|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's range||14.63 - 15.05|
|52-week range||8.20 - 15.93|
|Beta (5Y monthly)||0.83|
|PE ratio (TTM)||2.98|
|Forward dividend & yield||0.98 (6.55%)|
|Ex-dividend date||02 Oct 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- Russia’s most valuable listed company is testing the limits of corporate reinvention. Traditional lenders everywhere are adding payments apps and digital banking offerings to see off tech upstarts. State-owned giant Sberbank PJSC wants to go much further to become Russia’s answer to Amazon, Alibaba, Tencent and, well, Sberbank — all rolled into one. Watching long-time boss Herman Gref address investors this week in the Silicon Valley uniform of jeans, t-shirt and white trainers on a circular stage against a changing virtual background, it was hard to imagine this was once the Soviet savings monopoly, a monolith better known for bureaucracy and sullen service than tech prowess. In September, it dropped the word “bank” from corporate branding. Now, it aims to become one of the top three e-commerce players nationally by 2023 — delivering groceries and more alongside its regular banking, wealth management and insurance business.The logic isn’t hard to understand. Facing limits on its reach abroad and low interest rates that could weigh on margins for years, Sberbank wants to make more of its clout at home, where almost two-thirds of Russians are clients. Rival state-owned lender VTB Group too has diversified, expanding into grain trading. Yet by stretching into everything from cloud services to food delivery, taxis and even in-house hardware, Gref is pushing not just Sberbank’s aspirations, but what Moscow overseers will allow. Oversight questions are growing, and political risk is building too.Even if everything goes as planned, conglomerates often trade at a discount, suggesting they rarely deliver the value they should.Sberbank has already seen a remarkable transformation even before this effort to compete head-to-head with the likes of its one-time partner Yandex NV. Over more than a decade under Gref, a liberal reformer and former economy minister, the bank has bolstered its bottom line, revived its operating systems and branch networks, weathered European and U.S. sanctions, and now a pandemic. Impressive, even if it has had to delay a 1 trillion-ruble ($13 billion) net profit target.Sberbank’s banking app is the third most popular in Russia, as measured by monthly users, according to Gref. Clients are interacting with the lender more frequently. That’s good news, given engagement is a vital ingredient for any superapp-in-waiting. There’s the benefit of an extensive branch network too, in a vast country where actually making the deliveries has been a major brake on internet shopping.Yet a state bank isn’t necessarily the right owner for many of these businesses. Yes, the race is open for online shopping dominance in Russia, a country where few international tech heavyweights have made headway. But e-commerce has a propensity to gobble up cash that may extend beyond the 4% of equity signaled by Sberbank for the three-year period. The bank has already spent some $2 billion on acquisitions and tech to build a non-banking business that includes online cinema Okko and media group Rambler.Despite Gref’s reassurances otherwise, it’s unclear the bank can expand swiftly on all of these fronts without adding risk to the financial business where Sberbank still has room to grow in everything from loans to insurance. After all, banking will still account for roughly 70% of net operating income in 2023. Conglomerates elsewhere offer cautionary tales.Russia’s cautious central bank has already warned about the risk of creating new monopolies and fretted about the rapid expansion into non-financial services. That may well translate into tougher disclosures standards or capital requirements. Sberbank, after all, holds nearly half of Russia’s retail deposits. It may have looked to Asian heavyweights for inspiration, but there it was big tech that drove the disruption, not the other way around. Most of those companies, like Grab or Gojek in Southeast Asia, have expanded through partnerships, rather than full ownership. The going hasn’t been smooth either, as Ant Group’s initial public offering showed.Finally, there’s Kremlin risk. Russia wants and badly needs digital innovation, but state coffers need dividends too. Sberbank says it will pay out half its earnings, and any sign of that sum shrinking finance tech experiments may prove politically costly. So too will any slip-up that hurts consumers.Tech is necessary, tempting and potentially accretive. It can also prove a distraction, with economic uncertainty ahead, for a major lender that still has room to grow within financial services. Watching Sberbank has reminded me of a conversation I had a year or so ago with an Uber executive. When I asked why superapps weren’t catching on faster outside Asia, he paused. Sometimes, he replied, just because you can, doesn’t mean you should.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Covid-19 has driven a projected 10 million more Russian consumers online, accelerating the race to become the country’s answer to Amazon.com Inc. The chance to dominate e-commerce in the world’s biggest country is still very much up for grabs. Russia’s largest online retailer, Wildberries, controls only 13% of the market, even after its sales doubled in the first nine months of the year. By contrast, Amazon accounts for about half of the U.S. market.“Aided by the pandemic, large e-commerce platforms are gobbling up market share from both offline and online stores,” said Marat Ibragimov, an analyst at Gazprombank. “Competition is heating up, and in the future two or three will dominate.”Russia has more internet users than Amazon’s No. 2 market, Germany. Yet entrenched consumer habits and logistical challenges have stymied e-commerce in the country and discouraged foreign companies like Amazon from doing business there.After President Vladimir Putin ordered stores to close for almost two months during the first wave of Covid-19 in the spring, that left consumers with little choice but to give e-commerce a try. Internet sales are projected to surge 44% in 2020 to 2.5 trillion rubles ($32 billion), according to researcher Data Insight. “When the authorities shut the local market because of Covid-19, all I could do was to try the internet,” said Nadezhda Nikulina, 62, who lives in northwest Russia and mainly uses Wildberries. “I found it really convenient, and the choice is enormous.”Online purchases will account for just over 10% of Russian retail sales in 2020, up from 6% last year, according to industry lobby group AKIT. That compares with 16% in the U.S. and 37% in China in 2019.Internet shopping hasn’t taken off as quickly in part because of the difficulties involved in making deliveries in such a large country. Even the national mail service only recently