Yandex NV (YNDX) is rebounding from the smallest premium versus Google Inc. (GOOG) since Russia’s most-used search engine began trading in 2011 on prospects its domination over the U.S. company will spur record sales this quarter.
Shares of Yandex surged 5 percent to $21.98 in New York yesterday, the steepest one-day jump since Aug. 16 and the biggest advance on the Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. The rally lifted Yandex to 26 times estimated earnings, up from a valuation of 24.8 on Dec. 4. That was the smallest premium on record compared with the 17.3 multiple for Mountain View, California-based Google. Futures on Russia’s RTS Index dropped 0.3 percent to 146,310 in New York.
Yandex, which got 90 percent of revenue from text-based advertising in the last quarter, has averaged a 60.4 percent share of the Russian Web search market since September, compared with 26.5 percent for Google, the world’s largest search engine. Yandex will post fourth-quarter revenue of 8.9 billion rubles ($288 million), according to the median of three estimates compiled by Bloomberg.
“Yandex is a unique company, it’s a very rare example of a local company winning a competition against Google,” Konstantin Chernyshev, the head of research at UralSib Capital Corp. who has a buy rating on the shares, said by phone yesterday from Moscow. “Since Yandex has the biggest market share, it gets the most of the money spent on online advertising in Russia.”
Russian online advertising will rise by an average 22 percent a year between 2013 and 2016, UralSib Financial says.
The Bloomberg Russia-US Equity Index (RUS14BN) of Russian companies traded in the U.S. climbed 0.4 percent to 94.95 yesterday, a one-month high. The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, added 0.2 percent to $28.44, the highest level since Oct. 22. The RTS Volatility Index, which measures expected swings in futures, rose 2.1 percent to 21.38 points.
Futures expiring in December on the ruble showed the currency weakening 0.2 percent to 31.004 per dollar after the ruble slid 0.3 percent to 30.90 against the dollar yesterday.
Yandex’s net income is expected to increase to a record $267.3 million this year from $196.8 million in 2011, according to the mean estimate of six analysts surveyed by Bloomberg. Revenue is expected to increase to $933 million in 2012 and $1.2 billion in 2013, according to the mean estimate of 13 analysts surveyed by Bloomberg.
Gross domestic product in Russia, the world’s largest energy exporter will, expand 3.5 percent in 2013 after advancing 3.6 percent in 2012, according to the median estimate of 35 economists in a Bloomberg survey.
Oil, which together with natural gas made up a half of Russia’s federal budget revenue in 2011, fell to the lowest level in three weeks in New York after the European Central Bank cut its euro-area growth forecasts and as U.S. lawmakers struggled to reach agreement on a budget plan.
Crude for January delivery slumped 1.8 percent to $86.26 a barrel on the New York Mercantile Exchange, the lowest settlement since Nov. 15. Futures have dropped 13 percent this year. Brent oil for January settlement declined 1.6 percent to $107.03 a barrel on the London-based ICE Futures Europe exchange. Urals crude, the country’s main export blend, fell 1.6 percent to $105.44 a barrel yesterday, the lowest level since July 31.
OAO Gazprom Neft (GZPFY), the oil arm of Russia’s natural gas exporter, slipped 0.6 percent to $22.96. The ADR was the biggest decliner on the Bloomberg-Russia gauge yesterday. The company’s shares in Moscow added less than 0.1 percent to 142.85 rubles, or $4.62. Five Moscow-traded shares equal one ADR.
The 30-stock benchmark Micex Index (INDEXCF) added 0.2 percent to 1,438.54 yesterday, trading at 5.5 times estimated company earnings, compared with a multiple of 15.9 for the main index in India (SENSEX), 16.5 for Brazil and China’s (SHCOMP) 9.8.
United Co. Rusal, the world’s largest aluminum producer, dropped 0.8 percent to HK$4.80 in Hong Kong trading as of the city’s noon trading break. The MSCI Asia Pacific Index gained0.3 percent today.
-- With assistance from Moming Zhou and Mark Shenk in New York, Yulia Fedorinova and Ksenia Galouchko in Moscow. Editors: Marie- France Han, Tal Barak Harif
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