Gazprom increases on robust volume 18 October 2019

NEWS BITES - BRIC

Gazprom PJSC (MICEX:GAZP), Russia's largest Oil & gas company by market cap, has increased 24.0 Kopeck (0.1%) from its previous trading session to close at RUB227.84. Compared with the MOEX Russia Index which rose 5.3 points (0.2%) in the day, the relative price change was -0.3%. The rise has been propped up by robust volume of 1.5 times the average daily volume of 9.9 million shares. There were 14,735,210 shares worth RUB3.4 billion (US$52.4 million) traded today.

BULLISH TURNING POINT

Momentum Up

The price increase of 0.1% was fuelled by volume of 1.5 times average. On the previous day, the price decreased 0.1% on volume of 1.9 times average. The Beta of the stock is 1.7, indicating the bullish trend might be sustained in the short-term.

Stock Summary

CurrencyRussian Ruble (RUB) 1 USD = 64.04 RUB
Today's close (RUB)227.84
52-Week Range (RUB)146.3-256.4
SectorOil & Gas sector
Shares Outstanding23,673,512,900
Market CapRUB5,393.8 billion (US$84.2 billion)

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BULLISH SIGNALS

SECTION 3 TODAY'S BEARISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF RUB227.84):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]

+ Micex: GAZP.MICEX 14,735,210 [VI of 0.4] volume 98.61% of aggregate. Price: RUB227.84.

+ Frankfurt: GAZ.FRA 207,668 [VI of 0.2] volume 1.39% of aggregate. Price: EUR6.34. Using the current exchange rate of EUR1 equals 71.2273RUB, The shares are at a 98.2% premium to the close price on Micex.

+ Aggregate volume: there were 14.9 million shares of Gazprom worth RUB3.5 billion traded today. The aggregate volume was 0.4 times average trading of 35.1 million shares.

SECTION 2 GAZPROM BULLISH SIGNALS

2.1 Undervaluation [compared with sector average]:

Price/Earnings and Earnings Yield

+ Price/Earnings of 3.5. The P/E of 3.5 plus annual inflation in the Russia of 4.0% adds up to 7.5, well within the value benchmark Rule of 19.

+ Earnings yield of 28.9% is 4.4 times the 10-year bond yield of 6.64%.

Price to Sales

+ Price/Sales of 0.7 [0.8]. We estimate Gazprom stock is trading at a current year Price/Sales of 0.6 and a forward year Price/Sales of 0.5.

Price to Book

+ Price to Book of 0.4 [0.9]. We estimate Gazprom stock is trading at a current year Price to Book of 0.4 and a forward year Price to Book of 0.4.

+ The P/E of 3.5 multiplied by the P/NTA of 0.4 is 1.3. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

Price to EBITDA

+ Price to EBITDA of 2.9 [4.8].

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.3. Compared with the rest of the market the stock is undervalued.

Brand Value/Enterprise Value

+ Brandirectory have estimated Gazprom's brand value at RUB532.3 billion (US$8.3 billion). The Brand Value represents 5.5% of the estimated Enterprise Value of RUB9,733.7 billion (US$152 billion). Enterprise Value is defined as MCap of RUB5,393.8 billion plus net debt of RUB4,340 billion.

2.2 Undervaluation Indicators and rank of Gazprom in the Russian market:

DescriptionValueRank In Market
P/E * P/NTA1.35In Top 9%
Price/Earnings3.5In Top Quartile

2.3 Uptrend:

Price/Moving Average Price:

+ The Price/MAP of 1.2 for GAZP is higher than the Price/MAP for the MOEX Russia Index of 1.03.

+ The price to 200-day MAP ratio is 1.2, a bullish indicator. In the past 200 days this ratio has exceeded 1.2 101 times suggesting further upside. The 50-day MAP of RUB230.71 is higher than the 200-day MAP of RUB189.31, another bullish indicator.

Past Week:

+ In the past week, volume was 1.6 times average and the shares were up 0.2%. Friday's close price is at a 0.4% premium to its 5-day Volume Weighted Average Price (VWAP) of RUB227.01.

Relative Strength (6 months):

+ In the Russian market of 149 stocks traded today, the stock has a 6-month relative strength of 90 which means it is beating 90% of the market.

+ A price rise combined with a high relative strength is a bullish signal.

2.4 High Price Performance Indicators and rank of Gazprom in the Russian market:

DescriptionGAZP ValueRank In Market
MCapRUB5,393.8 billionIn Top 2%
Today's Trading TurnoverRUB3.4 billion (US$52.4 million)In Top 2%
Price/MAP2001.2In Top Quartile
Volatility %0.8In Top Quartile

SECTION 3 GAZPROM BEARISH SIGNALS

3.1 Downtrend:

Price/Moving Average Price and MACD:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 226.6 minus the 26-day EMA of 227.45 is negative suggesting a bearish signal.