started experimenting with home delivery. A widespread reluctance to pay for goods before they’re received—a holdover from Russia’s chaotic transition to a market economy in the 1990s—has also played a role.The local market remains fractured, with thousands of internet shops, including offerings from traditional retailers such as electronics store M.video and children’s goods chain Detsky Mir. But there is a trend toward Amazon-style marketplaces.Wildberries started in 2004 as an online clothing merchant, but now sells items ranging from food to electronic goods. More than 90% of its deliveries go to a network of 26,000 pickup points around Russia—the biggest distribution network outside of the national post—that allow customers to try on goods before taking them home.There are three other main contenders to become Russia’s answer to Amazon.One is AliExpress, a joint venture between China’s Alibaba Group Holding Ltd. and London-listed Mail.ru Group Ltd. After losing market share because of the long delivery time for orders from China, it has begun working with more local suppliers. AliExpress subsidizes delivery costs and provides same-day service on some goods through a partnership with the state postal service. Ozon, a Russian copycat of Amazon backed by billionaire Vladimir Evtushenkov and Baring Vostok Capital Partners, offers next-day delivery to 40% of the population. But deliveries to Siberia can take as long as five days.Ozon announced in October that it applied to sell shares in the U.S. to fund further growth, after more than doubling sales in the first half. It has set up a network of drop boxes near customers’ apartments, while also offering direct shipments through partners.The smallest competitor to date is Yandex NV, which accounts for 2% of the online retail market. Yandex already runs Russia’s leading search engine and its biggest car-hailing service. After an attempt to create an online marketplace with Sberbank PJSC ended earlier this year, Yandex sold $1 billion in shares to billionaire Roman Abramovich and other partners to invest more in e-commerce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The acquisition of Russia’s largest digital bank will accelerate Yandex’s progress toward superapp glory. With the $5.5 billion cash-and-stock deal as sketched out last week, what began as a homegrown Google would run the gamut from search, ride-hailing and music streaming to cards and deposits. It’s an accomplishment even Asia's pioneering apps-for-everything have struggled to achieve.With added clout, though, come extra political and regulatory risks that are harder to quantify.Being bigger isn’t always easier. Prominence, even dominance, has already come at the cost of compromise for the $22 billion U.S.-listed outfit. A Kremlin-sanctioned governance overhaul agreed last year allayed official concerns with the creation of a foundation to oversee sensitive issues including the transfer of intellectual property and users’ personal data. The company also faces stiff local competition in the form of its erstwhile partner, state lender Sberbank PJSC, which has aggressively shift toward Big Tech by joining forces with Yandex rival Mail.ru and rebranding itself Sber. Yandex’s rise has been remarkable. Founded in the 1990s, Russia’s technology powerhouse has expanded dramatically in the past few years. One of few search engines to dominate its home market ahead of Google, it combined with ride-hailing rival Uber Technologies Inc.’s local arm in 2017, taking a majority stake in their tie-up. It then added a string of other businesses and now stretches into everything from education to groceries — even if the search and portal segment still makes up the bulk of revenues. The well-flagged move into finance with a tilt at challenger bank Tinkoff has been cheered as a logical step after Yandex’s split with Sberbank. Billionaire Arkady Volozh’s outfit wanted control, so it makes sense to use some of the cash on its balance sheet to buy a profitable lender, rather than build one, even a reasonably pricey one at roughly four times book value. Investors initially added some $2.6 billion to the combined value of the two sides’ shares — an optimistic view of future revenue benefits given a formal and detailed offer hasn’t been made yet.On paper, the attraction is clear. Growth in online advertising and ride-hailing will cool. A deal with Tinkoff parent TCS Group Holding Plc plugs the fintech hole, while allowing Yandex to leverage the outfit’s consumer credit and small business focus to drive its e-commerce business, making the most of shopping habits transformed by a pandemic. Tinkoff has about 13% of the credit card market and 8% of the retail loan market in Russia, according to analysts at Citigroup Inc. In turn, the bank can cut marketing and other costs linked to bringing new customers on board — currently about a third of operating expenses.In Asia, payments and financial services are key for would-be superapps like Southeast Asia’s Grab and Go-Jek, Tencent Holdings Ltd.’s WeChat and even Korean messenger app Kakao, which has had success with Kakao Bank. Still, by adding one of the world’s largest digital banks to its stable, Yandex arguably goes further than all of them, testing the limits of the superapp model.Next, Yandex has to successfully manage the growing pains that come with that in Vladimir Putin’s Russia.With its rejig last year, Volozh nimbly circumvented a law that would have limited foreign ownership, and Yandex’s public service during the pandemic will help. But concerns over sovereignty and internet data are not going away, especially given Russia’s increasingly prickly relations with the West. That may complicate any efforts to list its ride-hailing arm, part-owned by Uber. Cyber sovereignty will certainly limit expansion abroad if China’s tech experience abroad is anything to go by.At home, Yandex is already walking a fine line between netizens and a heavy-handed Kremlin, with virtual protests held using its maps and navigation apps during lockdown as an example. The company later said it removes messages not related to road conditions. And that’s all before adding in the extra scrutiny that bank owners can expect.There’s extra competition too as Chinese taxi giant Didi Chuxing motors into Russia. Even pesky competitors can be costly — ask Uber.Finally, there’s the risk that a move-fast-and-add-businesses mantra turns Yandex into something more akin to Japan’s jumbled Rakuten, rather than Google or Tencent, with a conglomerate discount to match. Fintech makes sense, but does music streaming? Can Yandex create value developing shows for its streaming video platform? As importantly, can its management team stretch across its various early-stage businesses, a growing online shopping operation and more, while folding in a bank?Yandex has plenty of ambition. It will need to prove that the financial benefits match.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.