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Halyk Finance: Kazakhstan equities review - ENRC and Kcell pull KASE higher




Halyk Finance


18 Feb 2013





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Over the past two week KASE index rose by 5.2%, outperforming the global indices. Shares of ENRC (+27,3%), Kcell (+6,1%), Kazkom (+6,4%) and KMG EP (+4,3%) were the winners. Tactical ideas ENRC shares were the winners over the past two weeks thanks to positive company specific news - publication of strong full-year 2012 production results and the information on a possible takeover of the company or a purchase of its assets. We believe ENRC shares are overbought now and expect the correction within the next two weeks, in part due to the news on a related party transaction. But we also believe the share price will rise in the run up to the publication of the 2012 financial results on March 30 due to speculative buying from traders in anticipation of higher financial results than the consensus estimate. The strong trade data from China also had a positive impact on the shares of mining companies. In January exports from China rose by 25% YoY, and imports increased by 28.8% YoY, both well above the analyst consensus. Kcell shares appreciated after the announcement of the planned dividend for the 2H2012 (T162 per share) and on the news of the slowdown of market expansion of Tele2 in Kazakhstan. The announced dividend payout exceeded our forecast (T155 per share), but this does not explain the rally. We believe more certainty over the dividend size mainly drove the stock price. We recommend to fix a long position for the investors with aggressive return expectations. However, given the lack of alternatives, Kcell shares remain one of the most attractive investments for investors with realistic return expectations.

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