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Russia Market Commentary
Analyst Review
| Company | Industry/ System | Risk | Recommendation | Comments |
| Aeroflot (AFLT) | Airlines RTS-2 | Low to med. | Bargain under $100 | Coming of very good year in 1997 in which served almost 4 million passengers; has routes to over 94 counties; fleet size stands at 115, and plans to add 15-20 more planes in 1998; current market capitalization is under $300 million |
| Amursvyaz (AMSV) | Telecom RTS-2 | High | Short-medium term buy | Attractive company from fundamental perspective; PE ratio and Market Cap./ Access line is about half the industry averages; price should have growth spurt then follow industry's index |
| Bor | Chemicals | Very High |
Accumulate | Has about 36% of world market for borates and boric acid; 51% stake in company is scheduled to be auctioned in next few months; extremely low P/BV; needs to improve export capacity |
| Dalenergo | Energy RTS-3 | Very High | Add to portfolio | Very low PE ratio and P/BV; great potential, but risky in that serves Far Eastern Primorsky Region |
| Gazprom (GAZP) | Oil & Gas | Med | Long term buy | Russia's gas monopoly is the world's largest producer and distributor of natural gas; trading mechanisms keep price depressed |
| Himprom Novo- cheboksarsk (HIMC) |
Chemicals RTS-2 | Med High | Accumulate | Has very promising project involving the development of crop protection products; appeared very under-valued even before the market crash; trades at a fraction of book value |
| Irkutskenergo (IRGZ) | Energy RTS-1 | Med | Buy under $0.13 | Surplus provider of cheap energy; exports to China and Mongolia could send share price soaring if relationship with UES becomes clearer |
| Kirovsky Plant (KIRZ) | Machine RTS-1 | High | Good addition to portfolio | Has joint venture projects with General Electric and Caterpillar |
| Lenenergo (LSNG) |
Energy RTS-1 | Low | Buy | Serves Russia's second largest market; good location to participate in European energy projects |
| LUKoil (LKOH) |
Oil & Gas RTS-1 | Low | A steal under $10.00 | Russia's premier blue chip stock; very aggressive in expanding operations; recently penetrated the US market; price was flirting with $30 before crash; will play large role in Russian market's rebound |
| Moscow City
Telephone (MGTS) |
Telecom RTS-1 | High | Hold | Serves Russia's largest city; very low market capitalization per access line; would greatly benefit from a share split; possible share dilution is big risk |
| Novosibirsk Electosvyaz (ENCO) | Telecom RTS-1 | Med | Buy | Serves large industrial region; market capitalization per access line very low |
| Pavlovsky Bus Plant (PAZA) |
Machine RTS-2 | High | Long term buy | Consistent three year performance; very low PE ratio |
| Progress - AAK |
Helicopters | Very High |
Buy and pray | Extremely undervalued and extremely illiquid; price should take-off when investors look beyond 1st and 2nd tier |
| Rostelecom (RTKM) | Telecom RTS-1 | Med | Good buy under $2.80 | Market position and long term potential make this near monopoly long distance provider a major bargain at current prices; recently placed a level-2 ADR on the NYSE. |
| Sakhalinmor- neftegaz (SKGZ) |
Oil & Gas RTS-1 | Med | Buy under $3.00 | Has enormous long term potential through involvement in Sakhalin I and II projects; price could soar if market rebounds |
| Sber Bank (SBER) |
Banking RTS-1 | Med | Solid buy under $130 | Displayed good financial results in first half of 1997; provides relatively safe way to invest in Russian banking industry |
| Samaraenergo (SAGO) |
Energy RTS-1 | Med | Solid buy | Consistent financial results; promising region |
| Sverlovsk- energo (SVER) |
Energy RTS-1 | Med | Speculative buy | One of the most undervalued energos; ranks third in electricity output |
| Surgutnefte- gaz (SNGS) |
Oil & Gas RTS-1 | Low | Great buy under $0.12 | Very strong management and efficient operations; company should benefit from new projects in Baltic Sea area; due to market crash, current price is a major bargain |
| Tatneft (TATN) | Oil & Gas RTS-1 | Buy under $0.60 | Russia's fourth largest oil producer; enjoys favorable relationship with government of Tartarstan; Level-3 ADR expected later this year | |
| Unified Energy Systems (EESR) |
Energy RTS-1 | Low to Med | Strong buy under $0.20 | Accumulate heavily when price is below $0.28; has large stakes in over 70 regional energos; recent board shake up could turn into a big plus; will play large role in Russian market's rebound |
| Ural Telecom (URTC) |
Telecom RTS-1 | Med | Buy under $20.00 | Serves large industrial region; market capitalization per access line very low (especially when compared to Ural Svyazinform); was hammered during market crash largely due to lack of liquidity |
| Yakutsk- energo (YAEN) |
Energy RTS-2 | Med High | Speculative buy | Recently added to RTS-2; appears extremely cheap at current price |
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