Equity Daily Research

Equity Daily Research www.bcsgm.com

Thursday, 25 June 2020 Market

Market data IMF downgrade, US jobs weakness, COVID resurgence

… … Ahead: Cautious trade at play. The IMF cut its 2020 global growth forecast Dow Brent Shanghai* RTS to -4.9% from -3% predicted in April. Enthusiasm will be further tempered ahead ▼ ▼ ▲ - of US jobless claims, expected to remain extraordinarily high, while a resurgence -2.72% -4.91% - 0.00% in confirmed COVID-19 cases in the US (as well as Germany, LatAm), linked to the

RTS Index Index trading volume, $mn reopening of businesses, is also dimming the economic recovery outlook. In turn, 1,340 1,290 Brent has retreated, albeit is finding some support from US-China trade hopes. 1,240 1,270 Core news 1,140 Economics 1,250 1,040 Economics: Putin’s address – Tax reforms and new economic aid. Kremlin’s economic 1,230 940 agenda remains ultra-liberal, but besides more economic support, the new Recovery Plan includes some important innovations in taxation – a departure from 20 years of 1,210 840 17 Jun 18 Jun 19 Jun 22 Jun 23 Jun flat personal income tax rate – a cautious first step, but we see more to follow.

RTS Last 30dma 60dma 180dma Economics: SME activity rises to 88% of pre-crisis levels – +ive. Data shows recovery Volume, $ bn 0.00 1.32 1.17 1.28 in SMEs – the worst hit by the lockdown – may be far faster than anticipated – good for the economic outlook, albeit future performance will depend on COVID trends. RTS Sectors Indices – YTD Change Oil & Gas

YTD change Oil & Gas: US production bounces back, storage rises, oil prices tumble. This supports our view that oil has recovered too far, too fast and could retreat to $30-$35/bbl this Utilities -2% summer. We reiterate our defensive Best Ideas of Lukoil and SurgutNG prefs. Met&Min. -2% Metals & Mining Consum. -5% Polymetal (Hold): Exploration assets in Primorye sold – Neutral. The selling price of Telecoms -7% the assets is likely minor and should not materially affect Polymetal’s cash position. Financials -16% Petropavlovsk (Hold): POG shares to start trading on MOEX today – Slight +ve. RTS -17% Trading increases its liquidity and provides access to the MOEX investor base. Oil&Gas -26% Financials Sberbank (Buy): Joint businesses with Yandex to be reorganized – +ive. Sale of a 45% Equity Indices share in Yandex.Market and consolidation of 100% in Yandex.Money may support new Value 1D 1W 1М YTD developments in the ecosystem, but creates a new strong competitor in e-commerce. RTSI 1,281 n/a 3.5% 8% -17% MOEX 2,792 n/a 1.9% 3% -8% Halyk Bank (Buy): Dividend for 2019 suggested at 60% payout, 13% DY – +ive. A MSCI EM 1,011 -0.38% 1.6% 12% -10% surprise – DPS of KZT17/sh and $1.7/GDR – given the decision not to pay in April; S&P 3,050 -2.59% -2.0% 3% -5% suggests the bank sees improvements and confirms our positive stance on the name. DJIA 25,446 -2.72% -2.6% 4% -11% NASDAQ 9,909 -2.19% -0.0% 6% 11% TMT DAX 12,094 -3.43% -2.3% 9% -9% IT Sector: Tax relief for IT companies – Potentially +ive. The cut may still be somewhat FTSE 6,124 -3.11% -2.1% 2% -19% positive, depending on how the business is structured. The scale is too early to gauge – Hang Seng* - - 1.2% 8% -12% Shanghai* - - 1.5% 6% -2% should become clearer in the coming weeks. Nikkei* 22,336 0.21% -0.7% 9% -6% Yandex (Buy): Split of JVs with Sberbank – Mixed. The deal is no surprise. Agreeable S&P Future* 3,049 -1.84% -0.7% 6% -4% * Data as of 07:26 Moscow time price tag for Yandex.Market – moderate premium to Sberbanks’ spend. Mixed bag for Yandex – need to consolidate losses, share dilution, but fintech non-compete lifted. Commodities Price, $ 1D 1W 1М YTD Yandex (Buy): Management comments on current trends, taxi plans – Neutral. Brent 40.3 -4.91% -0.5% 15% -39% Preliminary 2Q20 GAAP was more or less in line with BCSe; ad seems to recover a bit WTI 37.9 -5.86% -0.1% 13% -38% slower, while ride-hailing – faster. As for plans to acquire Uber’s stake in Taxi – we see Gold 1,761 -0.41% 2.0% 2% 16% no imminent need, depends on the price. Silver 17.5 -2.47% 0.0% 2% -2% Nickel 12,510 -0.44% -2.6% 3% -11% Real Estate Copper 5,871 -0.41% 2.2% 12% -5% Real Estate: Higher thresholds for 6.5% subsidized mortgages – +ive. Higher Aluminum 1,564 -0.89% -0.9% 6% -13% thresholds allows for greater coverage of the supply of apartments in MSK, SPB and FOREX/Bonds Rates the regions. The program should visibly support demand in coming months. Value 1D 1W 1М YTD BCS GM Reports (Click to access) USD/RUB 69.56 1.05% -0.2% -3% 12% Trade Idea Opened: Long HSBK – EGM set, 2019 dividends on agenda ... 14% DY EUR/RUB 78.29 0.61% -0.1% 0% 13% EUR/USD 1.125 -0.50% 0.1% 3% 0% Update: TMT – Online is king Yield 1D 1W 1М YTD UST-10 0.68% -3 -6 2 -124 Bund-10 -0.45% -4 -5 5 -26 Today’s Calendar (full calendar inside) EMBI+spread 435 7 5 -29 137 None Russia 30 -UST 115 6 6 -7 51 Russia 42 3.14% 2 -9 -13 -43 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.

Equity Daily

Thursday, 25 June 2020

MOEX Russia Index / MSCI Russia Market

MOEX Russia Index MSCI Russia IMF downgrade, US jobs weakness, COVID resurgence 3,400 950 3,200 850 Ahead: Cautious trade at play. The IMF again downwardly revised its global 3,000 750 growth forecast, projecting 2020 GDP of -4.9%, lower than the -3% predicted in 2,800 650 April. Enthusiasm will be further tempered ahead of US jobless claims, which are 2,600 550 expected to remain extraordinarily high, while a resurgence in confirmed COVID- 2,400 450 19 cases in the US (as well as Germany, LatAm), linked to the reopening of 2,200 350 businesses, is also dimming the economic recovery outlook. In turn, Brent has 2,000 250 retreated, albeit is finding some support from US-China trade hopes. Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 US down, Asia mixed. US (S&P 500 -2.59%, DJIA -2.72%, NASDAQ -2.19%). Asia RTS Futures this morning (Hang Seng closed, Shanghai closed for holiday, Nikkei +0.21%). S&P OPEN 125580 CURRENT c 124540 ▼ 500 Futures (-1.84%), Brent futures this morning $40.1/bbl, lower than the open. S&P 500 Review/Trader’s Comment [Tuesday – iMOEX +1.04%]: A Trump boost. Markets 3,400 climbed ahead of the holiday, driven higher by the favorable ‘trade’ wind emanating from beyond our shores. Trump sacrificed the oratory reputation of 3,200 one of his acolytes to smooth the US-China narrative – the ‘Phase 1’ trade deal 3,000 was on track. Utilities were the only sector to close lower – local retail focus 2,800 temporarily shifted away from the dividend payers; RSTI the outlier (+1.48%) on consolidation chatter. M&Mers saw GMKN (+3.15%) surge, the recent spillage 2,600 forgotten and dividend story intact. Gold (PLZL +1.79%, POLY +2.39%) was aided 2,400 by dollar weakness. The energy plays were positive but marginally so – the 2,200 powers that be have exhausted themselves talking crude northwards, so now Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 time for a pause. Elsewhere, SBER (+1.33%) remained solid, backed by a bid to Brent, (Futures) $/bbl. European financials. TCSG (+4.69%) was the enigma, squeezed higher on nothing obvious. TMT en feugo: YNDX (+2.7%) boosted by Putin’s comments re: IT tax 80 breaks. MAIL (+9.36%) continued to squeeze all the juice it can from the local 70 listing trade. Overall, volumes remained well below par at >30% shy of norm. 60 Putin’s late in the day address to the nation seen as positive, but ahead of the 50 holiday not many remained at their desks. 40 For the Day [Wednesday Russia Markets closed]: Brent crude (-4.91% to 30 $40.3/bbl), ruble depreciated against the US dollar to 69.56, RTS (+n/a) and MOEX 20 Russia (+n/a). 10 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20

