Russian stock report - Gazprom
Gazprom rises for a second consecutive day, a two-day rise of 0.8% August 17, 2018 18:00 SAMT
NEWS BITES - BRIC
Gazprom PJSC (MICEX:GAZP), Russia's 2nd largest Oil & gas company by market cap, has risen 72.0 Kopeck (0.5%) for a second consecutive day on Friday. This brought its two-day rise to RUB1.12 (0.8%), compared with the MOEX Russia Index which rose 9.5 points (0.4%) in the two days for a relative price increase of 0.4%. The 2-day rise was fuelled by a cumulative volume of 2.4 times the average 2-day volume of 5.5 million shares. Gazprom's stock last traded at RUB141.52. Its MCap is RUB3,350.3 billion (US$50.2 billion).
Highlights in today's Report:
SECTION 1 BULLISH SIGNALS
SECTION 2 BEARISH SIGNALS
SECTION 3 PRICE VOLUME DYNAMICS
SECTION 4 RELATED NEWS
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 GAZPROM BULLISH SIGNALS
+ The present value of RUB1,000 (PV1000) invested one year ago in Gazprom is RUB1,219, for a capital gain of RUB219.
|MOEX Russia Index||995||987||1,164|
+ The present value of RUB1,000 (PV1000) invested ten years ago in Gazprom is RUB12,983, for a capital gain of RUB11,983.
+ 10 years Multiplier in RUB = 12.983x
+ Compound Annual Growth Rate (CAGR) in RUB = 29.2%
Present Value of USD1,000 invested 10 years ago:
+ The present value of USD1,000 (PV1000) invested ten years ago in Gazprom is $US4,777, for a capital gain of $US3,777.
+ 10 years ago USD 1 equalled RUB 24.57
+ 10 years Multiplier in USD = 4.777x
+ Compound Annual Growth Rate (CAGR) in USD = 16.9%
Aug 17, 2018: USD 1 equals RUB 66.77
High Performance Indicators and rank of Gazprom in the Russian market:
|Description||GAZP Value||Rank In Market|
|Today's Trading Turnover||RUB2 billion (US$29.4 million)||In Top 2%|
|Earnings Yield %||1.6||In Top Quartile|
|Volatility %||1.2||In Top Quartile|
|Total Debt to Equity||0.2||In Top Quartile|
+ The P/E of 62.1 multiplied by the P/NTA of 0.3 is 16.1. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.2. Compared with the rest of the market the stock is undervalued.
+ Gazprom is cash rich with Cash to Market Capitalisation at 15.2%.
+ Over the last 3 years average annual compound growth rate of earnings per share was 12.5%. This is considered moderate.
+ Net profit margin has averaged 8.4% in the last 3 years. This is better than the sector average of 7.4% and suggests a high margin of safety.
+ Brandirectory have estimated Gazprom's brand value at RUB555.1 billion (US$8.3 billion). The Brand Value represents 8.0% of the estimated Enterprise Value of RUB6,957.2 billion (US$104.2 billion).
Quarterly Trend in Net Profit Margin:
+ Net Profit margin has shown signs of recovery in recent quarters. [All figures in %]
|Qtr-ended||Net Profit Margin|
|Mar 18 [Q1]||18.3|
|Dec 17 [Q4]||-24.3|
1.3 Undervaluation [compared with sector average]:
+ Price/Sales of 0.4 [0.7]. We estimate Gazprom stock is trading at a current year Price/Sales of 0.4 and a forward year Price/Sales of 0.4.
+ Price to Book of 0.3 [0.7]. We estimate Gazprom stock is trading at a current year Price to Book of 0.2 and a forward year Price to Book of 0.2.
SECTION 2 GAZPROM BEARISH SIGNALS
Low Performance Indicators and rank of Gazprom in the Russian market:
|Description||GAZP Value||Rank In Market|
|Return on Assets [ROA] %||0.4||In Bottom 1%|
|% Prem to Vol Wtd Price||0.2||In Bottom 4%|
|EBITDA Margin %||6.2||In Bottom 7%|
+ Total Liabilities/EBITDA of 13.6 which compares unfavourably with the Joseph Piotroski benchmark of 5.
+ As per the Du Pont analysis, Return on Equity [ROE] is less than stellar at 0.4%; a deterioration from 4.6% last year. ROE is computed as net profit margin of 1.2% times asset turnover [sales/assets] of 0.39 times leverage factor [total assets/shareholders' equity] of 1.4.
YOY Deterioration in ROE and Profit Margin
|Du Pont Analysis||ROE||Profit Margin||Asset Turnover||Equity Multiplier|
2.2 Overvaluation [compared with sector average]:
+ Price/Earnings of 62.1 [12.9].
