Today we’ll look at Russian companies with the highest five-year profit growth, a market cap of at least RUB 10 billion, and a P/E ratio of no more than 20. The latter means that the shares are not overpriced, and there’s almost no risk for investors to find themselves in a bubble.
All shares reviewed below are listed on the Moscow Stock Exchange. All data is given in Russian rubles, but the percentage changes in profit and turnover for five years are shown, both in rubles and US dollars due to the recent drop in the ruble exchange rate. The letter "B" stands for billions.
When assessing a company one should be cautious about the dividend data given. We use data from finance.google.com, but its dividend data for Russian enterprises is sometimes erroneous or obsolete. Before investing in any stocks from this review, try to discover more information about the amount of dividend income you can expect to receive.
— Symbol: OGKB
— Market cap: RUB 41B
— Annual turnover: RUB 134B
— P/E ratio: 7.4
— Dividend yield: 2.2%
— Share price change YoY: +39%
— 5-year profit change (RUB): +215%
— 5-year profit change (USD): +61%
— 5-year turnover change (RUB): +5%
— 5-year turnover change (USD): –46%
Description. An energy company formed in 2005, when the famous monopoly of RAO UES (Unified Energy Networks) of Russia was broken up into several independent companies. The company engages in the generation, distribution and sale of electricity, mainly wholesale. The total capacity of its power plants is about 20 gigawatts.
Chart. The 2012-2014 period was marked with a price slump, followed by a multi-year minimum record in 2015. Since then, the prices turned to a slight growth, hitting a local record in the beginning of 2017. However, they soon dropped back to the price level of the mid-2016.
Pros. Largest five-year profit growth in this review.
Cons. Low dividends.
2. Moskovskiy Oblastnoy Bank PAO (Mosoblbank)
Office of MosoblBank
— Symbol: MOBB
— Market cap: RUB 24B
— Annual turnover: RUB 21B
— P/E ratio: 1.1
— Dividend yield: –
— Share price change YoY: –12%
— 5-year profit change (RUB): +173%
— 5-year profit change (USD): +39%
— 5-year turnover change (RUB): +18%
— 5-year turnover change (USD): –18%
Description. A bank founded in 1992 in Dagestan (under the original name "Vatan"). Later the ownership changed and the bank moved to the Moscow region. In the 2000s, it significantly expanded its activities, opening more than 100 branches in the Moscow region and another 600 throughout Russia. In 2014, off-balance sheet deposits of 76 billion rubles were found. As a result, the Central Bank of Russia decided to restructure the bank to avoid bankruptcy. While the bank was under administration, it was discovered that former bank executives had stolen large sums of the depositiors’ money. As a result, Mosoblbank’s shares crashed and remain low to this day.
Chart. The bank’s shares reached a record high in 2013–2014, but then collapsed about 19 times. In 2016 the stocks began to climb back slowly, but are still trading at a significant discount to four years ago.
Pros. Excellent five-year profit growth, good five-year ruble turnover growth.
Cons. Extremely low P/E ratio (the shares have quite a scandalous reputation and are still unpopular despite the growth in profits), no dividends.
3. PJSC Kazanorgsintez
— Symbol: KZOS
— Market cap: RUB 120B
— Annual turnover: RUB 69B
— P/E ratio: 6.4
— Dividend yield: 7.6%
— Share price change YoY: +81%
— 5-year profit change (RUB): +80%
— 5-year profit change (USD): -8%
— 5-year turnover change (RUB): +15%
— 5-year turnover change (USD): –41%
Description. One of Russia’s largest chemical enterprises, founded in 1963. It produces more than 38 percent of all Russian polyethylene and is its largest exporter. The company is a leader in the production of polyethylene pipes, phenol, acetone, cooling liquids, chemical reagents for oil extraction and glycol dehydration. Kazanorgsintez produces more than one million tons of chemical products a year.
Chart. Since mid-2012, the company’s shares have grown twenty-fold.
Pros. High dividends, long-term positive trend, good five-year ruble profit growth, low P/E ratio.
Cons. No significant disadvantages were found.
4. Protek Capital Inc.
Protech office and warehouse complex
— Symbol: PRTK
— Market cap: RUB 53B
— Annual turnover: RUB 195B
— P/E ratio: 8.7
— Dividend yield: 7.5%
— Share price change YoY: +4%
— 5-year profit change (RUB): +64%
— 5-year profit change (USD): –16%
— 5-year turnover change (RUB): +14%
— 5-year turnover change (USD): –42%
Description. One of the largest pharmaceutical companies in Russia, founded in 1990. The company engages in its own pharmaceutical manufacturing, as well as the distribution and sale of others manufacturers’ medicines. The company’s main facility is the Sotex plant, located in Moscow region, which has a capacity of 100 million ampoules a year. Protek has been listed on the stock exchange since 2010. Most of its shares belong to chairman Vadim Yakunin, either directly or through controlled organizations (not to be confused with the former head of Russian Railways Vladimir Yakunin). Only 20 percent of its shares are in free float.
Chart. Shortly after its IPO in 2010, Protek shares fell six times, but in 2012 they began to recover and are now close to their record highs of 2010.
Pros. Huge dividends, low P/E ratio, positive share price and ruble profit trends.
Cons. No significant disadvantages were found.
5. UTair Aviation (UTair PAO)
UTair aircraft in original coloring
— Symbol: UTAR
— Market cap: RUB 30B
— Annual turnover: RUB 70B
— P/E ratio: 5.1
— Dividend yield: –
— Share price change YoY: –13%
— 5-year profit change (RUB): +57%
— 5-year profit change (USD): –20%
— 5-year turnover change (RUB): +10%
— 5-year turnover change (USD): –44%
Description. The third-largest Russian airline after Aeroflot and S7. Founded in 1967 as Tyumen Civil Aviation Administration. In 1991, it was formally reorganized as the Tyumen-AviaTrans company, which was renamed UTair in 2002. At the beginning of 2010, the company had a fleet of more than 200 aircraft, and handled about 10 million passengers a year. But in 2014 the company fell into crisis and decided to scale back its operations. UTair now has juts 62 planes, which are mostly Boeing 737-500s. The company still has a fleet of more than 300 helicopters.
Chart. In 2014, the company was plunged into crisis and its shares contracted threefold. Since 2016, the stock is relatively stable.
Pros. Excellent five-year ruble profit growth, low P/E ratio
Cons. No dividends.
6. LSR Group
Residential complex "New Ohta — color city" in Saint-Petersburg
— Symbol: LSRG
— Market cap: RUB 91B
— Annual turnover: RUB 87B
— P/E ratio: 9.8
— Dividend yield: 8.8%
— Share price change YoY: +17%
— 5-year profit change (RUB): +43%
— 5-year profit change (USD): –27%
— 5-year turnover change (RUB): +12%
— 5-year turnover change (USD): –43%
Description. One of the largest construction companies in Russia, founded in 1993. LSR Group engages mostly in residential development, but performs other projects as well. Now the company is preparing a construction site for the Hermitage museum’s satellite in Moscow. LSR’s headquarters are located in Saint Petersburg, but the group also operates in Moscow and some other cities. The company has the highest rating of openness, A1, according to a Russian rating agency.
Chart. LSR shares peaked during the real estate bubble in 2007. Shortly after, they fell about 18 times, but in 2009–2010 bounced back.
Pros. Positive share price and ruble profit trends, high dividend.
Cons. Relatively high P/E ratio (compared to other companies reviewed).