Past Month:

+ The price dropped 2.1% in the past month. The fall has been exacerbated by high volume of 1.9 times average for the month.

3.2 Low Price Performance Indicator and rank of Gazprom in the Russian market:

DescriptionGAZP ValueRank In Market
% Prem to Vol Wtd Price0.3In Bottom Quartile

Overbought/Bearish Signals:

+ The stock is overbought according to the Williams % R indicator of -12.9, suggesting the price is close to its 14-day high of RUB228.90.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF RUB227.84):

SECTION 4 THE PAST WEEK

4.1 Snapshot: Gazprom stock was up 47.0 Kopeck or 0.2% in the past week. Volume in the week was 1.6 times average trading of 49.6 million shares. It underperformed the MICEX Index in 4 out of 5 days.

DayGazpromClose price [RUB]Price change %Relative change %Comment
ThursdayDecreases, 2 days' volume in a day227.6-0.1-0.1VI*=1.9
WednesdayIncreases, 2 days' volume in a day227.730.8-0.3VI*=1.6
TuesdayRises in 4 out of last 5 days225.920.1-0.5VI*=1.7
MondayDecreases on firm volume225.75-0.7-0.2Steepest Fall; VI*=1.3
FridayRises for a third consecutive day, a three-day rise of 1.9%227.371.31.8Top Rise; VI*=1.8

[Volume Index (VI); 1 is average]

+ Gazprom PJSC is placed 109/182 in BuySellSignals' ranking of Russian performers in the past week, a percentile ranking of 40.

4.2 Volatility:

+ Gazprom is at a discount of 11.1% to its 12-month high of RUB256.40 on July 04. It is also at a premium of 55.7% to the 12-month low of RUB146.30 on November 26, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Net profit margin has averaged 13.6% in the last 3 years. This is better than the sector average of 9.5% and suggests a high margin of safety.

5.2 Growth:

Annual Trend in Revenue, EPS and EBITDA:

5-years average annualized earnings growth rate of 5.8%

+ Revenue growth rate is positive and has seen consecutive rises in recent years. [Year ended, all figures in %]

YearRevenue GrowthEPS GrowthEBITDA Growth
Dec 1825.6103.982
Dec 174.114.9-6.4
Dec 163.6-18-53.4

5.3 Low Debt Indicators:

+ The debt to equity ratio of 28.0% is under a safe benchmark figure of 50%. However, it has deteriorated in the past two years.

+ Total Liabilities/EBITDA of 3.8 is comfortably below the Joseph Piotroski benchmark of 5.

5.4 High Growth and Performance Indicator and rank of Gazprom in the Russian market:

DescriptionValueRank In Market
EPS Growth %103.9In Top Quartile

5.5 Past 5 years Annual EPS growth:

Annual ReportEPS (RUB)Growth %
201865.89103.9
201732.3214.9
201628.13-18.0
201534.29394.8
20146.93-86.0

Average Annual Compounded rate of growth in EPS for the 5 years was 5.8%. There have been three rises and two declines in the past 5 years.

5.6 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 12.7%. 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 42.0%.

GAZPClose (RUB)Annual Return %
Oct 18227.8442.0
1 Yr ago160.4928.2
2 Yrs ago125.17(8.0)
3 Yrs ago136(3.6)
4 Yrs ago141.044.8

Close 5 years ago RUB134.60

5.7 Present Value of RUB1,000 invested in Gazprom since listing thirteen years ago

- Gazprom shares closed at RUB7.82 when it was first listed on January 23, 2006.

- The present value of RUB1,000 (PV1000) invested in Gazprom on the date of listing is RUB29,136, including a capital gain of RUB28,136.

- Multiplier in RUB = 29.136x

- Annualized Total Shareholder Returns (TSR) in RUB= 27.8%

5.8 Present Value of USD1000 invested in Gazprom since listing thirteen years ago

- Gazprom shares closed at RUB7.82 when it was first listed on January 23, 2006.

- The present value of USD1,000 (PV1000) invested in Gazprom on the date of listing is $US12,853, including a capital gain of $US11,853.

