On July 21 Dalsvyaz voiced plans to split its ADRs, after which one depository receipt is to be backed by five common shares, as compared to 30 at present. Following the split, the price of an ADR will come down from about USD 120 now to roughly USD 20, while the number of ADRs in circulation will considerably increase.
On July 24 the JPMorgan Chase depository bank is to compile a list of shareholders entitled to get additional ADRs, while the allocation of additional GDRs will take place on July 31.
It also became known that Sibirtelecom is also planning a split of its ADRs in the near future. The details of this operation have not yet been disclosed. It was reported earlier that CenterTelecom and North-West Telecom (Russian acronym, SZT) also aimed to split their ADRs to boost the number of ADRs in circulation by a respective 4x and 5x.
Although a split of stock is a standard corporate procedure, which is applied rather often, we are upbeat about the attention the inter-regional phone company is devoting to its shares, which shows that the company is attentive to investors' needs.
We reiterate our BUY recommendation on Dalsvyaz shares and set the target price for the company at USD 6.7 per common share and USD 6.44 per pref. Investors are also advised to BUY Sibirtelecom common and preferred shares, with the target price of USD 0.18 per common and USD 0.12 per pref.
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