research reports

Home > research reports
Username
Password
remember
Forgot password?
Not a member yet? Register now
Year: Month: All releases Economy Sectors Companies
1 / 20

Georgian Railway - 9M19 update

20 Dec, 2019

GR released 9M19 unaudited results together with Management Discussion and Analysis. Revenue was up 3.8% y/y to US$ 131.1mn in 9M. This increase was mostly driven by higher freight transportation revenue (US$ 81.2mn) reflecting pick up in dry cargo volumes (+17.5% y/y to US$ 48.4mn). Operating expenses declined 16.2% y/y to US$ 95.7mn in 9M19, mostly due to lower depreciation expenses. As a result adjusted EBITDA improved by 22.6% y/y to US$ 60.4mn with adjusted EBITDA margin climbing 7.1ppts y/y to 46.1% in 9M. Despite better operating performance the bottom line was negative US$ 23.0mn in 9M caused by GEL-depreciation related non-cash FX loss (US$ 45mn) and impairment loss on trade receivable (US$ 8.1mn).

Freight transportation, the largest revenue category for GR, continued growth in 3Q19, with revenue up 14.4% y/y to US$ 81.2mn in 9M19. Notably, surge in dry cargo transportation (up 17.5% y/y to US$ 48.4mn) had the largest effect on the overall cargo transportation revenues. Freight handling also increased, up 10.8% y/y to US$ 16.8mn. On the downside, logistic service revenues dropped 34.6% y/y to US$ 13.9mn and freight car rental revenue also declined 5.6% y/y to US$ 7.0mn. Meanwhile passenger traffic revenue increased by a mere 1.0% y/y (though up 12.8% y/y in GEL) in 9M19. Other revenues, accounting for just 2.3% of total, were up 27.0% y/y to US$ 3.0mn due to increased sales of materials and scrap.

9M19 operating expenses were down 16.2% y/y to US$ 95.7mn, as depreciation expenses reduced. End 2018 reduction in asset-base due to the significant impairment loss recognition reduced GR’s depreciation expenses by 34.4% y/y to US$ 23.4mn in 9M19. Employee benefits and electricity and other consumables, where the only categories that increased in GEL terms up 6.4% y/y to GEL 117.3mn and 2.7% y/y to GEL 33.8mn, respectively. While in USD, every cost item declined in 9M19, explained by GEL’s depreciation.


Download report (English)
Read More

Regional Fixed Income Market Watch | November 2019

20 Dec, 2019

Highlights 
• US real GDP growth was revised upward to an annualized 2.1% (second estimate) from an annualized 2.0% (advance estimate) in 3Q19. Annual inflation in the US was 2.1% in November 2019, up from 1.8% in previous month. Unemployment rate was 3.5% in November 2019, down from 3.6% in previous month. Target range for the federal funds rate was kept unchanged at 1.5%-1.75% in December 2019 in line with expectations. 
• EU19 real GDP growth was 1.2% y/y in 3Q19. Based on the Eurostat flash estimate, annual inflation in EU19 was 1.0% in November 2019, up from 0.7% in previous month. Unemployment rate in EU19 was 7.5% in October 2019, unchanged from previous month. In December 2019, ECB kept the interest rate unchanged on the main refinancing operations, the marginal lending facility and the deposit facility at 0.00%, 0.25% and -0.50%, respectively. 
• Turkish economy increased by 0.9% y/y in 3Q19 after 1.6% y/y reduction in 2Q19. 
• In October 2019, economic growth was 7.7% y/y in Armenia, 5.7% y/y in Georgia, 5.4% y/y in Kazakhstan and 3.1% y/y in Russia, based on preliminary data. In 10M19, growth was 2.1% y/y in Azerbaijan and 1.1% y/y in Belarus. 
• In November 2019, annual inflation was above the target range in Georgia (7.0%) and Turkey (10.6%); inflation was below the target in Armenia (1.0%) and in Russia (3.5%), while it was within the target range in Kazakhstan (5.4%) and close to the target in Ukraine (5.1% y/y). Annual inflation was 2.4% in Azerbaijan in November 2019. 
• As of 19 December 2019, monetary policy rate increased by 50 basis points to 9.0% in Georgia, while it was cut by 25 basis points to 7.5% in Azerbaijan and to 6.25% in Russia, by 50 basis points to 9.0% in Belarus, by 200 basis points to 12.0% in Turkey and to 13.5% in Ukraine. 
• In November 2019, Fitch upgraded Armenia’s rating to BB- from B+ with a stable outlook.

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine


Download report (English)
Read More

Initiating coverage of Silknet, which placed debut US$ 200mn Eurobond in 2019

3 Dec, 2019


10 things you need to know about Georgia’s telecom sector and Silknet
 
1. Georgia was one of the first post-Soviet countries to liberalize the telecom market. The country’s telecom industry has seen a number of mergers and acquisitions in recent years, enabling original operators to maintain the dominant market positions. In Georgia’s three-carrier mobile industry, Magticom and Silknet are the only full-service telecom operators, while Veon is focused on the mobile industry.