Brent Futures OPEN 40.35 CURRENT c 40.1 ▼ Mark S Bradford, [email protected] Trading Comment: Stuart Samuels, [email protected] RTS: Sector Performance YTD change

Utilities -2% Met&Min. -2% Consum. -5% Telecoms -7% Financials -16% RTS -17% Oil&Gas -26%

Source: Bloomberg

Equity Daily

Thursday, 25 June 2020

Event watch Date Company Event Comment 25-30 June VTB Abbreviated IFRS for May Monthly IFRS results will provide an advanced insight into 2Q20 IFRS – important, given the current, volatile environment. 25-30 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%. 2 July Moscow Exchange 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. 8 July Sberbank RAS for previous month RAS results will reveal the early signs of the impact from RUB depreciation and macroeconomic weakness. 10 July Severstal 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 Polyus 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 Unipro 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. 28 July Enel Russia 2Q20 IFRS Results COVID’s effect on electricity market dynamics and 2019’s high base should lead to a significant y/y decrease in financials. 29 July MMK 2Q20 IFRS Results Financials are likely to worsen q/q, potentially hit by declining sales volumes and steel prices. Still, a decline in iron ore prices and the ruble’s devaluation may provide some support by reducing costs. 29 July Fed meeting Policy decision Further rate cuts appear impotent – already cut to near nil 16 Mar. QE and other liquidity operations now operative to keep markets functioning smoothly amid COVID-19 pandemic: Pledged $700bn for asset purchases; as of 3 April, Fed balance sheet hit record US$5.86tn. 30 July EVRAZ 2Q20 Trading Update We expect steel sales to improve slightly over the quarter, while realized prices should decline on the back of reduced domestic and global demand. 30 July Magnit 2Q20 Trading Update & IFRS LfLs and IFRS numbers will be in the spotlight. 2Q20 results will be highly dependent on the spread of COVID-19, highlights which may undermine sales if production and demand suffer.

Equity Daily

Thursday, 25 June 2020

Economics

Putin’s address – Tax reforms and new aid to the economy BCS Take: Kremlin’s economic agenda remains ultra-liberal, but besides increased support to the economy and people, the new Recovery Plan include some important innovations in taxation – a departure from 20 years of flat personal income tax rate, a cautious first step, but we see more to follow. News: A mix of populism … On 23 June, a day before the Victory Day parade and a week before the vote on the new Constitution, President Putin addressed the nation on the issue of current affairs. While a large part of his address was devoted to the pandemic – he said that the situation in Russia is improving, but caution is still required – in the speech he also presented a few new initiatives that were either prepared by the Cabinet as part of the new Recovery Plan or represented homework of the Finance Ministry that was completed well before the pandemic started. The former included promises of increased state aid to the economy: new one-off payouts to families with kids of Rb10,000 per child; extension of program of subsidized interest rates for mortgages at 6.5% to include housing with cost of up to Rb6mn (Rb12mn for large cities); additional funding for subsidized corporate loans (Rb100bn), regional budgets (Rb100bn) and road construction (Rb100bn). … and budget consolidation. The latter initiatives – which we believe were prepared by Minfin a long time ago – included three key initiatives: an introduction of a ‘mild version’ of a progressive personal income tax rate (2ppts up to 15% for the part of annual income that exceeds Rb5mn – this money will fund juvenile healthcare); a unified annual tax of Rb5mn for Russians that manage their foreign assets via companies that they control; and provision of major tax breaks for Russia-based IT industry (a cut in profit tax from 20% to 3% and in payroll tax from 14% to 7.6%). Full support to prudent fiscal, monetary policies. Putin praised the government and CBR for the pursuit of conservative policies and stressed that there will be no change in the two core principles underlying these policies – the ‘budget rule’ and ‘inflation targeting’. He stressed that the CBR has recently cut its rate to a historic low of 4.5% - in our view, this comes as a sign that the Kremlin thinks that monetary easing is mostly done, for now. Analysis: Kremlin’s economic agenda remains ultraliberal. We see Putin’s address as yet further evidence that the economic policy of Russian authorities continues to be based on ultraliberal approaches – that includes conservative spending, protection of state coffers, a minimalist approach to social expenditures and a push toward higher taxation for people and companies. Such policies are in a stark contrast to what is happening in other parts of the world where governments and regulators race to deliver huge aid packages, often at expense of a critical rise in their leverage. Contrary to that, Russia remains extremely modest in its anti-crisis spending and continues to mix delivery of any new aid with moves towards increased levels of taxation. Putin’s address marked an important departure from 20 years of flat personal income tax rate: while his first step was extremely cautious, we would not be surprised to see more of similar tax initiatives to follow later. Overall, despite the crisis, Russia’s external debt remained unchanged, its international reserves continued to rise and its currency made almost a full comeback to its pre-pandemic levels.

Equity Daily

Thursday, 25 June 2020

Economics SME activity rises to 88% of pre-crisis levels – +ive BCS Take: SMEs were the worst hit by the lockdown; data shows recovery in this sector may be far faster than earlier anticipated – good news for the Russian economic outlook, albeit future performance will depend on epidemiological trends. News: Three-quarters of SMEs are back. According to data provided by Evotor – a Russian operator of 650,000 online cashier registers – on 21 June, turnover of small and midsize companies in areas of trade and services reached 88.2% of the levels seen in early March, before the pandemic. The total number of businesses in operation has grown to 76.1% of the pre-crisis levels. Over the week 15-21 June, the biggest increases in turnover were recorded among tourist agencies (39.3% to 63.1% of pre- crisis levels), box offices (39.7% to 60.3%), dental clinics (72.5% to 91%) and beauty salons (72.3% to 88.3%). In mid-June, trade turnover in non-food retail outlets was hovering at 50-79% of pre-crisis levels, in food retail – at 95% and insurance companies have seen almost a full comeback from the crisis (98.5%). Analysis: All eyes on the future pandemic trend. SMEs, trade and service industries were among the biggest victims of the lockdown. Therefore, signs of continued recovery in these segments of the Russian economy is very good news, especially as they show that a comeback in operations is taking place at a much faster pace and includes more companies than one might expect. Provided that C- virus statistics in Russia show continued declines – which, however, is not a given as seen from the trends in other parts of the globe – we can expect to see continued positive dynamic in areas of services and trade in the next few weeks. In Moscow, on 23 June, cafes and restaurants started to operate in full; on 25 June, Moscow region joins with the removal of all existing quarantine restrictions for shopping malls, services and restaurants.

Vladimir Tikhomirov, PhD [email protected]

Oil & Gas

US production bounces back, storage rises, oil prices tumble BCS Take: This rather sharp market reaction supports our argument that oil has recovered too far, too fast. We maintain our view that oil could retreat to the $30- $35/bbl range this summer, and reiterate our defensive Best Ideas of Lukoil and SurgutNG prefs. News: The US Energy Information Agency released weekly data yesterday. The data showed both production increases of 500kbd and stock builds of 3.4mm bbl of crude. Additionally, there were further indications of significant increases of COVID-19 in some states so far lightly hit, including Texas and Florida. Together, this news sparked a 5-6% correction in oil prices. Brent fell by c$2/bbl, from c$42/bbl to c$40/bbl, while WTI fell to $37.7/bbl. Analysis: While negative, the numbers from the US were not one-sidedly so. Yes, US oil production rebounded by 500kbd week-on-week to 11.0mmbpd, the first increase since output began sliding from 13mmbpd in late March due to the COVID-19 crisis, but that increase was mostly due to the return to production of some platforms shut by tropical storm Cristobal. Yes, crude stocks grew by 3.4mm bbl, but stocks of refined products fell by 1.7mm bbl, partly because demand for refined products rose by 1.1mmbpd to 18.3mmbpd – still below the 20mmbpd of January, but well above the 13.8mmbpd seen at the trough of the COVID-19 crisis in early April. In other words, the IEA’s numbers by themselves do not seem to quite justify a 5%+ correction in oil prices, so some of the blame also likely rests with the signs of a surge in COVID-19 cases in Texas and elsewhere.

Equity Daily

Thursday, 25 June 2020

Regardless, this rather sharp market reaction supports our argument that oil has recovered too far, too fast. There is a massive global storage overhang, while oil producers in the US are receiving a relatively solid price signal to return shut-in wells back to producing status, while idle oil production capacity globally is very high due to the OPEC+ constraints and reductions in producers outside that organization and the US. We maintain our view that oil could retreat to the $30-$35/bbl range this summer, and reiterate our defensive Best Ideas of Lukoil and SurgutNG prefs.

