Английский язык. Практический курс для решения бизнес-задач Пусенкова Нина

Figure 1. Renaissance Capital Stock Focus List

Recap of Stock/Sector Performance Year-to-Date

Driven by the ever growing domestic liquidity, the Russian stock market has risen strongly over the year, gaining 26%. The top performers in 2003, similar to in 2002, were second– or even third-tier stocks. The only two «blue chips» to feature in the top 20 best performing companies – Mosenergo and UES – almost doubled in value year-to-date (this is a stark reversal of the situation in 2002 when each of these stocks lost about 25%). 75% of the top 20 best performing stocks come from the utilities sector, implying that the game for control of the sector, which started in 2002, is still on.

Figure 2. The Best Performing Russian Stocks in 2003 Year-to-Date

The list of the worst performing stocks has 4 utilities firms in 2003, but otherwise it is a more diverse group and contains a number of larger companies. Beer stocks were clearly out of favor with investors, with SUN Interbrew falling almost 40%, and Baltika down 10%. Despite the strong rally in the telecoms sector as a whole, two stocks – Far East Telecom and North-West Telecom – lagged behind their peers.

Sector performance is something of a misnomer, as several are comprised of just one or two companies, while others include common and preferred shares, which often distort the overall picture. The banking sector (that is, Sberbank), which was the best performer in Russia in 2002, managed to clinch the second spot in 2003 year-to-date. The utilities sector, which was the only sector that finished down year-on-year in 2002, was the best performing one year-to-date, helped by hefty increases in UES and Mosenergo shares. At the other end of the spectrum were the airlines, and the retail and consumer stocks (led down by SUN Interbrew’s and Baltika’s poor performances).

Figure 3. The Worst Performing Russian Stocks in 2003 Year-to-Date

Finally, all top 20 stocks, except Baltika, have increased in value since the beginning of the year. UES moved up from the middle of the table at the beginning of 2003 to become the 5th largest stock. Following a strong rally in the telecom sector, 6 of the top 20 Russian stocks were telecom companies.

Figure 4. Performance of the Top Russian Stocks in 2003 Year-to-Date

On the Valuation of Russian Equities

Valuation represents only one side of the multilayered decision process behind choosing a stock. Other tangible and less tangible issues, such as, for example, the existence of the earnings momentum, sensitivity to newsflow, and the quality of management, play important roles behind the selection process. Such intangibles have traditionally held more weight in emerging market investment criteria than in developed ones, and continue to do so. This argument naturally pertains to Russia as well, and we argue that valuations can also incorporate intangible considerations.

The RTS is trading at a 2003 P/E of 6.8x, which albeit some 15% higher than at the beginning of the year, still compares favourably with other developing markets. We now take a look at sectors and individual stocks within the Russian investment universe.

The easiest multiple to use is EV/Sales. It is also the least useful of the multiples – the company may have an attractive multiple on a standalone basis, or on a growth-adjusted basis, but nothing would tell us if the company is actually profitable or if it is losing money. One way of avoiding this problem is to compare EV/Sales and Net Margin – clearly the companies with low multiples and high margins are attractive on this scale. Some of the automakers are trading at the lowest multiples, but many of them do not show growth and have low net income margins. Telecom stocks are trading on high multiples, but they are also expected to post the fastest growth and their profit margins are above 15%.

Admittedly, EV/EBITDA is also not the best multiple upon which to focus, taking no consideration, for example, of either taxes or capex. However, given ongoing differences in the reporting standards of Russian companies, EBITDA is frequently the line below which a lot of things go fuzzy. For instance, the Russian Accounting Standards (RAS) – still used by most companies, apart from blue chip stocks with ADRs – treat net income in a very different way from the U.S. GAAP and IAS. It is entirely normal to make social contributions, pay bonuses to employees, or divert funds elsewhere from whatever is called the net income under RAS, and hence RAS reported net income usually shrinks substantially when converted into GAAP figures.

