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The Most Influential RENCASIA Constituents
Ticker Company Influence, pts Leading Movers TPL CN Equity Tethys Petroleum Ltd +0.53 KCEL LI Equity KCell JSC +0.30 ZKM LI Equity Zhaikmunai LP +0.14 1878 HK Equity SouthGobi Resources Ltd +0.09 KZTK KZ Equity Kazakhtelecom JSC +0.01 Lagging Movers CG CN Equity Centerra Gold Inc -0.09 UUU CN Equity Uranium One Inc -0.14 KMG LI Equity KazMunaiGas Exploration Production JSC -0.24	Index Movers

Composition of RENCASIA
Number	Ticker	Company	Industry	MktCap, $mn	Weight in Index
1	1878 HK Equity	SouthGobi Resources Ltd	Metals & Mining	261.82	0.86
2	CG CN Equity	Centerra Gold Inc	Metals & Mining	965.84	7.53
3	DGO LN Equity	Dragon Oil PLC	Oil & Gas	4,735.05	16.59
4	ENRC LN Equity	Eurasian Natural Resources Corp PLC	Metals & Mining	4,619.80	10.98
5	HSBK LI Equity	Halyk Savings Bank of Kazakhstan JSC	Banking	2,387.86	6.37
6	KAZ LN Equity	Kazakhmys PLC	Metals & Mining	2,500.57	7.31
7	KCEL LI Equity	KCell JSC	Telecoms	2,980.00	8.64
8	KMG LI Equity	KazMunaiGas Exploration Production JSC	Oil & Gas	6,340.96	14.12
9	KZTK KZ Equity	Kazakhtelecom JSC	Telecoms	1,024.44	2.73
10	TPL CN Equity	Tethys Petroleum Ltd	Oil & Gas	226.81	2.38
11	UUU CN Equity	Uranium One Inc	Metals & Mining	2,578.52	14.48
12	ZKM LI Equity	Zhaikmunai LP	Oil & Gas	2,138.86	8.01