- Multiplier in USD = 12.853x

- Annualized Total Shareholder Returns (TSR) in USD = 20.4%

5.9 Increased VWAP

Past five years, 12 months ended Oct 18 (RUB)

YearHigh PriceVWAPLow Price
2019256.4198.79146.3
2018176.95143.24123.64
2017160.62130.92111.46
2016170.43142.18122.75
2015166.94143.74113.73

In the past five years Volume Weighted Average Price (VWAP) has increased by 38.3% to RUB198.79. Based on a dynamic start date of five years ago, there have been declines in VWAP in 3 out of 5 years.

5.10 Increased Average Daily Turnover

Past five years, 12 months ended Oct 18 (RUB billion)

YearAverage Daily Turnover
20195.4
20183.4
20173.4
20163.9
20154.6

In the past five years, average daily share turnover has increased 18.1% to RUB5.4 billion (US$84.9 million). This suggests increased liquidity.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Performance:

+ Return on Equity 11.1% [12.9%].

+ Return on Capital Employed 10.1% [11.9%].

+ As per the Du Pont analysis, Return on Equity [ROE] of 11.1% is lower than sector average of 12.9%. ROE is computed as net profit margin of 18.6% times asset turnover [sales/assets] of 0.4 times leverage factor [total assets/shareholders' equity] of 1.5.

6.2 Declining ADVT past five years

Avg. Daily Volume Traded 12 months ended Oct 18, million shares

YearADVT
20199.9
201823.8
201726.1
201628.1
201532.2

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 69.2% to 9.9 million shares.

6.3 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 25.01% (or a turnover period of 4 years ). The average length of ownership of the stock is 0.9 times the average holding period of 4 years 5 months for stocks in the MOEX Russia Index.

SECTION 7 GAZPROM SUMMARY FINANCIALS

7.1 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)128.3102.1109.4
Pretax (USD B)28.915.914.4
Net (USD B)22.711.110.4
EPS (RUB)65.8932.3228.13

+ Net profit was up 103.9% from US$11.1 billion in 2017 to US$22.7 billion in 2018.

+ Earnings Per Share (EPS) was up 103.9% from RUB32.32 to RUB65.89.

7.2 Annual Report: Key Parameters

FY2018 Annual Report: Gazprom Net Profit up 104%


Release Date: July 25, 2019

Gazprom (MICEX:GAZP) reported net profit for the year-ended 31 December 2018 of RUB1,456b ($US21.0b), up 103.9% from RUB714b ($US12.4b) in the previous year. Earnings per share (EPS) were up 103.9% from RUB32.32 (US56.14c) in FY2017 to RUB65.89 (US94.84c) in FY2018.

Major changes compared with previous year:

Favourable Changes:

- EBIT Margin up from 15.6% to 22.5%

- EBIT to total assets up from 5.6% to 8.9%

- Profit before tax to Sales up from 15.6% to 22.5%

- Current ratio up 26.9% from 1.3 to 1.7

- Working capital to total assets up from 4.8% to 8.4%

- Total current assets to Total Assets up from 19% to 20.2%

- Long-term investments to Total Assets up from 6.2% to 7.3%

- Total Liabilities to EBITDA of 3.8 compares favourably with the Joseph Piotroski benchmark of <5. This ratio has improved by 37.8% from the previous year's ratio of 6.1.

- Total Liabilities to Operating Cash Flow of 4.3 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 17% from the previous year's ratio of 5.2.

- Net tangible assets per share up 14.8% from RUB538.91 ($US9.4) to RUB618.46 ($US8.9)

Unfavourable Changes:

- Fixed Assets to Total Assets down from 68.8% to 66.4%

- Current Debtors to Total Assets down from 6.2% to 5.9%

Note:

- Total revenue to total assets steady at 0.4

- Debt to Equity steady at 0.3

- Retained earnings to total assets steady at 63.5%

- Total non-current assets to Total Assets down from 81% to 79.8%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : Gazprom PJSC (GAZP)
December 312018201720182017Change
DescriptionRUB mRUB m$US m$US m(%)
Sales Revenue8,224,1776,546,143118,378.8113,706.5Up 25.6
EBITDA1,852,5621,018,00626,665.817,682.8Up 82
EBIT1,852,5621,018,00626,665.817,682.8Up 82
Pre-Tax Profit/(Loss)1,852,5621,018,00626,665.817,682.8Up 82
Working Capital1,738,535879,75025,024.515,281.3Up 97.6
Current Assets4,212,2303,469,26660,630.860,261.2Up 21.4
Current Liabilities2,473,6952,589,51635,606.444,979.9Down 4.5
Shareholders' Funds13,300,00911,629,086191,440.3201,997.2Up 14.4
Total Liabilities7,034,2876,223,289101,251.5108,098.5Up 13
Total Assets20,810,44018,238,770299,545.5316,807.4Up 14.1
Current Debt569,061874,8058,191.115,195.4Down 34.9
Non-Current Debt3,294,7612,391,71347,424.841,544.1Up 37.8
Total Debt3,863,8223,266,51855,615.956,739.4Up 18.3
Operating Cash Flow1,617,3841,187,02223,280.620,618.6Up 36.3
Net Assets13,776,15312,015,481198,293.9208,708.9Up 14.7
Net Tangible Assets13,668,05611,910,012196,738206,876.9Up 14.8
AuditorKPMG LLP 

