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A joint venture to be formed between Russian carmaker Avtovaz and Japanese automotive company Nissan in Russia’s Far East should enable the Russian company to expand its share of the regional market for new cars, thereby strengthening its foothold on the Russian automotive market.
On September 9, Sergei Chemezov, head of the state-run Russian Technologies corporation, stated plans to form a car assembly venture between Avtovaz and Nissan in Komsomolsk-on-Amur. More distant plans call for the establishment of a similar JV in Irkutsk.
We are upbeat on this news. Russia’s Trans-ural region is now lacking in car assembly plants, while demand for cars there is high. The robust demand is currently mostly met with car imports from Japan, as car shipments from European Russia would be economically unviable due to high transportation costs. After opening an assembly plant for the production of inexpensive Japanese cars in the Far East, the JV would be in a position to claim a large share of the regional market for new cars. In addition, cooperation with the Japanese company would enable the JV to assemble modern high-quality cars that would be in demand with buyers.
We estimate the fair value of one common share in Avtovaz at USD 0.94, with an upside potential of 34%, which corresponds to a BUY recommendation. Our fair price for one pref in the carmaker is USD 0.47 per share, with an upside of 38.6%, which corresponds to a BUY recommendation. Konstantin Romanov
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AvtoVAZ
Capitalization: $659 988 732,00
Common shares:
Price: $0,23
Delta week: -1,0%
Delta month: -16,8%
Delta year: -85,5%
Preferred shares:
Price: $0,072
Delta week: -0,5%
Delta month: -38,0%
Delta year: -86,8%
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0.569
0.073
