RusHydro Joins Lukoil in Buyback Rally: Russia Overnight
OAO RusHydro, the Russian renewable energy producer that has lost about 40 percent of market value in the past year, rallied in Moscow and New York as company officials take advantage of the decline to buy back stock.
American depositary receipts of the state-run power company jumped 4 percent to a one-month high of $1.84 in New York, following a 1.3 percent advance of the stock on Moscow’s Micex Index (INDEXCF) to the highest close since April 2. RusHydro led gains on the Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S., which was little changed at 95.37.
RusHydro, which slumped to a record low in New York April 19, follows OAO Lukoil and CTC Media Inc. (CTCM), Russian companies planning buybacks or whose executives have purchased shares as the Micex gauge slid to the cheapest level since June last month. George Rizhinashvili, a RusHydro deputy chairman, boosted his stake almost sixfold since November, company filings showed, and management may buy more stock, according to Timur Ahmedzhanov, head of investor relations.
“When management votes for the stock with its own ruble, there could be no better reason for the market to reconsider the stock,” Mark Rubinstein, head of research at IFC Metropol in Moscow, said in a telephone interview yesterday. “It’s a very positive sign. Management knows better than analysts how the company is really doing.”
RTS Index futures were little changed in U.S. hours at 140,740. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, decreased 0.6 percent to $27.13. The RTS Volatility Index, which measures expected swings in futures, fell 1.4 percent to 20.40.
RusHydro rose to 58.33 kopeks, or 1.9 cents, in Moscow yesterday. Rizhinashvili increased his stake to 0.017 percent from 0.0029 percent in November, when he first bought shares of RusHydro, according to regulatory filings.
“Management knows the company really well and they spend their own bonuses to buy the stock,” Ahmedzhanov, Moscow-based head of investment relations at the company, said by phone yesterday. “Investors like that.”
RusHydro has tumbled 51 percent in Moscow from last year’s high on March 5 as the government limits power tariff increases and the Interior Ministry probes alleged embezzlement at the company. Vladimir Pekhtin, who resigned from the lower house of parliament in February after bloggers published documents showing he owned luxury property in Miami, has been approved to RusHydro’s board, according to a statement last month.
RusHydro is expected to decide on its 2012 dividends by the end of the month, according to Moscow-based analysts Sergey Beiden at Otkritie Financial Corp. and Fedor Kornachev at ZAO Raiffeisenbank. The company, which posted an adjusted net income of 31.8 billion rubles ($1.02 billion) last year, paid about 10 percent profit in dividends in 2011, Beiden said. Russia requires that all government-backed companies pay no less than a quarter of profit as dividends.
There is a “good chance” the company will meet the government’s requirement already for its 2012 dividends, Otkritie’s Beiden said.
CTC Media Inc., the Nasdaq-listed Russian television network, gained 0.4 percent to $11.40 in New York, the biggest advance since April 29. The board approved a 2.5 million share buyback program, Chief Executive Officer Boris Podolsky said on a March 6 conference call.
OAO Lukoil is “ready” to buy back shares when the price falls, Deputy Vice-President Andrei Gaidamaka said in November. Chief Executive Officer Vagit Alekperov and his deputy Leonid Fedun spent $260 million to buy the oil producer’s shares, according to December regulatory filings.
Lukoil rose 0.1 percent to $64.73 in New York yesterday, while adding 0.6 percent to 2,014.90 rubles, or $64.90, in Moscow.
Russia’s Micex Index trades at 5.3 times estimated earnings, the lowest valuation among 21 emerging markets tracked by Bloomberg. That compares with a valuation of 10.8 for Brazil’s Bovespa index and 9.2 times for the Shanghai Composite Index. The Russian gauge rose 0.4 percent to 1,413.43 yesterday in a second day of gains.
Ruble futures showed the currency unchanged at 31.99 per dollar in U.S. hours. Russia’s ruble gained less than 0.1 percent to 31.04 per dollar yesterday and rose 0.2 percent to 35.3305 against the dollar-euro basket used by the central bank to manage swings that erode exporter competitiveness.
Crude oil for June delivery increased 0.6 percent to $96.16 a barrel on the New York Mercantile Exchange yesterday. Brent oil for June settlement added 1.3 percent to $105.46 a barrel. Urals crude, Russia’s major export oil blend, jumped 2.9 percent to $104.83 per barrel.
United Co. Rusal, the world’s largest aluminum producer, rose 2.3 percent to HK$4.03 in Hong Kong trading as of 10:13 a.m. local time. The MSCI Asia Pacific Index gained 1.1 percent.
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