Research Notes

Murmansk Trawling Port (MTP) is one of the two largest fishing companies in Russia with output of over 200,000 tons of sea food products a year. Given the uncompetitive market environment and steadily growing demand, we believe that in the next few years the company will be able to boost its earnings. Provided that the company's business becomes more transparent, this should contribute to improving the investment appeal of its shares.

Over the past few years the company has grown revenues, while keeping its margins at a stable level with some signs of an upward trend. During the past 12 moths the company's stock valuations have been consistently positive, underscoring rising investor interest in the concern's equities.

The company sells 60% of its products domestically and exports 40% primarily to Western European countries, which allows MTP to be less reliant on the price environment in a specific region.

MTP shares are undervalued on primary multiples (even including an adjustment to country and specific risks) against its peers both in developed and developing countries.

We would like to highlight the company's key growth drivers:

• Gradual expansion into international markets;
• Growing domestic demand;
• Expansion and upgrade of the existing fleet;
• Higher business transparency.

Significant factors potentially constraining growth in MTP stock valuations are insufficient share liquidity and opacity of corporate business.

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Vladimir Sergievskiy

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