The EBITDA line tends to be less distorted by accounting differences and thus our first step is to focus on it. The average Russian 2003 EV/EBITDA has somewhat increased over the past 5 months and is now about 3.8x, as opposed to 3.2x in January. There are a number of companies, which trade at a substantial discount even to this already low number. However, in most cases, there is a good reason for this – either growth is not there, or the risks are too high. For instance, although many utilities companies are trading at or below 2x EV/EBITDA, the growth is on the low side, but the risks are on the high side. Retailer TsUM shows one of the most impressive growth profiles (37% CAGR in EBITDA), and is also trading at a discount to the average. However, TsUM’s 19%+ weighted average cost of capital (WACC) is substantially above the average, and we are uncertain about its long-term strategy.

PAZ, Wimm-Bill-Dann, Norilsk Nickel, and Baltika are the companies, which, in our view, look appealing on an EV/EBITDA valuation basis, factoring in growth.

TsUM also shows up well on the EV/CF valuation sheet, followed by PAZ. Valuations of Vympelkom, Wimm-Bill-Dann, and Volga Telecom also look quite attractive, once growth is factored in. Tatneft and Surgutneftegas are two of the cheaper stocks by this measure, but there is no growth in Tatneft, while Surgut is no longer trading on fundamentals.

The P/E valuation also highlights the automotive and utilities stocks, and Sberbank, as some of the more attractively valued shares. MTS, Vympelkom, and Wimm-Bill-Dann also look good on growth adjusted measures, albeit that they are trading above the average of 6.8x.

The return on capital employed (ROCE) valuation, which, at least in theory, incorporates all cash items – including taxes, company indebtedness, and capital expenditure – highlights that most of the companies which have positive returns over their WACC have already traded up. Examples are easy to find – YUKOS, Baltika, MTS, Vympelkom, and Sibneft.

The companies which do have a positive spread of ROIC over WACC are LUKOIL, and Zavolzhskiy Motors, and, to a lesser degree, Mosenergo and Norilsk Nickel. While Zavolzhskiy Motors is forecast to keep its ROIC above WACC for the next two years, LUKOIL’s economic returns are forecast to deteriorate in 2004, while those of Norilsk Nickel are expected to improve.

The International Perspective

While looking at the valuations of Russian companies internationally, it has to be borne in mind that while Russian company share prices have been going mostly up, their risk profile has been coming down, allowing more room for price appreciation. After all, valuations are meaningless before they have been compared to growth rates and risks, as measured by WACC.

The single largest change to the WACCs of Russian companies came from the significant reduction in the country risk, as measured by the basket of Eurobonds. The yields of Russian Eurobonds, both sovereign and corporate, have seen a considerable decline in the last 12 months, on average by a 3—3.5 percentage points. To a large degree, however, this is attributable to a significant decline in US dollar yields – the tightening in EMBI spreads was far less steep than the decline in yields. Also, Russian debt yields have been declining in line with peers, as emerging market debt has performed quite well in the low interest rate and low economic growth environment.

However, there are also some Russia-specific factors behind the great performance of Russian debt over the past several months. These include a significant current account surplus, forex reserves nudging the $60 billion mark, a state budget surplus, a growing economy, significantly improved political stability, and some hesitant progress in structural reforms. This is all in sharp contrast with 1997—1998, when the decline in yields was driven by foreign «hot money» rather than fundamentals. In contrast now domestic investor demand in the Eurobond market is more stable than foreign demand. For these reasons, and due to the relatively low chance of rising dollar interest rates this year, we think that Russian debt yields, however ridiculously low they might appear, are sustainable in 2003. And Russia is still trading some healthy 100 basis points (bps) wider than Mexico, which is one investment grade higher, and about 200 bps wider than Poland, which is now trading as a quasi-EU country.