Ronald P Smith, [email protected] Vasiliy Mordovtsev, [email protected]

Metals & Mining

POLY LN Polymetal Recom'd HOLD MCap, $mn 9,183 LP, GBp 1,583 EV, $mn 10,280 Polymetal sold exploration assets in Primorye – Neutral TP, GBp 1,600 ADTV 3m, DR, $mn 36.2 BCS Take: The selling price of exploration assets in Primorye is likely to be minor Upside 1% ADTV 3m, Shares, $mn 18.4 and should not materially affect Polymetal’s cash position. Excess return -6% 20E 21E Free float 41% EV/EBITDA, x 6.9 7.0 News: Polymetal sold Primorsky Mining and Geological Company. The company Free float, $mn 3,749 P/E adj., x 9.8 10.2 owns several licensed sites in Primorsky Krai. Polymetal said the assets did not Source: Bloomberg, BCS GM meet the company’s expectations. Polymetal has no other assets in Primorsky Krai. The assets sold include licenses for Levoberezhniy, Kumirny, Tayoznoye, 1,747 POLY LN, GBp RTSI, USD Elizavetinskoye and Blagodatenskaya deposits. Interfax reported.

1,547 1,347 1,147

947

747

547 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20

POG LN Petropavlovsk Recom'd HOLD MCap, $mn 1,236 POG shares to start trading on MOEX today – Slight +ve LP, GBp 30.0 EV, $mn 1,313 TP, GBp 29.0 ADTV 3m, DR, $mn 5.7 BCS Take: Trading on MOEX increases the company’s liquidity and provides access Downside -3% to the Moscow Exchange investor base. Excess return -19% 20E 21E Free float 90% EV/EBITDA, x 2.7 2.7 News: Petropavlovsk shares to start trading on MOEX from today. Interfax Free float, $mn 1,107 P/E adj., x 4.7 4.6 reported – 3.3bn of shares with a par value of 0.01 pounds were admitted to Source: Bloomberg, BCS GM trading. The paper ticker name is POGR. Petropavlovsk filed an application to include its shares in the list of securities admitted to trading on the Moscow Exchange in mid-June. Listing on the Moscow Exchange will remain secondary to 30.7 POG LN, GBp RTSI, USD LSE listing, where POG shares are now listed. The company will not place or issue 25.7 new shares to obtain the secondary listing. 20.7 Kirill Chuyko, [email protected] 15.7 Oleg Petropavlovskiy, [email protected] 10.7 Artem Bagdasaryan, [email protected] 5.7 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20

Equity Daily

Thursday, 25 June 2020

Financial Services

SBER RX Sberbank Recom'd BUY MCap, $mn 65,217 LP, RUB 208 3m chg. 8% Joint businesses with Yandex to be reorganized – +ive TP, RUB 280 ADTV 3m, Shares, $ mn 218.0 BCS Take: The sale of a 45% share in Yandex.Market (Rb20bn profit) and the Upside 35% ADTV 3m, DR, $mn 52.7 consolidation of 100% in Yandex.Money may support new developments in the Excess return 20% 20E 21E ecosystem, but creates a new strong competitor in e-commerce. Free float 48% P/BV, x 1.0 0.9 Free float, $mn 31,174 P/E, x 6.8 5.8 News: Sberbank to sell 45% in e-commerce JV Yandex.Market B.V. The JV includes Source: Bloomberg, BCS GM such brands as Yandex.Market, Beru, Supercheck, etc. – the sale will be for Rb42bn with potential profit of Rb20bn, subject for final terms. Seperately, Sberbank will SBER RX, RUB MOEX Russia Index, RUB 286 consolidate 100% of the e-payment service Yandex.Money after acquiring 25% + 1Rb 266 for Rb2.4bn at a substantial discount to the market value – given the deal price is set according to the agreement signed in 2013, final price is subject for FX rate. 246 226 Analysis: Yandex.Money developed well – non-banking segments still c3% of revenue. 206 The e-commerce JV with Yandex was created in 2017 with Rb30bn investments from 186 Sberbank for a 45% stake. For 3M20, Yandex.Market net loss totaled Rb2.7bn, while 166 Yandex.Money net profit totaled Rb450mn. Sberbank disclosed that Yandex.Money Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 developed well since acquisition of its controlling stake in 2013 – turnover grew 13x to Rb503bn and EBITDA showed a 16x increase to Rb2.9bn. Yandex.Money holds leading

positions across B2B and B2C segments. Still, the financial impact of Sberbank’s non-

banking segments is limited at c3% of revenue.

HSBK LI Halyk Bank Recom'd BUY MCap, $mn 3,869 LP, USD 13.3 3m chg. 73% Dividend for 2019 suggested at 60% payout, 13% DY – +ive TP, USD 15.0 ADTV 3m, DR, $mn 1.4 BCS Take: A surprise – DPS of KZT17/sh and $1.7/GDR – given the decision not to Upside 13% pay dividends in April. The move suggests the bank sees improvements and Excess return -3% 20E 21E confirms our positive stance on the name. Free float 19% P/BV, x 1.1 1.0 Free float, $mn 731 P/E, x 5.8 5.1 News: Halyk Bank announced an EGM for 23 July to discuss dividend payments. Source: Bloomberg, BCS GM The recommendation implies KZT17.08/sh or $1.7/GDR, which provides a 13% DY

on a 60% payout. The dividend record date is 23 July. 16.6 HSBK LI, USD RTSI, USD Analysis: Decision a (positive) surprise, given no dividends in April. Halyk Bank sees 14.6 an improved outlook – state of emergency lifted 11 May, improved traffic, etc. The 12.6 EGM materials also state that GDP in Kazakhstan fell 0.2% over 4M20 and some industries even managed to show growth. Halyk Bank also provided a negative 10.6 scenario with CET1R staying at 17% end-2020, given the 2019 dividend payment. 8.6 Currently, CET1R is 20.6% – 2019 dividend payment removes 3pp of CET1. 6.6 Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 Elena Tsareva, [email protected]

Veronika Yan, [email protected]

TMT

Yandex / Mail.ru / Qiwi / HeadHunter HHR US MAIL LI QIWI US YNDX US Recom'd SELL BUY BUY BUY Target price 22.3 26.5 25.1 55.8 Tax relief for IT companies – Potentially +ive Last price 23.0 22.5 18.0 50.3 Upside -3% 18% 40% 11% BCS Take: This tax cut does not seem to apply to internet companies in our coverage Excess return -15% 5% 22% -1% directly, but may still be somewhat positive, depending on how the business is Currency USD USD USD USD structured. The scale is too early to gauge – should get clearer in the coming weeks. ADTV 3m, $mn 1.6 2.0 5.6 97.4 MCap, $mn 1,149 4,890 1,132 16,523 News: Putin announced tax relief measures for IT companies on Tuesday. These EV, $mn 1,192 5,178 997 15,714 measures should be indefinite, and suggest a cut in social security tax on salaries EV/EBITDA, 20E 23.8 10.0 7.2 21.2 P/E adj., 20E 38.7 18.2 11.2 48.7 from 14% to 7.6% and in income tax from the standard 20% to 3%. He did not Source: Bloomberg, BCS GM specify what would be the approach to tell if a company is eligible.

Equity Daily

Thursday, 25 June 2020

Analysis: May be positive for internet stocks under coverage; scale unclear for now.

190 RTS, USD YNDX US MAIL LI Earlier this week, Vedomosti printed the details of (presumably) this tax relief plan HHR US QIWI US (all details matched the President’s speech) and the plan only covered companies 160 earning 90%+ revenue from software sales. Technically, then, it should not directly apply to companies in our coverage (e.g., Yandex earns most of revenue from ad), 130 except possibly for Mail.ru’s game segment (accounted for 20% EBITDA in 2019). 100 However, it may be applied to some companies’ subsidiaries – if, for instance, a subsidiary employs part of headcount and provides software sale and support 70 services within the group. We believe this could be the case at least for some companies in our coverage – we should get more info on the potential impact within 40 Jun 19 Aug 19 Oct 19 Dec 19 Feb 20 Apr 20 the coming weeks. It should be at least true for Yandex, which on yesterday’s call

said that it expects a positive impact from the law, not “revolutionary”, but still

some. We estimate, if Yandex gets tax relief on most of its product development salaries, it could at c2% to EBITDA, based on 2019 numbers.

