Russian stock report - Gazprom

RUSS

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

1.1 Technicals:

+ The present value of RUB1,000 (PV1000) invested one year ago in Gazprom is RUB1,219, for a capital gain of RUB219.

PV10001-week1-month1-year
GAZP.MICEX9789741,219
MOEX Russia Index9959871,164

+ 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:

DescriptionGAZP ValueRank In Market
Today's Trading TurnoverRUB2 billion (US$29.4 million)In Top 2%
Earnings Yield %1.6In Top Quartile
Volatility %1.2In Top Quartile
Total Debt to Equity0.2In Top Quartile

1.2 Fundamentals:

+ 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-endedNet 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:

DescriptionGAZP ValueRank In Market
Return on Assets [ROA] %0.4In Bottom 1%
% Prem to Vol Wtd Price0.2In Bottom 4%
EBITDA Margin %6.2In Bottom 7%

2.1 Fundamentals:

+ 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 AnalysisROEProfit MarginAsset TurnoverEquity Multiplier
Current Year0.41.20.391.4
Previous Year4.610.60.381.4

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

3.1 Volatility:

+ 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%.

GAZPClose (RUB)Annual Return %
Aug 17141.5221.9
1 Yr ago116.12(15.9)
2 Yrs ago138.15(4.7)
3 Yrs ago144.999.1
4 Yrs ago132.951.6

Close 5 years ago RUB130.91

3.4 Year-To-Date

+ 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

Other 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]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)50.2B25167
Total Assets (US$)288.7B26466
Revenue (US$)113.4B6019
Net Profit (US$)1.2B968193
Return on Equity %0.428,5854,738
Net Profit Margin %1.226,1984,173
Price to Book0.31,846371
Price/Earnings61.815,8182,828
PV1000 (1Year) USD*1,09314,4662,398
US$* Change (1Year) %7.513,0642,161

* 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 endedDec 2017Dec 2016Dec 2015
Sales (USD B)113.4104.690.6
Pretax (USD B)3.913.813.8
Net (USD B)1.29.911.7
EPS (RUB)2.2828.1334.29

+ 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

7.1 Activities

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).

COMPANY IDENTIFIERS

Contact: 495-719-30-01

Physical Address: ul. Nametkina, 16, V-420, GSP-7

MOSCOW 117997

Russian Federation

State/Province/Country: Russia

Country of Incorporation: Russia

Exchange: Moscow Exchange (MICEX)

Business Sector: Energy - Fossil Fuels

Industry Group: Oil & Gas

Economic Sector: Energy

ISIN: RU0007661625

M:GAZP; MCX:GAZP; MM:GAZP; RM:GAZP; GAZP.MM

PermID: 4295887074

RIC: GAZP.MM

Source: www.BuySellSignals.com