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The Most Influential RENCASIA Constituents

Ticker Company Influence, pts Leading Movers DGO LN Equity Dragon Oil PLC +0.05 ZKM LI Equity Zhaikmunai LP +0.03 ENRC LN Equity Eurasian Natural Resources Corp PLC +0.02 CCBN KZ Equity Bank CenterCredit +0.02 KAZ LN Equity Kazakhmys PLC +0.01 Lagging Movers UUU CN Equity Uranium One Inc -0.01 KZTK KZ Equity Kazakhtelecom -0.02 TPL CN Equity Tethys Petroleum Ltd -0.02 KMG LI Equity KazMunaiGas Exploration Production -0.19

Index Movers

Composition of RENCASIA
Number	Ticker	Company	Industry	MktCap, $mn	Weight in Index
1	CCBN KZ Equity	Bank CenterCredit	Banking	615.86	1.22
2	CG CN Equity	Centerra Gold Inc	Metals & Mining	2,996.09	14.44
3	DGO LN Equity	Dragon Oil PLC	Oil&Gas Alternatives	3,453.43	15.39
4	ENRC LN Equity	Eurasian Natural Resources Corp PLC	Metals & Mining	18,260.10	14.23
5	HSBK LI Equity	Halyk Savings Bank of Kazakhstan JSC	Banking	2,665.90	5.80
6	KAZ LN Equity	Kazakhmys PLC	Metals & Mining	10,262.15	16.30
7	KKB LI Equity	Kazkommertsbank	Banking	3,893.02	1.92
8	KMG LI Equity	KazMunaiGas Exploration Production	Oil & Gas	8,001.60	13.29
9	KZG LI Equity	KazakhGold Group Ltd	Metals & Mining	232.94	0.69
10	KZTK KZ Equity	Kazakhtelecom	Telecoms	1,072.16	2.39
11	MXP LN Equity	Max Petroleum PLC	Oil&Gas Alternatives	70.61	0.22
12	STCM LN Equity	Steppe Cement Ltd	Basic Materials	114.68	0.61
13	TPL CN Equity	Tethys Petroleum Ltd	Oil & Gas	272.37	2.68
14	UUU CN Equity	Uranium One Inc	Basic Materials	1,612.92	6.46
15	ZKM LI Equity	Zhaikmunai LP	Oil&Gas Alternatives	1,369.00	4.37

