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Analytics and Market news

Monday, 13 August 2018

Ukraine Weekly Market Monitor

Eavex Capital

Kyiv-listed stocks corrected last week after a firm rise over the preceding week, when several local blue chip companies reported better-than-expected earnings for 2Q18. In particular, Raiffeisen Bank Aval (BAVL) posted earnings per share of 2.22 kopecks for the second quarter compared to guidance of 1.80 kopecks. Also, national oil flagship company UkrNafta (UNAF) delivered a solid 55% YoY increase in its net profit to UAH 2.06bn in 1H18, implying UAH 38.01 earnings per share for the period. UkrNaftas shares initially advanced to UAH 117 after the report but then slipped back to UAH 113 after data that the companys oil extraction fell by 3.7% YoY in 1H18 and natural gas extraction dropped by an unimpressive 15% YoY for the same period.

The UX index lost 1.2% last week to close at 1626 points. Electricity generator CentrEnergo (CEEN) shed by 1.1% to UAh 14.80 and its close peer DonbassEnergo (DOEN) sank 5.7% to UAH 24.50.

In London, Ferrexpo (FXPO) was a wild trade story, as the stock reached a local peak of GBp 202 ahead of the companys first-half earnings report but then tumbled by as much as 20% before recovering back to GBp 173. We suppose that investors were disappointed that Ferrexpos primary cost per tonne of produced iron ore surged by 31% YoY in 1H18. Meanwhile, the companys EBITDA decreased by 18.5% to USD  234mn in the period, which was rather expected after benchmark iron ore prices have been moving generally lower since March. Another impressive stock performance was observed in Regal Petroleum (RPT), a London-listed gas extraction company with assets in Ukraine. The RPT stock skyrocketed from GBp 18.50 to GBp 40.80 just in two trading sessions as the company unveiled a nearly four-fold increase in its proven and probable oil&gas reserves after the latest appraisal. Unsurprisingly, the stock failed to hold up at the GBp 40 level, correcting back to GBp 30.00 as the appraisal reports looked not very convincing.

In Warsaw, Kernel (KER) returned above the PLN 50 line, trading at PLN 51.90 on Friday. The volatile, low-liquidity stock of Agroton (AGT) rose 25% over the last two weeks to PLN 4.20 without any visible trigger.

On the currency front, the hryvnia showed what we consider to be seasonal weakness, losing nearly 1% against the dollar to close at 27.30 UAH/USD. The National Bank said its foreign currency reserves decreased by USD 230mn to USD 17.8bn in July, a figure that covers an equivalent of three months worth of Ukraines imports.

POLITICS AND ECONOMICS

- Poroshenkos Top Strategist Met with Manafort in 2014

- Headline Inflation Moves Down to 9% After July Data

full report

Eavex Capital welcomes any questions or comments you may have regarding our research products.
Please contact our office in Kyiv at 380-44-590-5454, or by email:

Alexander Klymchuk, Head of Sales, a.klymchuk@eavex.com.ua
Dmitry Churin, Head of Research, d.churin@eavex.com.ua

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