Recently Reports

June 14, 2013 Crude Times: Bottom fishing?	30 Pages PDF file 1.71 MB
With emerging market stocks continuing their downward trend, some companies seem to advance to new lows faster than others. We would like to draw investors’ attention to the particularly weak performance of Gazprom’s shares over the past several weeks, which have touched a new low since 2008 of $6.85 on 13 June. Having declined 27.5% YtD, Gazprom’s market capitalisation remains just above $80bn with EV at c. $120bn. Taking Gazprom’s assets at market value (those that are publicly listed), we estimate the implied value of the non-public part of the business at $100bn. The key assets that contribute to this valuation are pipelines and upstream operations. There is a wide range of opinions on what is the true value of the transportation business since its true economics remain opaque, in our view. One way to tackle this issue is to apply an EV/km multiple on which Transneft trades to the asset base of Gazprom under the assumption that both companies operate in the same regulatory regime and had Gazprom’s pipelines been run independently they would have achieved a level of returns similar to Transneft. If we apply Transneft’s $0.65mn/km multiple to Gazprom’s 160,000 km of trunk pipelines we reach a $102.8bn value which leaves just $17.8bn for its upstream business. And just for reference, its upstream operations generate c. $30bn of EBITDA and require less than $10bn of maintenance capex, on our estimates, leading to a recurring c. $15bn of FCF per annum.
May 22, 2013 Zhaikmunai: 1Q13 results review	2 Pages PDF file 151 KB
Building momentum. Following a strong 1Q13 operational update, Zhaikmunai released full financial accounts for the quarter this week and held a conference call dedicated to the results. As we previously mentioned in our operational update review (Zhaikmunai: On Track, published 22 April), the results are generally strong and are above our and market expectations. We believe that full-year results should come down closer to our below-consensus expectations as the oil price is already 8.4% below the 1Q13 average of $113/bl and the company will be closing the gas treatment facility (GTF) for its annual two-week maintenance period in 4Q13, which should correct daily production volumes slightly downwards. EBITDA released in the financial statements turned out to be 9.3% higher than what the company guided for in operations update.
May 21, 2013 The Focal Point: Renaissance Capital Focal List	30 Pages PDF file 892 KB
Introducing the Renaissance Capital Focal List, in which we showcase the strongest ideas from Renaissance Capital’s research team across EMEA emerging and frontier markets. We prioritise actionable trades, and those where we can identify potential stock triggers.
May 17, 2013 Russia: Crude Times - Taxes, dividends and JVs	30 Pages PDF file 1.68 MB
This week (on 15 May), we participated in roundtable debates organised by the Analytical Centre of the Russian Government on the development of the oil & gas industry in the east of Russia, ahead of a government meeting on this subject scheduled for early June. We found the most interesting points in the discussion were not about the oil & gas industry itself but rather around the government’s general strategic priorities. We were particularly interested to hear the current fiscal deficit and the overall deteriorating budget position mentioned several times; this appears to be quite a serious issue for the government.
May 8, 2013 EMEA telecoms and transport - Ex-dividend: Before and after	4 Pages PDF file 165 KB
Adjusting for dividends. Most of the companies in our telecoms and transport coverage are due to go ex-dividend shortly, and some already have (see Figure 3). For those that are now trading ex-div, we make the following YE13E TP adjustments to reflect this: Our VimpelCom TP is now $12.1/ADS (previously $13.2); Globaltrans moves to $20.6/GDR (from $21.3); NCSP moves to $9.2/GDR (from $9.3); Sollers drops to RUB1,094/share (from RUB1,147); Rostelecom moves to RUB122/common share (from RUB124), and to RUB96/pref (from RUB100), on Magyar Telekom, it moves to HUF381/share (from HUF431). Our TP on Global Ports is now $15.4/GDR (from $15.6), and MTS moves to $22.6/ADR (from $23.5). MTS local shares are due to go ex-div on 10 May, at which point our fair value drops to RUB370 from RUB385.Our ratings on all the above stocks are unchanged (see Figures 1 and 2).
April 26, 2013 Russia: Crude Times - Changing gas dynamics	30 Pages PDF file 1.73 MB
Leaving aside US gas, we note several interesting developments on the international gas market.
April 22, 2013 Kazakhstan: Zhaikmunai - On track	1 Pages PDF file 137 KB
Fairly strong results. Zhaikmunai reported a fairly strong operational update for 1Q13, in our view. Revenue increased 40% YoY to $228mn, while the company expects EBITDA above $140mn, representing a YoY increase of more than 27%, mainly driven by a 38% rise in production. We note, however, that 1Q13 results were supported by the elevated oil price, which averaged $113/bl in 1Q13; QtD, the oil price has declined by 8.2% to $104/bl, therefore it cannot be extrapolated directly for the remainder of the year. Full-year results are also likely to be affected by the two-week GTF maintenance during 4Q13. We are 5% below Bloomberg consensus on EBITDA for this year, as we are expecting 45.7 kb/d average production and a $100/bl oil price.
April 19, 2013 Russia: Crude Times - Situation on the domestic gasoline market	30 Pages PDF file 1.77 MB
Lukoil has announced it is cutting oil product prices across the full chain, from refineries to gasoline stations, according to a Vedomosti article published on 18 April. The newspaper refers to various experts, who highlight growing inventory levels of gasoline and other products as a likely reason for the price drop. According to the Marine Ports Association of Russia, total shipments of oil products in Russia were practically unchanged in 1Q13 (up 0.2% YoY), while production was up 4.1% YoY with an additional 2.1mnt of products output (based on InfoTEK data). Transneft also recently highlighted that for the first time in its history, crude deliveries to Russian refineries exceeded crude exports, as Russian downstream is now capable of processing more crude on the back of continuous modernisation and rising demand.
April 18, 2013 Kazakhstan: KazMunaiGas - No dividend surprise, cut to SELL	2 Pages PDF file 322 KB
Downgrade to SELL. KMG EP announced this morning (18 April) that its board of directors has recommended a KZT1,619/share dividend ($1.8/GDR) for FY12 to be paid on 1 July 2013, with a record date set at 31 May. This dividend is broadly in line with our expectation of $1.9/GDR and represents a 10% yield. The payout ratio at KMG EP for FY12 amounted to 46%. While a 10% dividend yield appears attractive, we think this has been widely expected and more importantly we do not consider this dividend payment to be sustainable given the need to invest more capital in modernisation at the Uzen and Emba fields. We downgrade our rating to SELL from Hold maintaining our $15.5/GDR target price.
April 12, 2013 Russia: Crude Times - Complete capitulation?	30 Pages PDF file 1.83 MB
This week, Gazprom’s GDRs approached the critical level of $8, testing five-year lows, while its market capitalisation declined below $100bn. Overall investor sentiment for Russian oil & gas is weak, with very little buying appetite. Yesterday (11 April), the Russian stock market was one of few globally to decline (the RTS was down 1.4%), adding to a sense of capitulation – especially given that we are approaching May, when most shares go ex-dividend, exacerbating the traditional seasonal correction. Accordingly, we have reviewed the performance of Russian oil & gas stocks vs their global peers and Brent, both YtD and over a one-year period. Notably, YtD sector performance has been diverse, with the oilfield services (OFS) segment the biggest outperformer, up 18% (IGSS being the top performer, up 47%).

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Renaissance Capital Central Asia Equity Index performances
RENCASIA value statistics 2007 2008 2009 Open 930.00 1,000.00 334.43 Close 1,000.00 334.43 677.44 Average 1,062.00 851.12 482.83	RENCASIA return 2007 2008 2009 Capital gain return 7.50 -66.56 102.57 Dividend yield 1.10 6.41 2.43 Total return 8.60 -60.15 0.00
Indexed stocks Market capitalization, $mn 2007 2008 2009 Open 42,838.00 69,178.00 21,794.00 Close 47,643.00 21,794.00 53,989.89 Average 48,669.00 58,898.66 41,946.86	RENCASIA income 2007 2008 2009 P/B 1.98 0.66 1.13 ROE 20.32 20.98 18.31 ROA 4.19 5.29 4.84 P/E 9.74 3.15 6.15 Net income, $mn 1,204.00 1,669.80 1,853.92 Net income growth, % 49.00 35.00 11.03

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