As an example of corporate bonds, the yields of MTS and Vympelkom dollar debt instruments have also declined in the past year. It should be noted, though, that Vympelkom has closed the gap with MTS in terms of the cost of debt, which is due both to an improvement in Vympelkom’s financial results and MTS’ increasing leverage. MTS’ Eurobonds maturing in 2008 now probably serve as the best proxy for the cost of debt for both companies, which we would see in the tight area of around 8%.

Despite the decreasing macro risks, we do not think that there have been many changes, which would allow us to consider Russian equity as any less risky than we did previously. Legislation has not changed much, the corporate governance risks remain the same, the dealings in shares of UES and Surgutneftegas over the past six months have proved that the market remains an «insider’s» place, and the overall breadth of the market – if anything – has worsened. Thus, we do not see any reasons to decrease our six percentage point equity risk premium.

Source: Alexander Kazbegi, Renaissance Capital, Company Handbook, 2003 (excerpt).

Essential Vocabulary

1. recap (recapitulation) – краткое повторение, суммирование

2. year-to-date (YTD) – с начала года до настоящего момента

3. second (third)-tier company – компания второго (третьего) эшелона

4. blue chip – голубая фишка

5. year-on-year (YoY) – в годовом исчислении или в течение года

6. investment universe n – инвестиционная вселенная

7. enterprise value (EV) – ценность предприятия

8. EV/Sales – отношение ценности предприятия к продажам

9. net margin – чистая маржа

10. Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) – прибыль до уплаты процентов, налогов, амортизации материальных и нематериальных активов

11. EV/EBITDA – отношение ценности предприятия к EBITDA

12. Russian Accounting Standards (RAS) – российские стандарты бухучета (РСБУ)

13. Generally Accepted Accounting Principles (GAAP) – общепринятые стандарты бухгалтерского учета

14. International Accounting Standards (IAS) – международные стандарты финансовой отчетности (МСФО)

15. Compound Annual Growth Rate (CAGR) – кумулятивный годовой темп роста

16. EV/CF – отношение ценности предприятия к денежному потоку

17. Weighted Average Cost of Capital (WACC) – средневзвешенная стоимость капитала

18. trade up – зд. достичь возможного максимума

19. Return on Invested Capital (ROIC) – доходность инвестированного капитала

20.basket n – корзина (напр. валют)

21. percentage point – процентный пункт

22. Emerging Markets Bond Index (EMBI) – индекс облигаций развивающихся рынков

23. hot money – «горячие деньги» (краткосрочные потоки капитала, обусловленные стремлением воспользоваться более высокими процентными ставками или арбитражной возможностью, «бегство капитала»)

24. basis point (bps) – базисный пункт

25. quasi – якобы, почти, квази-, полу-, кажущийся, подобный

26. equity risk premium – премия за риск, связанный с акциями

Exercise 1. Answer the following questions.

1. How did the Russian stock market perform in 2003? 2. Why is it difficult to assess sector performance? 3. What are the aspects that play an important role in the valuation of the emerging market companies? 4. What are the best multiples to use for the valuation of Russian companies? 5. What companies looked good in 2003 according to Renaissance Capital experts? 6. How did Russian companies look from the international perspective in 2003? 7. What were the country-specific developments that contributed to the excellent performance of Russian companies in 2003? 8. What were the risks inherent in Russian stocks?

Exercise 2*. Find terms in the text that match definitions given below and make sentences of your own with each term.

1. 1/100th of 1%

2. shares in leading quoted companies that can be easily bought and sold without influencing their price and are regarded as low-risk investments

3. purchases of long-term assets, such as equipment, used in manufacturing a product

4. risk associated with a cross-border transaction, including but not limited to legal and political conditions

5. a sum of money or other property owned by one person or organization to another

6. a debt instrument issued by a borrower outside of its own country. The currency in which the bond is denominated can be foreign to the buyer, to the purchaser, or to both

7. rules for the preparation of company accounts

8. the total value at market prices of the securities at issue for a company, or a stock market or sector of the stock market

9. of securities, the amount by which the secondary market price exceeds the issue price or par value

10. the difference between two rates or prices

Exercise 3. Explain to the first-time investor in the Russian stock market risks and opportunities inherent in it. Formulate 10 commandments of investing in Russia.