Year-on-year comparison of Per Share figures

December 312018201720182017Change (%)
SalesRUB372.1RUB296.2$US5.4$US5.1Up 25.6
Cash3,965.1Kopeck4,072.7 KopeckUS57.1cUS70.7cDown 2.6
Shareholders' FundsRUB601.8RUB526.2$US8.7$US9.1Up 14.4
Total LiabilitiesRUB318.3RUB281.6$US4.6$US4.9Up 13
Total AssetsRUB941.6RUB825.3$US13.6$US14.3Up 14.1
Current Debt2,574.9Kopeck3,958.4 KopeckUS37.1cUS68.8cDown 34.9
Non-Current DebtRUB149.110,822.2 Kopeck$US2.1US188cUp 37.8
Total DebtRUB174.8RUB147.8$US2.5$US2.6Up 18.3
Net Tangible AssetsRUB618.5RUB538.9$US8.9$US9.4Up 14.8

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Return on Equity (%)11.16.4Up 73.4
Return on Assets (%)7.34.2Up 73.8
Total debt to net tangible assets (%)28.327.4Up 3.3
Total Liabilities to EBITDA3.86.1Down 37.8
Total Liabilities to Operating Cash Flow4.35.2Down 17
Debt/Equity (Up 3.7% from 0.27 to 0.28)0.30.3Up 3.7
Total Liabilities/Total Assets (Steady % from 0.34 to 0.34)0.30.3Steady
Current Ratio1.71.3Up 26.9
Common Size Ratios by Assets %
Total non-current assets to Total Assets 79.8 81.0 Down 1.5
Fixed Assets to Total Assets 66.4 68.8 Down 3.5
Total current assets to Total Assets 20.2 19.0 Up 6.2
Long-term investments to Total Assets 7.3 6.2 Up 17.2
Current Debtors to Total Assets 5.9 6.2 Down 4.2
Common Size Ratios by Sales %
Profit before tax to Sales 22.5 15.6 Up 44.7
Tax expenses to Sales (3.9) (3.8) Down 1.7

Currency Conversion (December 31, 2018): $US1 = RUB69.47

Currency Conversion (December 31, 2017): $US1 = RUB57.57

Three-year record of growth and performance:

In the last 3 years Total Revenue averaged RUB7,261.5B ($US104.5B), EBITDA averaged RUB1,319.3B ($US19B) and Net Profit averaged RUB945.8B ($US13.6B). Compound Annual Growth Rate (CAGR) averaged 10.6% for Total Revenue, 22.8% for Net Profit and -7.4% for EBITDA.

DescriptionAnnual (RUB B)Annual ($US B)3-year Avg (RUB B)3-year Avg ($US B)3-year CAGR %
Total Revenue8,224.2118.47,261.5104.510.6
EBITDA1,852.626.71,319.319(7.4)
Operating Profit1,852.626.71,319.319(7.4)
Net Profit1,456.321945.813.622.8

Three-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 18.6% was above its 3-year Avg of 13.6% (All Figures in %)

Description20183-year Avg
EBITDA Margin22.518.5
Operating Profit Margin22.518.5
Net Profit Margin18.613.6
Return on Equity11.17.4
Return on Assets7.35
Return on Capital Employed10.17.7

SECTION 8 CORPORATE PROFILE

8.1 Activities

Gazprom is a gas company basically focused on geological exploration, production, transmission, storage, processing and marketing of gas and other hydrocarbons.

8.2 Issued Capital and MCap

Based on 23,673,512,900 issued shares the market capitalisation is RUB5,393.8 billion (US$84.2 billion).

8.3 Vanguard Total World Stock ETF 7627:

The stock was one of 7627 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 67,200 shares in the period Jul 31, 2019 to Aug 31, 2019 worth $US-15,441,122 at an estimated Volume Weighted Average Price (VWAP) of $US229.7786. As at Aug 31, 2019, the Vanguard Total World Stock ETF held 691,121 shares worth $US2,385,884 or 0.01% by value of the ETF's portfolio [Ranked 1155 out of 7627 by value and 4 out of 35 for Russia].

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