+ Return on Assets 0.4% [3.1%].
+ Return on Capital Employed 2.5% [6.6%].
+ Price to EBITDA of 8 [5.9].
SECTION 3 GAZPROM PRICE VOLUME DYNAMICS
+ Gazprom is at a discount of 6.7% to its 12-month high of RUB151.65 on January 23. It is also at a premium of 23.0% to the 12-month low of RUB115.07 on August 23, 2017.
3.2 Aggregate Volumes and Prices:
[Volume Index or VI in brackets; 1 is average]
+ Micex: GAZP.MICEX 13,877,330 [VI of 0.5] volume 98.07% of aggregate. Price: RUB141.52.
+ Frankfurt: GAZ.FRA 273,734 [VI of 0.01] volume 1.93% of aggregate. Price: EUR3.66. Using the current exchange rate of EUR1 equals 76.0683RUB, The shares are at a 96.7% premium to the close price on Micex.
+ Aggregate volume: there were 14.2 million shares of Gazprom worth RUB2 billion traded today. The aggregate volume was 0.2 times average trading of 65.1 million shares.
The turnover rate in the 12 months to date was 27.6% (or a turnover period of 3 years 7 months). This average length of ownership of the stock at 0.9 times the average holding period of 3 years 9 months for stocks in the MOEX Russia Index suggests a larger number of speculators on the share register, making it less safe for long-term investors.
3.3 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in GAZP would have produced a return of 21.9%.
|GAZP||Close (RUB)||Annual Return %|
|1 Yr ago||116.12||(15.9)|
|2 Yrs ago||138.15||(4.7)|
|3 Yrs ago||144.99||9.1|
|4 Yrs ago||132.95||1.6|
Close 5 years ago RUB130.91
+ Gazprom PJSC (MICEX:GAZP), gained RUB11.59 (or 8.9%) year-to-date (YTD) in 2018 to close at RUB141.52 today. The stock is trading at a Price/Sales multiple of 0.4. The Price/Sales is 0.6 times the sector average of 0.7; and is the 8th lowest in the Oil & Gas sector.
SECTION 4 GAZPROM RELATED NEWS
+ BSS/News Bites:
Gazprom PJSC is placed 38/163 in BSS News Bites' ranking of Russian performers in the past year, a percentile ranking of 77.
+ Vanguard Total World Stock ETF 2588:
The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 822,381 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-115,094,522 at an estimated Volume Weighted Average Price (VWAP) of $US139.9528. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US0 or 822,381% by value of the ETF's portfolio [Ranked 2476 out of 2588 by value and 6 out of 7 for Russia].
SECTION 5 GAZPROM GLOBAL RANKING
Global Rank [out of 47,645 stocks] and Rank of Gazprom in the Europe Region [out of 8,516 stocks]
|Description||Value||Global Rank||In Eur Region|
|Total Assets (US$)||288.7B||264||66|
|Net Profit (US$)||1.2B||968||193|
|Return on Equity %||0.4||28,585||4,738|
|Net Profit Margin %||1.2||26,198||4,173|
|Price to Book||0.3||1,846||371|
|PV1000 (1Year) USD*||1,093||14,466||2,398|
|US$* Change (1Year) %||7.5||13,064||2,161|
* 1 year ago USD 1 = RUB 59.52
Aug 17, 2018: USD 1 equals RUB 66.77
SECTION 6 GAZPROM SUMMARY FINANCIALS
Financials Summary (Past 3 years)
|Year ended||Dec 2017||Dec 2016||Dec 2015|
|Sales (USD B)||113.4||104.6||90.6|
|Pretax (USD B)||3.9||13.8||13.8|
|Net (USD B)||1.2||9.9||11.7|
+ Net profit was down 87.7% from US$9.9 billion in 2016 to US$1.2 billion in 2017.
+ Earnings Per Share (EPS) was down 91.9% from RUB28.13 to RUB2.28.
SECTION 7 GAZPROM PROFILE
Gazprom is a gas company basically focused on geological exploration, production, transmission, storage, processing and marketing of gas and other hydrocarbons.
7.2 Top Management
The chairman is Viktor Zubkov.
7.3 Issued Capital
Based on 23,673,512,900 issued shares the market capitalisation is RUB3,350.3 billion (US$50.2 billion).
Physical Address: ul. Nametkina, 16, V-420, GSP-7
Country of Incorporation: Russia
Exchange: Moscow Exchange (MICEX)
Business Sector: Energy - Fossil Fuels
Industry Group: Oil & Gas
Economic Sector: Energy
M:GAZP; MCX:GAZP; MM:GAZP; RM:GAZP; GAZP.MM