Exercise 4*. Find three synonyms in the text for the term «прибыль», explain the difference in their meaning and make sentences of your own with each term.

Exercise 5*. Fill in the blanks using terms given below.

Five Investing Pitfalls To Avoid, According to Investor’s Business Daily

Buying Low-Priced Stocks

What sounds better? Buying 1,000 shares of a $1 stock or buying 20 shares of a $50 stock? Most people would probably say the former because it seems like a bargain, with more……… for big increases from owning more shares. But the money you make in a stock isn’t based on how many shares you own; it’s based on the amount of money………

Many investors have a love affair with cheap stocks, but low-priced stocks are generally missing a key ingredient of past stock market winners:……. sponsorship.

A stock can’t make big gains without the buying power of……. funds, banks, insurance companies and other deep-pocketed investors fueling their price moves. It’s not…… trades of 100, 200 or 300 shares that cause a stock to surge higher in price, it’s big institutional…….. share trades of 10,000, 20,000 or more that cause these great jumps in price when they buy – as well as great price drops when they sell.

Institutional investors account for about 70% of the trading……. each day on the……… so it’s a good idea to fish in the same pond as they do.

Remember: Cheap stocks are cheap for a reason. Stocks sell for what they’re…… In many cases, investors that try to grab stocks on the cheap don’t realize that they’re buying a company mired in problems with no institutional sponsorship, slowing…….. and sales growth and shrinking…….. share. Institutions have……. teams that seek out great opportunities, and because they buy in huge quantities over time, consider…….. their choices if you find these fund managers have better-than-average performance.

Avoiding Stocks With High P/E Ratios

«…….. on stocks with low P/E ratios. They’re attractively valued and there’s a lot of……… «How many times have you heard this statement from investment…….?

While it’s true that stocks with low P/E ratios can go higher, investors often misuse this……… metric. Leaders in an industry group often trade at a higher…….. than their…….. for a simple reason: They’re expanding their market share faster because of outstanding earnings and sales growth…….

Stocks on your……. list should have the traits of past big stock market…… we mentioned earlier: leading price performance in their industry group, top-notch earnings and sales growth and rising fund ownership, to name a few. A……. new product or service doesn’t hurt either.

Stocks with «high» P/E ratios share a common trait: their…….. shows there’s plenty of…….. about the company’s future prospects.

Letting Small Losses Turn Into Big Ones

Cut your losses in any stock at 7% or 8% and you’ll never get hit with a big loss: this is your…….. policy. If you buy stocks at the right time, they should never fall 7—8% below your…….. price.

A small loss in a stock can easily be overcome; it’s the big ones that can do serious damage to a…….. Take a 50% loss on a stock, and it would need to rise 100% to get back to…….. But if you cut your losses at 7% or 8%, a single 25%……. can wipe out three 7%—8% losses.

If a stock you own starts to fall on expanding…….. volume, it’s usually better to sell first and ask questions later, rather than the other way around. Keep losses small to avoid severe……. You can always re-enter the……. if you’ve only lost 7%. Don’t ever look back after a smart sell, even if the stock…….. You cannot……. its future, so you are best off reacting to what your stock is telling you right now. Learning this trait is hard – but it will save you a great…… in the long run.

Averaging Down

Averaging down means you’re buying stock as the price falls in the hopes of getting a……. It’s also known as throwing good money after bad or trying to catch a……. knife. Either way, trying to lower your…… cost in a stock is another risky proposition.

Buying Stocks In A Down Market

Some investors don’t pay any attention to the…… state of the market when they buy stocks, and that’s a mistake.

The goal is to buy stocks when the major……. are showing signs of…… (buying: heavy volume price increases) and to sell when they’re showing signs of…… (selling: heavy volume price declines).

When you’re buying stocks, make sure you’re swimming with the market tide, not against it.

