Ukraine’s main equity index fell sharply last week, although the drop was due entirely to the expected technical event of a correction in this year’s best performing issue, Raiffaisen Bank Aval (BAVL), following the passage of the ex-rights date for the bank’s 5.90 kopeck FY16 dividend. The stock fell 25% (by the amount of the dividend) to 19.40 kopecks. In our view, Raiffeisen Aval remains an attractive BUY opportunity, as its 1Q17 net profit was at a record high UAH 1.45bn (USD 54mn), implying earnings per share of 2.36 kopecks. We forecast that the bank will post a net profit of UAH 3.50bn in FY17 and will pay a 5.40 kopeck dividend next year.
Overall, the UX index lost 7.8% to close at 930 points, with all of the decline coming at the hands of Raiffeisen Aval. The bright spot among the index’s five components was Motor Sich (MSICH), which advanced by 4.2% to UAH 2193 on news that the company is planning a joint venture to build aircraft engines in China. In the electricity sector, CentrEnergo (CEEN) moved down by 0.5% closing at UAH 10.30 per share. In second-tier stocks, former UX index member Krukiv Wagon (KVBZ) plummeted by 22% to UAH 7.30 after an announcement that the company intends to de-list and transform itself into a private company at a special shareholders meeting scheduled for Jun 16.
In London, Ferrexpo (FXPO) gained 2.5% to GBp 163 despite no clear improvement in the outlook for iron ore prices. The benchmark 65 percent Fe iron ore price now stands at near USD 60 per tonne, down from USD 92 at the peak in February. In Warsaw trading, Astarta (AST) added 2.6% to PLN 70 on the nose after the company revealed plans to expand its grain storage capacities. Lugansk-based Agroton (AGT) slid 8.1% to PLN 6.70 after failing to extend its 2017 rally by climbing above the resistance level of PLN 7.50.
The hryvnia remained stable, inching up by 0.4% to 26.37 UAH/USD, as the dollar was soft against the world’s major currencies last week. The National Bank continued take advantage of an ample supply of forex on the interbank market to pad its foreign reserves.
POLITICS AND ECONOMICS
- Gingrich Says Trump Admin Will Provide Weapons to Ukraine
- UkrStat Reports 2.4% YoY GDP Growth in Ukraine for 1Q17
STOCKS IN THE NEWS
- UkrNafta Offers to Pay UAH 13bn Tax Liability Over 3 Years
- Motor Sich Plans Joint Engine Production With China’s Skyrizon
full report
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