Yandex Split of JVs with Sberbank – Mixed BCS Take: The deal is not a surprise – matches earlier press reports. Agreeable price tag for Yandex.Market – moderate premium to Sberbanks’ spend. Mixed bag for Yandex – need to consolidate losses, share dilution, but fintech non-compete lifted. News: Yandex announced a split of JVs with Sberbank, new share placement. Key highlights of the announcement and yesterday’s conference call are below. . Yandex will acquire a stake in Yandex.Market, sell a stake in Yandex.Money o Binding agreement. Deal is to close in 3Q20, subject to antitrust approval o Yandex will buy Sberbank’s 45% in Yandex.Market (price comparison site, e- commerce player Beru) for Rb42bn (c$0.6bn). Yandex will thus be the sole owner of the business, apart from the employee incentive program (10%). o Yandex will sell to Sberbank 25%+Rb1 in Yandex.Money for Rb2.4bn. This should lift the non-compete agreement in fintech for Yandex . Placement of newly issued shares of c$1bn (6% capital, 3% votes). o $400mn public placement ($60mn underwriters option on top) at $49.25 (2% discount to yesterday’s close); originally planned $200mn offering o $600mn private placement in equal parts – for VTB (via VTB Capital) and two investment vehicles; in one of which, the beneficiary is Roman Abramovich, and in the other – Evraz shareholders Alexander Abramov and Alexander Frolov. All will agree on a 2y lock-up and not to increase their stakes above 3.99% each within two years. They also obtained certain 2y rights to participate if Yandex’ e-commerce needs capital in the future . Plans in e-commerce – to get in top-3 and breakeven by 2023 o Will invest to beef up logistics; more integration with Yandex services o Breakeven target for the whole business; more remote for Beru alone o Will increase investments from cRb12bn for Yandex.Market in 2019, but less than 2x, according to management. Rb19bn on Yandex.Market’s books should come handy.

Yandex Management comments on current trends, taxi plans – Neutral BCS Take: Preliminary 2Q20 GAAP was more or less in line with what we expected; ad seems to recover a bit slower, while ride-hailing – faster. As for plans to acquire Uber’s stake in Taxi – we see no imminent need, depends on the price. News: Yandex released preliminary 2Q20 numbers, commented on Taxi plans. This came as part of the announced deal with Sberbank. . Preliminary 2Q20 GAAP – revenue flattish y/y, adj EBITDA down c40% o This is due to pandemic measures hitting ad, ride-hailing, car-sharing o Search&Portal revenue fell 10-15% y/y, adj EBITDA – 20-25%. In recent weeks, revenue is still down, but there is sequential recovery

Equity Daily

Thursday, 25 June 2020

o Taxi – revenue up 35-40% – boost in express e-grocery and B2B delivery (accounted on gross basis), EBITDA between zero and Rb0.5bn loss. Excluding Rb700-750mn self-driving spend, EBITDA was positive, despite the hit to ride-haling, which actually saw a slight y/y increase in GMV in June . Yandex.Taxi IPO is currently off agenda; Yandex is considering buying out Uber. o Yandex is looking into acquiring Uber’s stake; depends on the price. This is among the reasons why it placed shares for the deal with Sberbank instead of tapping into its $2.5bn cash cushion (excluding Yandex.Taxi) o Yandex believes it is reasonable to move car-sharing into Yandex.Taxi unit, while taking out self-driving into direct ownership with Uber. Uber, according to Yandex, supports these ideas

Maria Sukhanova, [email protected]

Real Estate

Higher thresholds for 6.5% subsidized mortgages – +ive BCS Take: Higher thresholds for apartments allows for greater coverage of the supply of apartments in Moscow, St Petersburg and the regions. The program should provide visible support for demand in coming months. News: Putin announced an increase of thresholds for mortgage subsidized loans. Putin addressed the nation on 23rd June and revealed new economic support measures. . Thresholds (downpayment of 20% or less) were increased from Rb3mn to Rb6mn in the regions and from Rb8mn to Rb12mn in Moscow and St Petersburg . To remind, the government targets to spend Rb6bn, but the size of the program may be amended, according to Putin’s earlier statements. The program is valid up to 1 November . Demand for subsidized loans is high: as of end-May, Russian banks approved 81,900 mortgages, with an approval ratio of 83%. . The Real estate sector should benefit from the announced changes. PIK as a developer focused on mass market real estate and with a high share of mortgage deals in sales is positioned best to capture the gain from higher demand

Anastasia Egazaryan, [email protected]

Equity Daily

Thursday, 25 June 2020

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 1,281 173,164 0.0% 3% 8% 33% -17% -8% -17% 832 1,647 1,219 MOEX Russia IMOEX Index RUB 2,792 170,898 0.0% 2% 3% 16% -8% 1% -8% 2,113 3,220 1,195

Oil & Gas Gazprom (DR) OGZD LI BUY 75% USD 5.47 9.57 62,784 112,294 5.8 4.5 8.0 5.5 8.0% -2.5% -2% 2% 19% -33% -25% -33% 4.08 8.42 42.7 Gazprom GAZP RX BUY 76% RUB 195 343 64,893 114,402 5.9 4.6 8.2 5.7 7.9% -0.1% -1% 0% 9% -24% -16% -24% 164 271 141.6 NOVATEK (DR) NVTK LI BUY 36% USD 154 210 46,832 64,773 25.0 14.5 n/m 10.6 2.0% -2.1% 0% 3% 41% -25% -25% -25% 88.5 219.8 17.1 NOVATEK NVTK RX BUY 40% RUB 1,076 1,505 47,458 65,399 25.2 14.7 n/m 10.8 2.0% 0.0% 0% 0% 25% -15% -17% -15% 716 1,380 28.8 Rosneft (DR) ROSN LI BUY 53% USD 5.23 8.00 55,470 136,926 7.6 5.4 23.1 8.1 2.1% -3.6% -1% 4% 35% -28% -21% -27% 2.88 7.85 14.5 Rosneft ROSN RX BUY 54% RUB 373 573 57,534 138,990 7.7 5.5 24.0 8.4 2.1% 0.0% 0% 2% 25% -17% -10% -17% 234 486 71.3 LUKOIL (DR) LKOD LI BUY 44% USD 76.5 110 49,878 51,548 4.2 3.6 9.6 7.6 9.9% -4.0% 0% 3% 33% -22% -9% -23% 46.7 109.1 58.7 LUKOIL LKOH RX BUY 45% RUB 5,449 7,881 51,642 53,312 4.4 3.7 10.0 7.9 9.8% -0.1% 2% 2% 21% -10% 3% -12% 3,754 6,717 131.0 Surgutneftegas (DR) SGGD LI HOLD 13% USD 5.61 6.3 20,042 -29,144 neg. neg. 2.4 5.6 1.7% -2.5% 2% 2% 52% -32% 37% -31% 3.13 8.75 4.4 Surgutneftegas SNGS RX HOLD 14% RUB 39.6 45.2 20,562 -28,624 neg. neg. 2.5 5.7 1.7% -0.4% 1% -1% 40% -24% 52% -22% 24.8 54.2 39.0 Surgutneftegas pref. SNGSP RX BUY 64% RUB 35.1 57.3 23,551 -28,624 neg. neg. 2.5 5.7 2.8% -0.1% 1% -2% 0% -8% -15% -7% 30.8 43.6 16.7 Gazprom Neft (DR) GAZ LI BUY 41% USD 24.9 35.0 23,495 35,880 6.8 5.2 14.8 7.8 3.4% -2.5% -1% 9% 38% -26% -22% -26% 15.5 37.8 1.3 Gazprom Neft SIBN RX BUY 42% RUB 354 502 24,274 36,659 6.9 5.4 15.3 8.0 3.4% 0.0% 0% 8% 26% -15% -12% -16% 240 470 11.5 Tatneft (DR) ATAD LI BUY 79% USD 50.2 90.0 18,228 19,100 5.9 4.1 9.5 6.2 4.0% -2.2% 3% 10% 17% -34% -32% -32% 28.5 80.4 13.6 Tatneft TATN RX BUY 83% RUB 588 1,075 18,629 19,501 6.0 4.2 9.7 6.3 4.0% -0.1% 4% 8% 5% -25% -24% -23% 385 830 46.6 Tatneft pref. TATNP RX BUY 71% USD 8.19 14.0 1,208 19,501 - - - - 4.4% 0.2% 2% 10% 9% -24% -11% -23% 365.5 777.5 10.5 Bashneft BANE RX - - RUB 1,861 - 4,806 9,905 - - - - - 0.1% 0% 4% 20% -4% -3% -4% 1,240 2,095 0.5 Bashneft pref. BANEP RX - - RUB 1,452 - 3,750 9,905 - - - - - 0.1% 0% 4% 16% -15% -13% -16% 1,041 1,865 2.5 Transneft pref. TRNFP RX - - RUB 138,125 - 14,555 72,370 - - - - 4.1% -0.3% 3% 5% 1% -22% -14% -22% 128,700 179,100 9.5 Russneft RNFT RX - - USD 7.6 - 2,233 3,713 - - - - 0.0% -1.4% 15% 24% 18% -4% -12% -5% 399 602 0.1