Source: November 11, 2004, By Ken Shreve, www.investors.com (abridged)

Terms:

сurrent, portfolio, block, exchanges, bargain, accumulation, deal, distribution, upside, watch, bullishness, piggybacking, opportunity, break-even, focus, trading, falling, invested, prospects, damage, indexes, rebounds, institutional, gains, mutual, retail, purchase, volume, worth, earnings, market, research, pros, valuation, peers, winners, dynamic, performance, insurance, gain, game, forecast, average

Exercise 6. Translate into Russian.

Покупать нельзя продавать

Акции «Транснефти» стали предметом спора крупнейших российских инвесткомпаний. В ответ на рекомендацию Deutsche UFG «продавать» привилегированные акции монополии и снижение их расчетной цены в 4,5 раза «Тройка Диалог» посоветовала инвесторам «покупать» бумаги «Транснефти».

«Транснефть»– нефтепроводная монополия, государству принадлежат 75% акций (100% голосующих), привилегированные акции (25% уставного капитала) обращаются на рынке. Чистая прибыль «Транснефти» по МСФО за девять месяцев 2005 г. – 41,6 млрд руб., выручка – 135,4 млрд руб.

На прошлой неделе Deutsche UFG в 4,5 раза понизил оценку справедливой цены привилегированных акций «Транснефти» – с $2662 до $580 – и рекомендовал инвесторам «продавать» бумаги. Инвестбанк мотивировал свое решение тем, что воспринимает ее теперь не как коммерческое предприятие, работающее для выгоды своих акционеров, а как технический инструмент государства. В результате в пятницу «префы» «Транснефти» в РТС рухнули на 10% (до $2185), на ММВБ – на 8,8% (61 500 руб.).

Другие инвесткомпании не разделяют пессимизма Deutsche UFG. Вчера «Тройка Диалог» вновь повторила рекомендацию «покупать» акции «Транснефти». «Бумаги подешевели на 10%, и мы считаем, что представился удачный момент для их покупки», – говорится в отчете инвесткомпании. «Транснефть» хоть и контролируется государством, но нацелена на получение максимальной прибыли. «Тройка Диалог», как и прежде, считает, что справедливая цена акций «Транснефти» составляет $3150. Инвесткомпания называет их единственными бумагами нефтегазового сектора, которым предстоит существенная переоценка. Соотношение стоимости компании и прогноза EBITDA на 2006 г. у «Транснефти» составляет 3,3, а в среднем по отрасли – 6,2, говорится в отчете.

«Мы не поменяли своего мнения о „Транснефти“, просто отреагировали на 10-процентное падение ее котировок», – поясняет старший аналитик «Тройки Диалог» Олег Максимов. В Deutsche UFG от комментариев отказались.

«Я не помню такого большого разброса в оценке справедливой цены акций компании», – разводит руками начальник аналитического отдела «Атона» Стивен Дашевский. По его мнению, отчеты инвестбанков «оживили торговлю акциями „Транснефти“. Вчера к середине дня „префы“ „Транснефти“ частично отыграли пятничное падение (на 5,5% в ММВБ и 6,18% в РТС), но к вечеру снова подешевели и закрылись почти на уровне пятницы – 60 985 руб. на ММВБ и $2185 в РТС.

Часть инвесторов после взаимоисключающих выводов инвесткомпаний находятся в смятении, отмечает вице-президент отдела продаж «Уралсиба» Александр Захаров: «Те, кто решил следовать рекомендациям Deutsche UFG, будут использовать для этого усиление „префов“ „Транснефти“, а кто хочет купить, наоборот, будут использовать проседания рынка». Сам «Уралсиб» считает «префы» «Транснефти» недооцененными, а пятничное снижение котировок – «отличной возможностью для покупки бумаг».

Вице-президент «Транснефти» Сергей Григорьев говорит, что в его компании «не отслеживают цену привилегированных акций и не знают, кто является миноритарным акционером компании».

Источник: Ведомости, 28.03.06