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The 2014 Emerging EMEA Research Team: Metals & Mining, No. 2: Dmitriy Kolomytsyn & team

Dmitriy Kolomytsyn & team
Morgan Stanley
First-place appearances: 1

Total appearances: 3

Team debut: 2011

Returning to this roster after a year’s absence, Morgan Stanley claims the No. 2 spot. Dmitriy Kolomytsyn’s Moscow-based crew wins investor praise for presenting “research in a consistent manner,” as one money manager observes. These analysts have become increasingly positive on Russian steelmakers, citing recent strength in slab prices that has yet to be priced in. At the same time, the conflict between Russia and Ukraine should be a net positive for the stocks, they contend, because lower Ukrainian long steel imports lead to a more balanced domestic steel market, and a weakening ruble keeps the those manufacturers below the 25th percentile on the global cost curve, Kolomytsyn explains. Thus, it’s an attractive time to buy, he says, and his group finds Magnitogorsk Iron & Steel Works particularly appealing. Russia’s third-largest player in the steel industry is “set to benefit from earnings growth, output growth, margins expansion and deleveraging,” the team leader says. MMK’s global depositary receipts were trading at $2.49 at the end of May, and the researchers project a rise to $3.75. They also highlight the country’s No. 2 steelmaker, Severstal, as a favorite. Severstal has among the highest dividend yields in the sector, they report, as well as a margin sensitivity to iron ore that has been overestimated and recent earnings upgrades that have yet to been fully appreciated. Their price objective of $10.75 implies a 25.9 percent upside to the GDRs’ trading value in late May.


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