Banking Sector P/BV P/E Sberbank SBER RX BUY 35% RUB 207 280 65,217 1.0 0.9 6.8 5.7 9.1% -0.3% 0% 10% 8% -17% -13% -19% 174 268 221 Sberbank (DR) SBER LI BUY 33% USD 11.8 16 63,412 1.0 0.9 6.7 5.6 9.1% -2.7% -1% 12% 19% -27% -24% -29% 8.62 17.43 52.4 Sberbank pref. SBERP RX BUY 16% RUB 190 220 2,769 0.9 0.8 6.2 5.2 9.8% 0.0% 0% 8% 5% -15% -8% -17% 162.0 238.5 26.9 VTB VTBR RX HOLD 4% RUB 0.036 0.037 6,739 0.5 0.5 8.0 4.3 7.6% 0.0% -3% 2% 8% -23% -13% -23% 0.03 0.05 22.3 VTB (DR) VTBR LI HOLD 7% USD 0.97 1.03 6,257 0.5 0.5 7.6 4.1 7.9% -3.2% -4% 4% 15% -34% -25% -35% 0.71 1.60 0.9 TCS Group TCS LI HOLD -33% USD 21.0 14.0 4,185 2.6 2.2 12.4 9.5 2.9% 0.5% 11% 29% 75% 0% 16% -1% 10.40 26.55 6.9 TCS Group (DR) TCSG RX HOLD -25% RUB 1,460 1,095 4,185 2.6 2.2 12.4 9.5 3.0% -0.1% 10% 21% 51% 10% - 9% 832 1,685 7.3 Bank St.Petersburg BSPB RX BUY 35% RUB 42.2 57 298 0.2 0.2 3.7 2.9 5.5% 0.1% 0% 6% -1% -17% -18% -25% 38.87 58.45 0.4 Halyk Bank HSBK LI BUY 13% USD 13.3 15 3,869 1.1 1.0 5.8 5.1 8.3% -0.7% 10% 44% 73% 0% 14% -1% 7.04 16.35 1.4

Diversified Financials Moscow Exchange MOEX RX BUY 30% RUB 115 150 3,819 5,118 10.9 10.5 11.1 11.1 7.8% 0.0% 0% 1% 22% 8% 29% 7% 81.0 128.3 24.5

Metals & Mining Severstal CHMF RX UR - USD 12.7 - 10,601 10,601 - - - - 12.4% -0.2% -1% 0% 3% -6% -20% -7% 777 1,094 15.1 Severstal (DR) SVST LI UR - USD 12.4 - 10,363 10,363 - - - - 12.5% -2.2% -2% 3% 14% -18% -28% -18% 9.8 17.4 4.6 EVRAZ EVR LN UR - GBP 3.0 - 5,474 5,474 - - - - 11.4% -4.2% 1% 14% 18% -25% -53% -25% 203 672 11.2 NLMK NLMK RX UR - USD 2.0 - 12,097 12,097 - - - - 6.2% 0.0% 1% 8% 20% -2% -17% -3% 101 171 13.2 NLMK (DR) NLMK LI UR - USD 20.0 - 12,010 12,010 - - - - 6.2% -1.8% 2% 13% 33% -12% -25% -13% 12.3 27.0 4.0 MMK MAGN RX UR - USD 0.57 - 6,249 6,249 - - - - 9.8% 0.1% -1% 2% 14% -5% -14% -7% 32.0 47.5 7.9 MMK (DR) MMK LI UR - USD 7.28 - 6,163 6,163 - - - - 9.8% -0.8% 0% 5% 26% -15% -22% -17% 5.10 9.99 0.6 TMK TRMK RX HOLD 2% RUB 59.79 61.0 898 1,728 3.6 5.3 13.5 22.3 n/a 0.0% 0% 1% 42% 7% -1% 3% 36.5 62.0 4.6 TMK (DR) TMKS LI HOLD 3% RUB 236.1 244.0 877 1,707 3.6 5.3 13.2 21.7 n/a -1.2% 1% 5% 61% -4% -12% -8% 1.75 3.87 0.5 Norilsk Nickel GMKN RX BUY 16% USD 285 330 44,737 46,599 5.9 7.6 8.5 11.9 7.7% -0.2% 2% -11% 3% 0% 37% 3% 14,146 22,952 100.9 Norilsk Nickel (DR) MNOD LI BUY 17% USD 28.3 33 44,348 46,210 5.8 7.6 8.4 11.8 7.8% -1.5% 3% -8% 14% -7% 24% -8% 19.5 35.4 41.9 Polymetal (DR) POLY LN HOLD 1% GBP 15.8 16 9,183 10,280 6.9 7.0 9.8 10.2 5.5% 0.5% 7% -7% 20% 35% 65% 33% 966 1,737 35.5 Polymetal POLY RX HOLD 2% RUB 1,349 1,380 9,141 10,238 6.9 7.0 9.8 10.1 5.5% 0.1% 5% -9% 13% 43% 75% 39% 764 1,568 18.4 Polyus (DR) PLZL LI HOLD 3% USD 84.6 87 22,322 23,702 7.2 7.1 10.1 10.0 2.4% 0.8% 11% 3% 35% 51% 77% 47% 45.4 84.6 11.6 Polyus PLZL RX HOLD 8% RUB 11,547 12,467 22,143 23,524 7.2 7.1 10.1 9.9 2.4% -0.3% 7% -2% 21% 66% 95% 63% 5,695 12,350 37.0 HGM HGM LN HOLD 21% GBP 2.32 2.8 1,051 1,146 3.7 3.8 5.4 5.7 1.7% -2.9% 2% -15% 17% 29% 16% 20% 151 271 2.7 Petropavlovsk POG LN HOLD -3% GBp 30.00 29 1,236 1,313 2.7 2.7 4.7 4.6 n/a -3.2% 8% 14% 40% 142% 200% 137% 9.34 32.00 5.8 Mechel (DR) MTL US SELL n/m USD 1.80 0.00 375 6,822 19.1 16.4 neg. neg. n/a -3.2% -5% 0% 19% -7% -16% -11% 1.30 3.33 0.2 UC Rusal 486 HK SELL -26% HKD 2.97 2.2 5,822 687 1.9 1.6 6.5 10.4 n/a 0.0% -3% 7% 33% -21% -8% -22% 2.1 4.9 1.7 UC Rusal RUAL RX SELL -26% RUB 26.6 20 5,869 734 2.0 1.7 6.5 10.5 n/a 0.1% -1% 1% 9% -12% 3% -14% 20.4 39.2 4.6 KAZ Minerals KAZ LN UR - GBP 4.71 - 2,758 2,758 - - - - n/a -2.5% 4% 6% 30% -13% -19% -14% 269.1 615.2 7.4 Ferrexpo FXPO LN SELL -38% GBP 1.76 1.10 1,291 834 2.3 4.5 7.8 n/m 7.5% -4.0% -12% 9% 43% 13% -33% 12% 101.7 281.1 3.1 Raspadskaya RASP RX - - RUB 112 - 1,148 581 - - - - - 0.1% 1% 3% 17% 3% -21% 5% 83 142 1.4 ALROSA ALRS RX BUY 7% USD 0.93 1.00 6,876 7,357 4.8 6.4 8.3 12.8 5.8% -0.1% 0% 1% 10% -23% -28% -24% 54.0 91.9 21.1 0 Fertilizers PhosAgro (DR) PHOR LI HOLD 26% USD 12.68 16.0 4,927 6,726 6.8 6.6 9.0 9.7 3.0% -2.6% -3% -2% 24% 1% -2% -1% 9.2 14.1 4.8 PhosAgro PHOR RX HOLD 29% RUB 2,658 3,439 15,009 16,809 17.0 16.5 27.3 29.5 3.0% -0.2% -2% -4% 10% 12% 8% 10% 2,099 2,875 3.1 Acron AKRN RX - - USD 79.18 - 3,152 ------0.1% 0% -10% -10% 13% 20% 14% 4,552 6,194 1.125 0 Retail Magnit (DR) MGNT LI UR - USD 13.31 - 6,782 6,782 - - - - 6.8% -0.2% 7% 22% 58% 9% -7% 9% 6.5 15.3 4.7 Magnit MGNT RX UR - RUB 4,114 - 6,096 6,096 - - - - 7.5% 0.0% 4% 14% 36% 22% 11% 20% 2,337 4,115 26.9 X5 Retail Group (DR) FIVE LI UR - USD 35.0 - 9,510 9,510 - - - - 4.7% 2.0% 8% 14% 37% 3% 2% 1% 20.5 37.2 8.1 X5 Retail Group FIVE RX UR - RUB 2,362 - 9,352 9,352 - - - - 4.7% -0.3% 5% 7% 13% 11% 9% 11% 1,643 2,390 9.7 Lenta LNTA LI - - USD 2.38 - 1,159 2,730 ------5.0% -2% 12% 21% -24% -27% -21% 1.6 3.5 0.21 O'Key OKEY LI - - USD 0.77 - 206 947 - - - - - 0.0% -4% -8% 9% -42% -54% -40% 0.5 1.7 0.04 M Video MVID RX - - RUB 401 - 1,049 2,872 - - - - - 0.1% -1% 16% 3% -21% -5% -23% 337 604 1.62 Detsky Mir DSKY RX HOLD -2% RUB 102.1 100 1,094 1,345 4.6 4.1 12.2 12.9 5.3% 0.2% 5% 6% 16% 3% 18% 2% 74.7 119.1 5.3 Obuv Rossii OBUV RX BUY 138% RUB 33.6 80 55 225 5.0 3.9 3.4 2.3 0.0% 0.5% -1% 13% -2% -18% -41% -22% 27 64 0.21

