Market reviews and recommendations of BCC Invest JSC (Kazakhstan) analysts for May 17, 2011

/IRBIS. May 17, 2011/ - BCC Invest JSC has provided IRBIS with a survey of main events, market reviews and investment ideas for May 17, 2011. The analysts are expecting a mixed and multidimensional opening on KASE on ambiguous exterior background. During the day, the KASE index stock quotations dynamics will be also multidimensional, and the KASE index would probably end the day on neutral territory. Analysts of JSC "BCC Invest" expect the following developments in international markets today: - On May 18 KASE wild hold the special trading on placement of MEUKAM-84, ninth release (KZKDKY070099). The coupon rate value should be written as the price, in % per annum up to the second decimal. This index is the object of the trade. - Kazakh banks show some signs of recovery - Fitch. In particular, Fitch notes the evidence of a recent stabilization of key credit metrics, including the weakening of growth in outstanding debt and stabilization of the lending according to reports. According to the agency, there is evidence of reaching the bottom of the housing market by slowly increasing the number of sales. Furthermore, banks continue to benefit from substantial liquidity in the sector, the growth of deposit base and markedly reduce the burden on repayment of debt, Fitch notes. However, the report underlines, few banks have taken steps to expand activities in the current situation, and this means that the whole sector is in stagnation. In addition, the agency stressed, the main factor constraining the ratings of banks, it remains concerned about the value of their assets and the adequacy of the reserve. Fitch also notes that the profitability of lending in the sector decreased due to increased competition and the availability of excess liquidity. "Profit before impairment of loans is weak in most banks, except the People's Bank, which is a notable exception. Some banks have indicated a negative net interest income (on a cash basis, ie excluding accrued interest)," - emphasizes the agency. According to him, the moment of concern especially with regard to the restructured banks, above all, BTA Bank ("B- " / forecast "Stable") and Alliance Bank ("B-" / Stable Outlook), to which to return to profitability requires significant efforts to restructure the business and rapid growth. Despite these difficulties, Fitch believes that there are factors that should help reduce the levels of delinquencies on loans in the coming months. "Borrowers should take advantage by improving the operating environment and the many government initiatives aimed at recapitalizing the corporate sector (such as interest rate subsidies and tax breaks)," - the report indicates. In addition to government programs, a key factor for recovery will increase the value of real estate / assets that, according to Fitch, in turn, will depend on the resumption of credit growth. - Norilsk Nickel in I quarter has reduced net profit under RAS by 32% to 34.3 billion rubles. Net profit of OJSC MMC Norilsk Nickel in the I quarter of 2011 amounted to 34.290 billion rubles, or 32.3% below the same period in 2010, the company's report says. Decrease is connected with operations in the financial market (revaluation and sale of financial investments) with an increase in metal prices and rising profits from sales. Proceeds of Norilsk Nickel have increased by 37% to 81.781 billion rubles. The accounts of the company under RAS are unconsolidated and take into account only the activities of the Polar Division of Norilsk Nickel. It does not take into account other assets of the company, In particular, Kola Mining's assets in Australia, Finland, Botswana and South Africa. Net profit of Norilsk Nickel under RAS in 2010, reportedly was 110.064 billion rubles, up 12% compared to 2009 (98.03 billion rubles). Consolidated Results of Norilsk Nickel under IFRS will be published in late May, the company said. According to analysts of JSC "BCC Invest", the news will have a neutral impact on the quotes of MMC Norilsk Nickel. Despite the decrease in net income compared to the same period last year, the company reported higher gross and operating margins, indicating the slower growth of costs and operating expenses compared to revenues. - Polymetal in I quarter had 1.152 billion rubles of net profit under RAS. Polymetal (RTS: PMTL) in I quarter 2011 had a net profit under RAS in the amount of 1.152 billion rubles, according to a report of the company. This is three times the rate of IV quarter of 2010, when the company received a net profit of 385.791 million rubles. Profit before tax amounted to 1.442 billion rubles, compared with 484.632 million rubles in the IV quarter of 2010. Polymetal is Russia's largest silver producer; it is also among the top five gold producers in the country. The company produces gold and silver in the three regions of Russia: Magadan region - Dukat and Moon (including mine-satellite Arylakh) in the Khabarovsk Territory - Khakandjinskoye deposit (including satellite Yuryevskoe) and Albazino (Phase 1 Mining started in March 2011 ) in the Sverdlovsk region - mine Vorontsovskoye. Also Polymetal develops copper-gold Varvarinskoye deposit in Kazakhstan and is working on development of gold deposits in Chukotka, the May. As of April 1, 2011 among the major shareholders of Polymetal were included: a group of "East" (Alexander Nesis) - 18.9% (in Powerboom Investments, the principal owner of which is Quotan International); PPF Group NV - 19.6% (through Pearlmoon); Alexander Mamut (10.7%, in Vitalbond) and MBC Development (4,4%). On the balance sheet of subsidiaries of the Polymetal were 9.5% of shares, free-float is estimated at 36.9%. According to analysts of JSC "BCC Invest", the news will have a positive impact on the quotations of JSC Polymetal. Analysts of JSC "BCC Invest" leave their current recommendation to "buy" with target price of $22.60 per depositary receipt. The analysts of "BCC Invest" are expecting the following events on international markets today: - In two days the publication of the producer price data is expected in Russia. - Today at 12:00 (AST) will be published Eurozone data on registration of new vehicles EU 25, and 15:00 (AST) - an index of business sentiment in the medium from the ZEW. At 14:30 (AST) in the UK will be published data on the Consumer Price Index, the Producer Price Index and Retail Prices Index. At 15:00 (AST) in Germany to be published data on the index of the current situation and the mood in the business environment of the ZEW. - Today, the United States at 18:30 (AST) will publish data on construction, and permits for new home construction, and at 19:15 (AST) - on capacity utilization and industrial production. Today the following companies provide their reports: Wal-Mart Stores Inc, Vodafone Group PLC, State Bank of India, Hyundai Motor Co, Kia Motors Corp, Home Depot Inc, Dell Inc and others. Analysts of BCC Invest JSC are giving the following advice for investors in securities of issuers in internal market: -------------------------------------------------------------- Closure Target Potential, Issuer Code price price % Recommenda- tion ---------------- ------- ------- ------ ---------- ----------- Kazkommertsbank KKGB 469.73 583 +24.11 Neutral KKGBp 198 196 -1.01 Neutral Halyk Bank HSBK 345 415 +20.29 Hold BankCenterCredit CCBN 515 646 +25.44 Hold Tsesnabank TSBN 865 1,030 +19.08 Neutral EP KMG RDGZ 18,050 20,500 +13.57 Hold Kazakhmys PLC GB_KZMS 2,950 3,870 +31.19 Buy ENRC PLC GB_ENRC 2,065 2,550 +23.49 Hold Kazakhtelecom KZTK 19,400 Review KZTKp 9,100 9,300 +2.20 Hold MREK MREK 1,100 1,130 +2.73 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. [2011-05-17]