Market reviews and recommendations of BCC Invest JSC (Kazakhstan) analysts for September 27, 2011
27.09.11 15:48
/IRBIS, September 27, 2011/ - BCC Invest JSC has provided
IRBIS with a survey of main events, market reviews and
investment ideas for September 27, 2011.
Analysts of JSC "BCC Invest" now expect positive opening of
trades on positive external background. Further, during the day,
according to analysts, on the local market dynamics will be
mixed and multidimensional - number of losses will be played
off, and the index of KASE, probably, will end the day with slight
increase.
Analysts of JCS "BCC Invest" note the following events on
Kazakhstani market today:
- S & P affirmed the ratings of "Norilsk Nickel", having
withdrawn them from review. International rating
agency Standard & Poor's confirmed the long-term
ratings of "Norilsk Nickel" (RTS: GMKN) term foreign
and local currency ratings at "BBB-" from "negative"
outlook, according to a press release from the agency.
Also confirmed the company's rating on a national scale
"ruAA +". Forecast - "negative". Rankings are derived
from CreditWatch, where there were from 3 August. "OK
"Rusal" has rejected the offer of "Norilsk nickel" to buy
back 15% of its shares for $ 8.75 billion, and the board
of directors of "Norilsk Nickel" has decided to buy 7.7%
stake from minority shareholders for $ 4.5 billion, we
believe that in the near future, "Norilsk Nickel", most
likely, will not make new proposals to buy back shares
from OK "Rusal". Given the lack of new supply, "Rusal"
and currently low levels of debt, "Norilsk Nickel", we
believe that a large positive value free cash flow and
lower costs to maintain a high credit rating,
corresponding to a rating category of "BBB-", - the report
of S & P says. "But in the long-term conflict between the
major shareholders of "Norilsk Nickel"- the "Interros
"(which owns almost 30% of shares ) and "RusAl" (25%)
- will, in our opinion, the main negative rating factor
because of its possible impact on the strategic
development, financial policy and access to external
finance, "Norilsk Nickel" - said in a news release. S & P
placed the rating "Norilsk Nickel" on CreditWatch with
"negative" outlook due to late disclosure of its financial
results for 2010 and left the ratings on review after the
company announced a proposal to buy 15% of its own
shares from "Rusal" for $ 8.75 billion in December 2010,
"Norilsk Nickel" made an offer to purchase a "Rusal"
25% of its shares for $ 12 billion, in March 2011 - a 20%
stake for $ 12.8 billion, all these proposals have been
rejected "RusAl". In September 2011 the board of
directors of "Norilsk Nickel" approved the new proposal
to buy back 7.7% of shares from minority shareholders
for $ 4.5 billion (in addition to an existing package of
treasury shares). The transaction will be financed
primarily through the issuance of new debt. Analysts
believe the agency that after the completion of the
purchase of new shares the management of "Norilsk
Nickel" did not want to buy additional shares, and
probably will not be able to build up debt for this purpose
in the near term, given the volatility of financial markets
at present. "Rusal" has already rejected three offers to
buy back shares from "Norilsk Nickel", apparently
regarding them as a strategic investment, "- noted in the
S & P." We believe that after completion of the
transaction approved by the recently new repurchase the
shares for $ 4.5 billion adjusted duty "Norilsk Nickel" has
to remain moderate: in 2011 the ratio of adjusted debt to
EBITDA ratio should be around 0.6, while the ratio of
FFO to adjusted debt - well above 100%. In the absence
of new large payments to shareholders in excess of the
target company (25%) in our standardized price
scenario, the price of nickel in 2011 is $ 8.5 / lb in 2012 -
$ 8 in subsequent years - $ 6.75, and copper price in
2011 - $ 3.25 / lb in 2012 - $ 3.0 and in subsequent
years - $ 2.25. Given our price scenario and the
expected increase in capital expenditures, we believe
that the ratio of adjusted debt to EBITDA will increase
gradually, but remain at a moderate level - about 1 "- the
report says S & P." Negative "outlook reflects the opinion
of analysts of the agency about the possible
consequences continuing the strategic differences
between the companies "Interros" and "RusAl" for
financial policy, management and strategic development
of the "Norilsk Nickel", which can lead to a downgrade in
the next 12-18 months. In addition, the forecast reflects
a possible downgrade in the event that Company will not
be able to attract long-term financing for the upcoming
purchase of shares for $ 4.5 billion, which could put
pressure on liquidity. This message is moderately
positive for the equity securities of OJSC MMC Norilsk
Nickel. Nevertheless, analysts of JSC "BCC Invest"
believe that the main impact on the quotation of the
company has uncertainty in commodity markets, where
for just a week contracts for nickel and copper have
fallen by more than 15%. At this time, guidance on
equity securities of MMC Norilsk Nickel are reviewed,
and soon we will release an updated review on this
issuer.
- Vale S.A. increases the size of dividend payments by
$ 1 billion. Vale SA, the world's largest iron ore
producer, said that the Board approved the proposal to
increase the dividend for 2011 by $ 1 billion, and will
soon make it to the Board of Directors. In our opinion,
the message is positive for the stock price and the ADR
of Vale SA. Previously, the company intended to pay the
$ 8 billion dividend in 2011. Thus, the company soon
intends to pay shareholders about $ 12 billion, based on
the current program of share repurchases of $ 3 billion in
2011, analysts of JSC "BCC Invest" expect free cash
flow of about $ 9 billion. Given that at the end of the
second quarter the company had substantial cash
reserves on the balance sheet ($ 13 billion), increasing
the attractiveness of shares by increasing the dividend
the company is quite acceptable. Analysts of JSC "BCC
Invest" confirm their current recommendations on equity
securities of Vale SA at the level of "buy" with target
price of $ 34.00 per depositary receipt.
Analysts of JSC "BCC Invest" expect the following
developments on international markets today:
- In the coming days in Russia is expected to publish data
for fiscal balance.
- Today in Germany at 12:00 (AST) GfK consumer
confidence index will be published. At 14:00 (AST) to be
published data on the Eurozone M3 money supply. In
the UK, at 16:00 (AST) CBI will publish index of volume
of retail trade.
- In today's USA at 19:00 (AST) will be published house
price index from S & P/CaseShiller, at 20:00 (AST) to be
published the index on manufacturing activity and
consumer confidence from Richmond Fed.
Analysts of BCC Invest JSC are giving the following advice
for investors in securities of issuers in internal market:
--------------------------------------------------------------
Closing Target Potential,
Issuer Code price price % Recommen-
dation
----------------- ------- -------- ------ ---------- ---------
Kazkommertsbank KKGB 265 Review
KKGBp 148 Review
Halyk Bank HSBK 230 Review
Bank CenterCredit CCBN 355 608 +71.27 Buy
Tsesnabank TSBN 903 1,030 +14.06 Neutral
KazMunaiGaz RDGZ 13,600 15,900 16.91 Buy
Kazakhmys PLC GB_KZMS 1,825 3,450 +89.04 Buy
ENRC PLC GB_ENRC 1,340 1,900 +41.79 Buy
Kazakhtelekom KZTK 18,500 27,500 +48.65 Buy
KZTKp 8,988 8,900 -0.98 Buy
MREK MREK 1,714.70 1,130 -34.10 Hold
--------------------------------------------------------------
The given material has exclusively information character and is not the offer
or recommendation to make any transactions with the stocks. IRBIS Agency
doesn't take responsibility for the opinions which are in given material.
[2011-09-27]