Agriculture Rusagro AGRO LI - - USD 9.6 - 1,292 2,364 - - - - - 0.0% 3% 8% 32% -5% -19% -8% 5.6 11.9 0.1 Cherkizovo GCHE RX - - RUB 1,763 - 1,126 1,942 - - - - - 0.1% -1% 3% -3% 3% -5% 1% 1,669 2,079 0.11 Note: Prices are calculated using SPOT and expected inflation differential

Equity Daily

Thursday, 25 June 2020

Stock performance 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 1,281 173,164 0.0% 3% 8% 33% -17% -8% -17% 832 1,647 1,219 MOEX Russia IMOEX Index RUB 2,792 170,898 0.0% 2% 3% 16% -8% 1% -8% 2,113 3,220 1,195

Real Estate LSR Group (DR) LSRG LI BUY 28% USD 2.01 2.58 1,035 1,352 4.5 4.1 5.7 5.6 4.4% -0.7% 9% 27% 39% -21% -19% -16% 1.23 2.88 0.3 LSR Group LSRG RX BUY 12% RUB 714 800 1,067 1,384 4.6 4.1 5.9 5.7 4.3% 0.1% 8% 23% 22% -7% -7% -7% 510 923 2.1 PIK Group PIKK RX HOLD 6% RUB 426 450 4,081 4,225 8.6 7.0 5.3 4.5 5.4% 0.1% 3% 16% 9% 8% 15% 6% 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 11.7% -1.4% 2% 11% 2% -21% -36% -21% 1.0 2.3 0.4 Etalon Group ETLN RX HOLD 0% RUB 97 97 416 706 3.9 3.6 6.6 6.5 n/a -0.1% 2% 8% -9% - - - 78 146 0.5

Utilities - Generators RusHydro HYDR RX SELL -35% RUB 0.81 0.53 5,113 8,432 5.3 5.0 8.6 8.1 4.5% 0.0% -2% 24% 31% 43% 35% 46% 0.48 0.83 10.7 RusHydro (DR) HYDR LI SELL -34% USD 1.10 0.73 4,698 8,017 5.1 4.8 8.0 7.5 4.7% -2.7% -4% 26% 41% 27% 22% 26% 0.60 1.14 0.5 Inter RAO IRAO RX BUY 123% RUB 4.94 11 5,291 2,877 1.5 1.4 4.2 3.7 n/a 0.0% -1% -1% 2% -1% -2% -2% 4.05 6.50 16.7 Unipro UPRO RX BUY 17% RUB 2.73 3.2 2,498 2,520 5.5 6.0 8.7 10.1 9.8% 0.1% -2% 4% 9% 0% 5% -2% 2.32 3.14 3.4 Enel Russia ENRU RX - - RUB 1.02 - 524 645 - - - - 8.4% -0.1% 3% 10% 13% 11% -12% 10% 0.73 1.15 0.6 TGK-1 TGKA RX - - RUB 0.01 - 732 1,096 - - - - - 0.0% 0% 9% 34% 2% 21% 2% 0.01 0.02 1.8 Mosenergo MSNG RX - - RUB 2.14 - 1,236 1,531 - - - - 7.8% 0.0% 3% 9% 23% -5% -13% -5% 1.43 2.64 0.8 OGK-2 OGKB RX - - RUB 0.78 - 1,254 1,765 - - - - - 0.4% 10% 24% 39% 37% 41% 39% 0.44 0.78 2.3 TGK-2 TGKB RX - - RUB 0.004 - 88 183 ------0.1% -1% -4% 14% 80% 67% 75% 0.00 0.01 0.29 Quadra TGKD RX - - RUB 0.003 - 76 504 - - - - - 0.2% -2% 0% 11% 3% -8% 0% 0.00 0.00 0.03 Irkutskenergo IRGZ RX - - RUB 12.11 - 837 2,040 - - - - - 0.2% 0% -3% 27% -11% -30% -13% 7.90 17.32 0.06

Utilities - Grids RusGrids RSTI RX - - RUB 1.56 - 4,492 16,039 - - - - - 0.2% 0% 8% 28% 11% 10% 13% 0.89 1.74 9.6 RusGrids pref. RSTIP RX - RUB 2.07 - 62 ------0.0% -3% -7% 56% 26% 19% 27% 1.02 2.43 0.6 Federal Grid Co. FEES RX BUY 31% RUB 0.19 0.25 3,518 6,432 3.1 3.1 2.7 2.7 5.1% 0.1% 1% -3% 17% -5% -7% -5% 0.14 0.24 8.3 Moscow UTD MSRS RX - - RUB 1.12 - 792 2,088 ------0.1% -1% -1% 13% -6% 52% -6% 0.72 1.28 0.08 MRSK Center MRKC RX - - RUB 0.28 - 173 833 - - - - - 0.2% 4% 18% 22% -6% -4% -11% 0.20 0.33 0.12 Lenenergo LSNG RX - - RUB 6.08 - 762 1,084 ------0.1% 0% 0% 7% -17% 8% -14% 5.62 7.34 0.07 Lenenergo pref. LSNGP RX - - RUB 159.40 - 19,978 ------0.1% 3% -2% 33% 30% 42% 30% 101.55 172.15 1.1 MRSK North-West MRKZ RX - - RUB 0.05 - 70 290 ------0.2% 3% 1% 16% -5% -26% -7% 0.04 0.07 0.03

Diversified Holdings AFK Sistema (DR) SSA LI HOLD 17% USD 4.8 5.6 2,302 - - - - - 0.8% -2.7% -3% 20% 48% -3% 59% -3% 2.65 6.05 1.0 AFK Sistema AFKS RX HOLD 18% RUB 17.0 20 2,395 - - - - - 0.8% -0.4% -3% 17% 36% 13% 77% 12% 9.55 19.40 9.0

Telecommunications MTS MTSS RX HOLD 17% RUB 324.7 380 8,367 15,336 5.1 4.8 10.5 9.5 8.8% 0.0% 0% -1% 16% 3% 16% 1% 254.0 348.1 21.5 MTS (DR) MBT US HOLD 13% USD 9.4 11 8,297 15,265 5.1 4.8 10.5 9.5 8.9% 0.2% 1% 4% 35% -7% 1% -8% 6.4 11.0 36.4 VEON VEON US HOLD 23% USD 1.7 2.1 3,004 12,177 3.4 3.2 6.1 4.8 13.6% -1.2% -3% 15% 16% -33% -39% -32% 1.3 3.2 10.1 VEON, NL VEON NA HOLD 29% USD 1.6 2.1 2,861 12,033 3.4 3.2 5.8 4.6 n/a -3.2% -6% 3% 9% -37% -42% -34% 1.1 2.9 0.2 Rostelecom RTKM RX HOLD 12% RUB 85.4 96 4,053 10,381 4.0 3.8 11.8 9.4 5.8% 0.2% 3% 5% 27% 8% 6% 9% 64.0 92.0 3.9 Rostelecom pref. RTKMP RX HOLD 14% RUB 76.4 87 161 - - - - - 6.6% 0.1% 2% 3% 26% 10% 20% 9% 58.5 83.0 0.5

