Drukāt |

Norvik Research 20.03.2017

20/03/2017 18:04

Global developments

Global stocks are weaker amid falling oil prices. S&P 500 futures are 0.1% lower, Eurostoxx 600 is 0.2% down. The dollar DXY index is unchanged. US 10Y treasury yields rose 1 bp to 2.51% after Friday's drop to a 2-week low.

Oil prices declined on the back of rising drilling activity in the US. Baker Hughes active rotary rigs count jumped by 14 to 631. Brent prices are 1.0% lower at $51.3/bbl.

Russia and CIS area developments and market colour

S&P on Friday raised the outlook on Russia’s sovereign rating from neutral to positive on favourable growth outlook. S&P affirmed Russia’s credit rating at BB+, one notch below investment grade, and stated that it may upgrade the rating if the Russian economy continues adapting to low oil prices environment while maintaining a relatively low government debt level.

Russia’s industrial production data for February came out significantly worse than expected. Output declined 2.7% YoY compared to a Bloomberg consensus forecast of 1.3% YoY growth, following 2.2% YoY expansion in January. According to Rosstat’s estimates, in seasonally- and work day-adjusted terms, IP in February declined 1.5% MoM after a 0.7% increase in January. The mining and quarrying output did not change on a YoY basis in February after a 3.3% YoY increase in January, led by gas extraction (+12.1% YoY), coal production (+2.9% YoY). Manufacturing output slumped 5.1% YoY, after a 2.0% YoY growth in January, partly due to the negative calendar effect.

The rouble is 0.6% weaker today at 57.5 versus USD, reflecting oil prices dynamics. OFZ yields are 3-4 bps tighter today. Russia’s and Kazakhstan’s longer term sovereign yields are 1-2 and 6-7 bps tighter today.

Corporate news

UC Rusal, a leading aluminium producer, published financial data for 2016. The results were broadly neutral, taking into account tough market conditions in the aluminium industry during the first half of 2016 when aluminium prices reached multi-year minimums. Net income rose 2.1 times to $1,18 bn. This result was achieved due to lower financial expenses, as well as a substantial increase in the share of profits of associated entities and joint ventures from $368 mn in 2015 to $848 mn last year.

Other financial parameters were slightly worse than in 2015. Sales went down by 8% to $7,983 bn as average aluminium prices on LME declined 3.5% from $1663 per ton to $1604 per ton, while average realized premium to LME price fell 43.4%. Adjusted EBITDA last year was also lower on a year-over-year basis at $1,49 bn (-26.1% YoY). EBITDA margin decreased from 23.2% in 2015 to 18.7% last year. Notably in 4Q 2016 EBITDA margin stood at 20.3% compared to 16.5% in 2015. The improvement of financial results during the second half of 2016 was driven by more favourable market conditions, as well as higher operational efficiency.

The favourable performance of 2H 2016 is expected to continue in 2017. The company forecasts that global aluminium demand will increase by 5% in 2017 compared to last year and reach 62.7 mn tons. Stable market conditions should contribute to aluminium deficit amounting to 1.1 million tons versus 0.7 million tons in 2016. Rusal’s 5-year Eurobond issued in January 2017 with a coupon of 5.125% is trading with YTM at 5.157% and Z-spread of 306.1 bps.

For more information on the research, please click here.

Norvik Banka Research
+44 207 259 8854

Brokerage department
+371 6701 1561

This report is prepared by Norvik Banka UK Limited, of 46-48 Grosvenor Gardens, London, SW1W 0EB, United Kingdom (hereinafter referred to as the Company) as a marketing communication for information purposes only. Neither the information nor any opinion contained in this report (notwithstanding the source) is intended to be, or should be construed as an offer, a recommendation, an advice or an invitation to make an offer, to buy or sell any financial instrument. Information contained in this report constitutes neither investment nor tax advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument discussed in this report and carefully evaluate the risks and eventual losses that are related to the investment services and its compliance with their investment goals.
Investors should note that any income derived from investments in financial instruments may fluctuate and that the price or value of securities and investments may rise or fall. Accordingly, investors may lose their investment or receive back less than originally invested. Past performance and income is not a guide to future performance and income. Foreign currency exchange rates may adversely affect the value, price or income of any security or related investment mentioned in this report. Investing in the Russian or CIS economies and securities involves a high degree of risk and requires appropriate knowledge and experience.
The information contained in this report have been obtained from such public sources what are believed to be reliable, but no representation or warranty is made by the Company with regard to accuracy. Therefore the information contained herein is subject to change without prior notice.
This report should not be viewed as the only source of information, and neither the Company, nor the companies within the NORVIK group and/or any affiliates or employees thereof accept any responsibility or liability whatsoever for any direct or indirect damage arising out of or in any way connected with the use of information contained herein, nor for its authenticity.
This report may not be distributed, copied, reproduced or changed without prior written consent from the Company. Further information, which for the avoidance of doubt cannot be treated as the recommendations and/or advice either, may be obtained from the Company upon request.
This report has not been prepared on the basis of the requirements of regulatory provisions promoting independence of investment research and is not subject to the prohibition from making transactions before disseminating investment research.
Norvik Banka Research is a Trading Name of Norvik Banka UK Ltd, which is Authorised and Regulated by the Financial Conduct Authority, FRN: 681329. Registered in England and Wales with number 08940522. Registered Office: 46/48 Grosvenor Gardens 1st Floor, London, SW1W 0EB.

The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful.

This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more Click Here.

Pēdējās ziņas