Recent movements in Russian yields have been associated with a number of factors including increasing political tension in Russia and heightened global risk aversion arising from European debt problems. These factors have been accompanied by high oil prices. We incorporate all of these factors into one story.
Yesterday Gazprom published IFRS results for 3Q 11. The company’s EBITDA was about 20% higher than both our forecast and consensus. However, the improvement was due to significant changes in inventories of finished goods and work in progress and we consider the results to be neutral. The company’s free cash flow (FCF) was negative in the third quarter.
We initiate coverage of AGC Bor Glassworks, Russia’s leading automotive glass manufacturers. We estimate the company’s fair value at USD 82.20 per share, implying 174% potential upside. We therefore recommend the stock as a BUY.
Banking
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