2. We find both the mobile and fixed market in Georgia to be attractive especially when compared to European markets. We believe that Georgia’s telecom market will benefit from rising urbanization, changing lifestyle and increased mobile data usage. 

3. Mobile segment expected to grow from mobile migration and increased data usage as Georgians use low levels of mobile internet compared to EU and CIS countries

4. Fixed broadband segment expected to benefit from increasing penetration in rural parts and shrinking household size in Georgia. After record breaking growth levels, we expect fixed broadband market to shift to steady growth path as penetration is still low in Georgia vs. EU. 

5. Pay-TV sector was the fastest growing segment, with penetration reaching 56.5% of the Georgia’s households. Despite the trend, Pay TV penetration still low in Georgia, particularly in rural parts. We estimate, urbanization trend and growing number of households to support the sector going forward. However, we acknowledge that the prevalent content piracy in Georgia hinders the sector’s growth outlook.

6. Fixed voice segment expected to continue decline, reflecting global trend of fixed-to-mobile substitution. Not surprising that more and more people, especially young Georgian families, do not have a fixed phone line at home. 

7. We initiate coverage of JSC Silknet, the largest fixed voice and second largest fixed broadband, Pay TV and mobile operator in Georgia. Silknet has transformed into a fully four-play-enabled telecom operator with the acquisition of Geocell in March 2018, then second largest mobile operator in Georgia. We believe that this acquisition enhances company’s market position and product profile, and better equips Silknet to compete with its rival.

8. Silknet placed its debut US$ 200mn Eurobond on 2 April 2019, with 5-year tenor and 11% coupon rate.  Major portion of the Eurobond proceeds was used to refinance the obligations incurred for Geocell acquisition and the remainder improved company’s liquidity profile.

9. Geocell acquisition almost doubled Silknet’s revenue as mobile sector became the largest and most profitable business line for the company. Silknet expected to benefit from the surge in mobile data traffic as well as growing fixed segment penetration in Georgia.

10. We believe that Silknet’s financial metrics will remain at comfortable levels compared to the Eurobond covenants in the medium term. Silknet’s credit profile is backed by robust profitability, moderate leverage and strong growth prospects, while key risks facing the company are related to competition in the sector and FX exposure. 

Download report (English)
Download(geo)
Read More

Regional Fixed Income Market Watch | October 2019

25 Nov, 2019

Highlights

  • US real GDP growth came in at 1.9% annualized rate (advance estimate) in 3Q19 after 2.0% growth in 2Q19. Annual inflation in the US was 1.8% in October 2019, up from 1.7% in the previous month. Unemployment rate was 3.6% in October 2019, up from 3.5% in the previous month. Target range for the federal funds rate was lowered to 1.5%-1.75% in October 2019.
  • EU19 real GDP growth was 1.2% y/y in 3Q19 unchanged from 2Q19. Based on the Eurostat flash estimate, annual inflation in EU19 was 0.7% in October 2019, down from 0.8% in the previous month. Unemployment rate in EU19 was 7.5% in September 2019, unchanged from the previous month. In October 2019, ECB kept the interest rate unchanged on the main refinancing operations, the marginal lending facility and the deposit facility at 0.00%, 0.25% and -0.50%, respectively.
  • Chinese economy increased by 6.0% y/y in 3Q19 after growing 6.2% y/y in 2Q19.
  • In September 2019, economic growth was 7.5% y/y in Armenia, 5.2% y/y in Georgia, 4.1% y/y in Kazakhstan and 2.9% y/y in Russia, based on preliminary data. In 9M19, growth was 3.8% y/y in Ukraine, 2.5% y/y in Azerbaijan and 1.0% y/y in Belarus.
  • In October 2019, annual inflation was above the target level in Belarus (5.3%), Ukraine (6.5%), Georgia (6.9%) and Turkey (8.6%); inflation was below the target in Armenia (0.9%) and in Russia (3.8%), while it was within the target range in Kazakhstan (5.5%). Annual inflation was 2.7% in Azerbaijan in October 2019.
  • In October 2019, monetary policy rate increased by 100 basis points to 8.5% in Georgia, while it reduced by 25 basis points to 7.75% in Azerbaijan, by 50 basis points to 6.5% in Russia, by 100 basis points to 15.5% in Ukraine, by 250 basis points to 14.0% in Turkey and has remained unchanged in other countries.


Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.


Download report (English)
Read More
what we do management media center transactions contact
Important Disclaimer Privacy Policy Terms & Conditions Risk Warning
© 2014 Galt & Taggart | Creating Opportunities
Created by sbdigital