, PhD Mark S Bradford Maria Radchenko Olga Sibiricheva [email protected] [email protected] [email protected] [email protected] +7 (495) 785 53 36 (ext. 14911) +7 (495) 785 53 36 (ext. 14681) +7 (495) 213 15 35 +7 (495) 785 53 36 (ext. 14618) Equity Strategy Metals & Mining Yuri Golban Production Team Slava Smolyaninov Kirill Chuyko [email protected] Nikolay Porokhov [email protected] [email protected] +7 (495) 213 15 06 [email protected] +7 (495) 213 15 02 +7 (495) 213 15 26 Seb Barendt Yakov Yakovlev Kirill Chuyko Oleg Petropavlovskiy [email protected] [email protected] [email protected] [email protected] +7 (495) 213 15 94 Elena Kosovskaya +7 (495) 213 15 26 +7 (495) 213 15 03 [email protected] Yulia Goldina Artem Bagdasaryan Anastasia Boyko Olga Dontsova [email protected] [email protected] [email protected] [email protected] +7 (495) 213 15 07 +7 (495) 213 15 08 +7 495 785 53 36 (ext. 18546) Anton Ostroukhov Vasiliy Mordovtsev [email protected] Retail & Utilities Global Equity Markets [email protected] Tatiana Kurnosenko Dmitriy Skryabin Alexey Gil +7 (495) 213 15 86 [email protected] [email protected] [email protected] Oil & Gas +7 (495) 213 15 09 +7 495 785 53 36 (ext. 17614) Svetlana Shcheglova [email protected] Kirill Tachennikov Maria Lukina [email protected] [email protected]

+7 (495) 213 15 04 +7 (495) 213 15 36 Vasiliy Mordovtsev [email protected] Industrials & Real Estate & Fertilizers Business Administrator Data Specialists +7 (495) 213 15 86 Anastasia Egazaryan Anna Zhukova Vasiliy Mordovtsev [email protected] [email protected] [email protected] Financial Services +7 (495) 213 15 39 +7 (495) 785 53 36 (ext. 14803) +7 (495) 213 15 86 Elena Tsareva Mikhail Skorina [email protected] TMT [email protected] +7 (495) 213 15 37 Maria Sukhanova +7 (495) 785 53 36 (ext. 12084) Veronika Yan [email protected] [email protected] +7 (495) 213 15 05 +7 (495) 785 53 36 (ext. 10475)

Institutional Sales & Trading (Moscow) +7 (495) 785 5336 (ext. 15048) Institutional Sales & Trading (London) +44 (207) 065 2023 Institutional Sales (New York) +1 (212) 421 8567 Private Client Service +7 (495) 785 5336 (ext. 15440)

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