CTC Discount Shrinks as Shows Stoke Best Rally: Russia Overnight

CTC Media Inc., the Russian television company posting its best ever start to a year, is narrowing its discount to emerging-market media peers as new programs cement gains in audience share.

Shares of CTC jumped 2.3 percent to $10.50 yesterday in New York, bringing the TV channel owner’s surge this year to 35 percent, the biggest gain among the 14 most-traded Russian stocks in the U.S. CTC traded for 11.19 times estimated earnings, 51 percent below the MSCI Emerging Markets Media index’s valuation and the narrowest gap since May 29. The Bloomberg Russia-US Equity Index rose 0.1 percent to 104.89. RTS stock index futures fell 0.4 percent to 161,830 today.

CTC TV regained its position as Russia’s fourth most-watched channel in the week to Jan. 20 for the first time since March as it debuted new shows aimed at younger viewers including ‘Boarding School,’ ‘The Eighties’ and ‘Kitchen.’ The stock has broken a key level of $9.63 and may climb another 15 percent, Trading Central SA said, citing technical indicators.

“CTC Media’s discount is unjustified and should shrink further,” Sergey Libin, an analyst at ZAO Raiffeisen Bank who rates CTC buy, said by phone from Moscow yesterday. “We’re seeing a turnaround in terms of how their new shows are being received by audiences.”

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 0.1 percent to $30.97 in New York yesterday, the highest level since Sept. 14. The RTS Volatility Index, which measures expected swings in the stock futures, jumped 4 percent to 20.87 by 5:46 p.m. in Moscow today.

Audience Share

CTC is reversing its 11 percent slump in 2012, when it was relegated to fifth place among Russian TV channels and posted the first quarterly sales drop since 2009 in the second three months of the year. CTC TV’s share of viewers aged 4 years and older was at 6 percent in the week to Jan. 20, TNS Global said in an e-mailed report Jan. 24.

The channel’s share of viewers aged 6 to 54 years increased to 9.4 percent in the fourth quarter, from 8.7 percent in the third, the company said on its website, citing TNS Global data. CTC’s share of viewers aged between 10 and 45 years rose to 11 percent in the fourth quarter from 10.1 percent in the previous period, the data show.

CTC TV, which contributed 62 percent of CTC’s 2011 revenue, plans to expand production of local programming featuring some of Russia’s most popular actors, such as Marat Basharov and Dmitriy Nagiev, Vyacheslav Murugov, CTC TV’s general director, said in a Jan. 28 interview with Ogonek Weekly posted on CTC’s website.

Trading Volumes

The media company’s shares will rally to as high as $12.10 should they not retrace gains and settle below $9.30, Clement Hirson, a technical strategist at Trading Central in Paris, said by e-mail Jan. 28. Trading volume in CTC Media’s stock was 3.5 times the average daily volume over the past three months yesterday.

Russia’s gross domestic product will climb 3.5 percent in 2013, unchanged from the estimated pace of economic expansion in 2012, Deputy Economy Minister Andrei Klepach said in Moscow yesterday. The economy will grow 3.4 percent, according to the median of 25 economists’ estimates in a Bloomberg survey last month.

“CTC is sensitive to economic data and benefits from faster economic growth,” Libin said.

Ad Spending

Total spending on Russian TV ads is expected to increase to $5.9 billion in 2014, the biggest market in Europe, from $4.4 billion in 2011, CTC said on its website, citing estimates by industry think-tanks, including Zenith Optimedia and Video International.

Proceeds from advertising accounted for more than 97 percent of company revenue in 2011, the highest level since 2005, data compiled by Bloomberg show.

American depositary receipts of OAO Gazprom Neft increased 0.9 percent to $24.17 in New York yesterday after shares of the oil producer in Moscow lost 0.5 percent to 144.51 rubles, or the equivalent of $4.81. One ADR equals five shares. UBS AG reiterated its buy rating on the stock, while lowering the price estimate to $6 from $6.50.

Gazprom Neft rose 0.5 percent to 145.25 rubles on Moscow’s Micex Index today.

Crude for March delivery gained 1.2 percent to $97.57 a barrel on the New York Mercantile Exchange yesterday, the highest level since Sept. 14. It traded 0.1 percent higher at $97.69 today

Brent oil for February settlement increased 0.2 percent to $114.63 a barrel on the London-based ICE Futures Europe exchange, while Urals crude, Russia’s chief export blend, rose 0.1 percent to $113.42, the highest level since Oct. 15.

The ruble was unchanged at 30.0335 per dollar after jumping 0.4 percent to 30.0350 in Moscow yesterday. Ruble futures show the currency strengthening 0.1 percent to 30.259 per dollar.

United Co. Rusal, the world’s largest aluminum producer, was unchanged at HK$4.76 in Hong Kong today, after sinking 2.7 percent yesterday.

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