Media Yandex YNDX US BUY 11% USD 50.3 56 16,523 15,714 21.2 14.6 48.7 28.7 0.0% 2.7% 14% 25% 58% 15% 29% 16% 28.9 50.3 97.5 Yandex YNDX RX BUY 19% RUB 3,373 4,000 16,037 15,228 20.4 14.1 47.0 27.7 n/a 0.4% 10% 16% 37% 25% 38% 25% 1,898 3,359 25.5 Mail.Ru Group MAIL LI BUY 18% USD 22.5 27 4,890 5,178 11.8 9.7 21.9 16.2 n/a 1.4% 18% 25% 53% 4% -7% 2% 12.9 25.7 2.0 Qiwi QIWI US BUY 40% USD 18.0 25 1,132 997 7.2 4.5 11.2 6.8 5.1% -0.2% 20% 32% 94% -3% -12% -6% 9.27 24.68 5.5 HeadHunter HHR US SELL -3% USD 23.0 22 1,149 1,192 23.8 16.4 38.7 24.0 2.4% -1.3% 0% 28% 53% 12% 44% 9% 12.7 25.4 1.7

Industrials Aeroflot AFLT RX UR - RUB 81.3 - 1,312 1,312 - - - - 3.8% 0.1% -4% 11% 19% -21% -19% -21% 57 120 29.7 Globaltrans GLTR LI BUY 43% USD 5.2 7.5 936 1,398 4.1 3.8 5.8 5.3 14.7% -5.6% -9% -7% -3% -40% -44% -41% 5.1 9.5 0.8 Globaltruck GTRK RX HOLD 30% RUB 42.2 55 36 87 5.2 4.0 11.9 4.8 n/a 0.0% -1% -2% 44% -30% -39% -28% 29 70 0.1 United Wagon CompUWGN RX - - RUB 238 - 401 1,189 - - - - - 0.1% 0% -1% 5% -25% -41% -24% 203 417 0.019 Global Ports GLPR LI - - USD 2.9 - 550 1,314 - - - - - 0.0% 3% 12% 15% -20% -4% -15% 2.1 3.8 0.044 NCSP (DR) NCSP LI - - USD 11.8 - 3,030 3,507 - - - - - 0.0% 3% 0% -13% -21% 18% -21% 8.1 16.0 0.032 NCSP NMTP RX - - USD 0.16 - 3,020 3,496 - - - - - 0.3% -3% 20% 27% 29% 43% 20% 7.4 11.1 0.711 Sollers SVAV RX - - RUB 258 - 128 208 - - - - - 0.2% 1% 0% 19% -7% -17% -7% 199 325 0.049 Note: Prices are calculated using SPOT and expected inflation differential

Source: Bloomberg, BCS GM

Equity Daily

Thursday, 25 June 2020

Commodities

Commodity Close 1D 1W 1M 3M 6M 12M YTD 52WL 52WH Energy Brent ($/bbl) 40.3 -4.9% -1% 15% 46% -40% -38% -39% 16 72 WTI ($/bbl) 37.9 -5.9% 0% 13% 89% -38% -34% -38% -38 64 Gas, USA ($/tcm) 57.3 0.6% 8% -6% -8% -24% -31% -23% 51 103 Gas, Europe ($/tcm) 65.5 -2.0% 11% 58% -27% -48% -44% -52% 10 411 Metals Gold ($/oz) 1,761 -0.4% 2% 2% 8% 17% 24% 16% 1,382 1,780 Silver ($/oz) 17.50 -2.5% 0% 2% 23% -2% 13% -2% 11.64 19.65 Palladium ($/oz) 1,881 -2.6% -3% -4% -4% 0% 22% -3% 1,384 2,884 Platinum ($/oz) 805 -3.1% -2% -4% 13% -15% -1% -17% 564 1,042 Nickel ($/t) 12,510 -0.4% -3% 3% 12% -12% 4% -11% 11,040 18,625 Copper ($/t) 5,871 -0.4% 2% 12% 21% -5% -1% -5% 4,577 6,301 Zinc ($/t) 2,017 -1.7% 0% 3% 11% -11% -22% -12% 1,772 2,660 Aluminum ($/t) 1,564 -0.9% -1% 6% 3% -13% -10% -13% 1,420 1,833 Agricultural Wheat ($/bu) 5.78 0.0% -1% -3% -4% -3% -4% -4% 5.58 6.30 Corn ($/bu) 3.07 0.3% -1% 4% -8% -18% -30% -19% 2.87 4.59 Cotton ($/pound) 0.58 0.0% -2% 5% 18% -12% -5% -12% 0.45 0.69 Soybean ($/bu) 8.58 -0.6% 0% 5% -2% -7% -2% -8% 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 1,011 -0.4% 2% 12% 26% -9% -4% -10% 758 19/03/2020 1,147 20/01/2020 DJIA 25,446 -2.7% -3% 4% 23% -11% -5% -11% 18,592 23/03/2020 29,551 12/02/2020 S&P 500 3,050 -2.6% -2% 3% 25% -5% 4% -5% 2,237 23/03/2020 3,386 19/02/2020 Nasdaq 9,909 -2.2% -0% 6% 34% 11% 24% 11% 6,861 23/03/2020 10,131 23/06/2020 FTSE 100 6,124 -3.1% -2% 2% 12% -20% -17% -19% 4,994 16/03/2020 7,687 30/07/2019 DAX 12,094 -3.4% -2% 9% 25% -9% -1% -9% 8,442 16/03/2020 13,789 17/02/2020 Nikkei 225 22,288 -1.2% -1% 9% 23% -6% 5% -6% 16,553 19/03/2020 24,084 17/01/2020 BOVESPA 94,377 -1.7% -1% 15% 35% -19% -8% -18% 63,570 19/03/2020 119,528 24/01/2020 Shanghai Composite 2,980 0.3% 1% 6% 9% 0% -1% -2% 2,660 19/03/2020 3,116 14/01/2020 Hang Seng Index 24,782 -0.5% 1% 8% 9% -11% -13% -12% 21,696 19/03/2020 29,056 20/01/2020

Source: Bloomberg, BCS GM

Equity Daily

Thursday, 25 June 2020

Depositary Receipts_BCSlist Company Bloomberg ticker Price, $ Bloomberg ticker Price, $ DR per 1sh. 1 share price, $ (Disc.)/Prem. to Russia Avg 6M (Disc.)/Prem.

Russia Europe/US/Asia Gazprom GAZP RX 2.83 OGZD LI 5.47 0.5 2.74 -3.2% -0.9% Rosneft ROSN RX 5.43 ROSN LI 5.23 1.0 5.23 -3.6% -0.2% LUKOIL LKOH RX 79.2 LKOD LI 76.5 1.0 76.5 -3.4% -0.1% NOVATEK NVTK RX 15.6 NVTK LI 154 0.1 15.4 -1.3% 0.2% Surgutneftegaz SNGS RX 0.58 SGGD LI 5.61 0.1 0.56 -2.5% -0.6% Gazprom Neft SIBN RX 5.14 GAZ LI 24.9 0.2 4.98 -3.2% 0.4%

Nor. Nickel GMKN RX 285 MNOD LI 28.3 10 283 -0.9% 0.0%

NLMK NLMK RX 2.02 NLMK LI 20.0 0.1 2.00 -0.7% -0.5% Severstal CHMF RX 12.7 SVST LI 12.4 1.0 12.4 -2.3% -0.4% MMK MAGN RX 0.57 MMK LI 7.28 0.1 0.56 -1.4% -0.2% TMK TRMK RX 0.87 TMKS LI 3.4 0.3 0.85 -2.3% -1.4% Mechel com. MTLR RX 0.98 MTL US 1.80 0.5 0.90 -7.8% -2.9% Mechel pref. MTLRP RX 1.25 MTL/P US 0.55 2 1.10 -12.0% -4.7%

Acron AKRN RX 79.2 AKRN LI 8.00 10 80.0 1.0% -0.4% Phosagro PHOR RX 38.6 PHOR LI 12.7 3 38.0 -1.5% -0.9%