Recently Reports

July 14, 2010 Kazakhstan: The oil export duty is back	1 Pages PDF file 211 KB
Yesterday (13 July), Interfax reported that Kazakhstan’s government has decided to introduce an oil export duty of $20/tonne (about $2.7/bbl), which will take effect on 12 Aug 2010. The duty will apply to all oil producers, except those operating under production-sharing agreements (PSA) with stability clauses governing this specific payment. According to Finance Minister Bolat Zhamishev, about 15 oil companies will be exempt from the new tax. Export duties are planned not only for oil, but also for other commodities.
July 13, 2010 Kazakhstan: KazMunaiGas E&P - Cash down, stock up	1 Pages PDF file 45.1 KB
KazMunaiGas Exploration Production’s (KMGEP) share price added 7.5% yesterday (12 July), on news implying that the company’s cash pile, held with local banks, is not frozen and will be spent shortly. Yesterday’s close was at $19.25/GDR, implying 58% upside potential to our 12M target price (TP). The GDR is trading at 5.2x 2010E P/E (without taking into account the new acquisitions), a 13% discount to Tatneft, on our estimates. We reiterate our BUY rating.
July 13, 2010 Kazakhstan: Uranium One – China uranium deal supports price rebound	1 Pages PDF file 44.2 KB
China has agreed to buy more than 10kt of uranium from Cameco, over 10 years. We think strong uranium demand indicates the price has bottomed out, and we regard Uranium One (BUY; target price $2.92 [diluted, ex-dividend]) as the best play on uranium spot price growth.
July 5, 2010 Central Asia: RENCASIA and RENKAZ – EM underdogs in June	10 Pages PDF file 535 KB
Renaissance Capital’s RENCASIA Index lost 8% from 31 May to 30 June 2010, underperforming all its peer indices. MSCI EM ASIA, the best-performing EM peer, outperformed RENCASIA by 9.9% and RENKAZ by 9.4% in June.
July 5, 2010 Central Asia: Tethys Petroleum – From gas into oil	24 Pages PDF file 669 KB
We reiterate our BUY rating on TPL, and have decreased our target price to CAD1.83 (from CAD2.07; implying 30% upside potential vs the stock’s 1 July closing price).
June 28, 2010 Emerging EMEA: Oil and gas monitor	20 Pages PDF file 1.35 MB
Last-minute decisions to make. This week should prove an important one for Rosneft. First, we expect the government to officially reinstate the crude export duty for East Siberian fields. Deputy Prime Minister Igor Sechin said on 16 June that the new export duty regime for 22 East Siberian oil fields will be introduced on 1 July, leading to an approximate 67% saving (vs 100% currently). However, details of the new tax regime have yet to be made public, and we expect an announcement this week. Rosneft is the major beneficiary of this tax break at the moment (through its giant Vankor field), and we continue to expect that this tax break will be fully gone by the end of this year. Second, Rosneft’s CEO, Sergey Bogdanchikov, is yet to be officially reappointed or replaced, given his contract expires tomorrow (29 June). Sechin, Rosneft’s chairman, said last week that the government has not considered any other candidates than Bogdanchikov, but the lack of an official decision – now expected this week – has been causing concerns among the investment community.
June 15, 2010 Kazakhstan: Halyk Bank – Breaking away from the pack	22 Pages PDF file 932 KB
Halyk Bank’s 1Q10 results lend clear support to our view that it is breaking away from the pack.
June 9, 2010 Kazakhstan: Uranium One gets Kazakh assets, Atomredmedzoloto gets control	1 Pages PDF file 45.0 KB
Uranium One (UUU) has acquired 50% and 49.67% respective interests in the Akbastau and Zarechnoye uranium mines, in southern Kazakhstan, from Atomredmedzoloto (ARMZ), the Russian state uranium mining holding. The acquisition will result in a 60% production increase at UUU, from about 10mn lb per year to 16mn lb per year, and UUU’s total cash cost will remain below $20/lb (it is $17/lb for 2010). The company expects to realise management and operating synergies on the integration of the assets. ARMZ will contribute its interests in the Akbastau and Zarechnoye JV and $610mn in cash, in exchange for 356mn new common shares (the current share count is 587.5mn, to be increased to 943.5mn). UUU will pay at least a $1.06/share dividend to minorities (the record date will be seven days after the transaction closes, possibly by YE10, and the dividend will be paid within 21 days of the record date). This represents a minimum of 43% of the pre-announcement share price. The deal is subject to board approval at both ARMZ and UUU (likely in mid-July 2010). A circular to shareholders, containing a formal MI61-101 valuation, is due to be issued in late July. Akbastau (1.7mn lb of 2010E production on a 100% basis; 7.8mn lb of annual capacity by 2016; 29.8mn lb of indicated and 63.8mn lb of inferred U3O8 resources) and Zatechnoye (1.7mn lb of 2010 production on a 100% basis; 2.5mn lb of annual capacity by 2012) will increase production at UUU by 26% to 8.5mn lb in 2010, and 31% to 10.5mn lb in 2011. Over the longer term, Zarechnoye (2mn lb per year) and Akbastau (3.9mn lb per year) will add about 40% to attributable production, we estimate, potentially taking output to 18.3-20.3mn lb per year.
June 7, 2010 Emerging EMEA: Oil and gas monitor	21 Pages PDF file 510 KB
Russia’s crude output continues to grow. Preliminary data reported by Reuters last week (2 June) indicates that Russia produced 10,041 kbpd of crude and gas condensate in May – up 0.1% MoM and up 2.5% YoY. This represents the 15th consecutive month of YoY gains since Mar 2009, following 14 months of declines. We attribute the production increase chiefly to the start-up of the Vankor field by Rosneft and the Uvat fields by TNK-BP, as well as the ramping-up of crude output from Sakhalin-2. YtD, for the first five months of 2010, Russia's crude and condensate production increased 2.8% YoY to 207.8mnt. TNK-BP demonstrated the highest production growth rate (3.6%), followed by Rosneft (3.1%). Tatneft saw a slight increase of 0.2%, while Gazprom neft's production was marginally down 0.1%. Both LUKOIL and Surgutneftegas saw declining production, down 1.6% and 1.3% respectively. We maintain our forecast that Russian crude and gas condensate output will grow 1.2% in 2010.
June 1, 2010 Kazakhstan: ENRC plc - A buying opportunity	18 Pages PDF file 327 KB
Risk-reward ratio skewed to the upside: ENRC’s share price has fallen more than 16% over the past month in a highly volatile equity market. This is consistent with a decline in the spot pricing of the ferroalloy, iron ore and base metals revenue basket, but we have no doubt that negative sentiment and currency movements have also played a part. We believe ENRC’s current share price is a good entry point for the stock, given the current implied valuations, wide margins, cash flow generation, growth pipeline and positive newsflow. In 2H10 we expect further positive newsflow on ENRC’s copper/cobalt assets based in the Democratic Republic of the Congo (DRC), and on Bahia Mineração Limitada (BML)*, in which ENRC holds a 50% stake. The M&A drive has been value accretive, we believe. Working against ENRC, in our view, are a highly volatile equity market, investor uncertainty about the global recovery, and Chinese monetary tightening.

All Reports

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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