VTB VTBR RX 0.0005 VTBR LI 0.97 0.0005 0.0005 -7.2% -0.9% Sberbank SBER RX 3.01 SBER LI 11.8 0.25 2.94 -2.5% 0.1% QIWI QIWI RX 17.4 QIWI US 18.0 1.00 18.0 3.2% -1.0%

MTS MTSS RX 4.72 MBT US 9.4 0.5 4.68 -0.8% -0.3% AFK Sistema AFKS RX 0.25 SSA LI 4.8 0.1 0.24 -3.5% -1.0%

RusHydro HYDR RX 0.0118 HYDR LI 1.10 0.01 0.0110 -6.6% -5.2%

Magnit MGNT RX 59.8 MGNT LI 13 5 66.6 11.3% 11.2%

NCSP NMTP RX 0.16 NCSP LI 11.80 0.01 0.16 0.3% 35.1% Transcontainer TRCN RX 124.2 TRCN LI 10 10 96.5 -22.3% -20.2%

Yandex YNDX RX 49.0 YNDX US 50 - 50.3 2.6% 0.4%

LSR Group LSRG RX 10.38 LSRG LI 2.01 5 10.05 -3.2% -2.1%

Source: Bloomberg, BCS GM

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

Surgutneftegas SNGS RX 39.6 SNGSP RX 35.1 -11.5% -7.9% Bashneft BANE RX 1,861 BANEP RX 1,452 -22.0% -15.4% Bashneft TATN RX 588 TATNP RX 563 -4.2% -5.1% Transneft - - TRNFP RX 138,125 - -

Mechel MTLR RX 67.2 MTLRP RX 86.0 28.0% 11.8% Mechel (ADR) MTL US 125 MTL/P US 38 -69.4% -72.9%

Sberbank SBER RX 207 SBERP RX 190 -8.1% -8.3%

Rostelecom RTKM RX 85 RTKMP RX 76.4 -10.6% -11.0%

RusGrids RSTI RX 1.6 RSTIP RX 2.07 32.9% 25.3%

GAZ Group GAZA RX 389.3 GAZAP RX 327 -15.9% -14.1%

Source: Bloomberg, BCS GM

Equity Daily

Thursday, 25 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 1.30% 1 2.97 Baa3 BBB- BBB 111.0 111.4 4.88% 3,000 16/09/2023 RUSSIA 30 1.89% 2 2.74 Baa3 BBB- BBB 115.5 116.0 7.50% 2,603 31/03/2030 RUSSIA 42 3.16% 2 13.88 Baa3 BBB- BBB 138.1 139.0 5.63% 3,000 04/04/2042 ALFARU 21 1.66% 6 0.81 Ba1 BB+ BB+ 104.6 105.4 7.75% 1,000 28/04/2021 SBERRU 21 1.26% 0 0.94 Baa3 - BBB 103.9 104.7 5.72% 1,000 16/06/2021 SBERRU 22 1.89% 6 1.51 Baa3 - BBB 106.4 106.9 6.13% 1,500 07/02/2022 VEBBNK 20 -1.91% -12 0.03 - BBB- BBB 100.2 100.3 6.90% 1,600 09/07/2020 VTB 20 0.13% -16 0.29 Baa3 BBB- WD 101.5 102.2 6.55% 827 13/10/2020 ALRSRU 20 0.35% -2 0.34 Baa2 BBB- BBB- 102.3 102.8 7.75% 494 03/11/2020 CHMFRU 22 2.27% 3 2.14 Baa2 BBB- BBB 107.7 108.5 5.90% 634 17/10/2022 GAZPRU 22 2.00% 0 1.58 Baa2 BBB- BBB 107.1 107.8 6.51% 1,300 07/03/2022 GAZPRU 28 3.03% 0 6.30 Baa2 BBB- BBB 112.4 113.5 4.95% 900 06/02/2028 GAZPRU 34 3.61% 1 9.20 Baa2 BBB- BBB 153.6 154.7 8.63% 1,200 28/04/2034 GAZPRU 37 3.70% 1 10.90 Baa2 BBB- BBB 144.6 145.8 7.29% 1,250 16/08/2037 GMKNRM 20 1.03% 69 0.33 Baa2 BBB- BBB- *- 101.0 102.0 5.55% 1,000 28/10/2020 LUKOIL 20 1.04% 14 0.36 Baa2 BBB BBB+ 101.4 102.2 6.13% 1,000 09/11/2020 LUKOIL 22 1.80% 1 1.83 Baa2 BBB BBB+ 108.6 109.8 6.66% 500 07/06/2022 LUKOIL 23 2.18% 4 2.63 Baa2 BBB BBB+ 106.0 106.9 4.56% 1,500 24/04/2023 MOBTEL 23 2.45% -7 2.72 Ba1u BB+ BB+ 106.8 107.5 5.00% 500 30/05/2023 NVTKRM 21 1.22% 16 0.58 Baa2 BBB BBB 102.8 103.5 6.60% 650 03/02/2021 NVTKRM 22 2.21% 0 2.33 Baa2 BBB BBB 104.8 105.7 4.42% 1,000 13/12/2022 ROSNRM 22 2.30% 0 1.61 Baa3 BBB- WD 102.7 103.6 4.20% 2,000 06/03/2022 RURAIL 22 1.97% -1 1.67 Baa2 BBB- BBB 106.0 106.9 5.70% 625 05/04/2022 SIBNEF 22 2.42% 0 2.09 Baa2 BBB- BBB 103.6 104.8 4.38% 1,500 19/09/2022 SIBNEF 23 2.50% 0 3.10 Baa2 BBB- BBB 110.6 112.1 6.00% 1,500 27/11/2023 VIP 21 1.10% 2 0.57 Ba2u BB+ BBB- 103.5 104.3 7.75% 262 02/02/2021 VIP 22 2.27% 14 1.55 Ba2u BB+ BBB- 108.1 109.0 7.50% 417 01/03/2022 VIP 23 2.68% 0 2.39 Ba2u BB+ BBB- 107.9 108.6 5.95% 529 13/02/2023 Federal loan bonds (RUB-denominated) RUB bn OFZ 26215 4.63% 0 2.70 Baa3 BBB BBB 107.0 107.0 7.00% 250,000 16/08/2023 OFZ 26207 5.17% 11 4.97 Baa3 BBB BBB 116.9 116.9 8.15% 350,000 03/02/2027 OFZ 26212 5.32% 0 5.64 Baa3 BBB BBB 111.1 111.2 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

Equity Daily

Thursday, 25 June 2020

Russia Calendar Corporate

Date Sector Company Event 25-30 June Financial Services VTB Abbreviated IFRS for May 25-30 June Industrials Globaltrans Russia railways operating results 2 July Financial Services Moscow Exchange Monthly trading volume data 7 July Metals & Mining Ferrexpo 2Q20 Production Report 8 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 28 July Utilities Enel Russia 2Q20 IFRS Results 29 July Metals & Mining MMK 2Q20 IFRS Results 29 July USA Fed meeting Policy decision 30 July Metals & Mining EVRAZ 2Q20 Trading Update 30 July Retail Magnit 2Q20 Trading Update & IFRS highlights

Note: Dates may be subject to change by the company

BCS GM Recent Reports

Date Category Type Sector Company Reports (Available by subscription) 23 June Equity Trading Idea Financials 0 Long HSBK: EGM set, 2019 dividends on agenda – 14% DY 23 June Equity Update TMT 0 Online is king 22 June Equity Economic Digest Economics 0 Markets v Regulators 22 June Equity Week Ahead Strategy 0 Macro, Oil, Equity / FI Strategy 22 June Equity Equity Strategy Strategy 0 Best S-T stocks to Out/Underperform 22 June Equity Coverage Update O&G 0 Transfer of Coverage 22 June Equity Initiation O&G 0 L-T Bullish, S-T Savvy 18 June Equity O&G Monthly Digest O&G 0 Oil price outpaces demand – Stay cautious 17 June Equity Trading Idea Retail Detsky Mir Long Detsky Mir: Overhang risk passes; SPO showed solid demand – rebound expected 17 June Equity The Chart M&M Alrosa Diamond market rising from the dead – Google trends suggest 17 June Equity Index Alert strategy 0 MSCI August QIR Preview: Yandex – A Shoo-in for Inclusion 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

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] Ronald P Smith Maria Lukina [email protected] [email protected]

+7 495 785 53 36 (ext. 17720) +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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