FOCUS: Ozon likely to rally till financial report sets further mood

By Yekaterina Yezhova

MOSCOW, Jan 18 (PRIME) -- Investors still demonstrate great appetite for receipts of Russian online marketplace Ozon after its auspicious floatation less than two months ago both at home and in the U.S., and analysts think the mood could last up to three months till quarterly reports guide the dynamics.

“Certainly, Ozon’s initial public offering (IPO) was very successful as was the start of trading in the U.S. and Russia. The company sold the stocks at the upper range of U.S. $30 and the quotes debuted with a growth by 30–40%, rocketing to $51 at a certain point and later easing,” investment company QBF senior analyst Oleg Bogdanov told PRIME.

Ozon’s IPO on November 24, 2020 raised $1.27 billion topping expectations of $950 million. The stakes of its core owners, multi-industry holding Sistema and investment company Baring Vostok decreased to 33.1% and 33% from 45.2% and 45.1%, respectively. Bloomberg called it the most successful IPO of a Russian firm since 2011.

The depositary receipts jumped by 24.5% since its first closure to 3,510.50 rubles on the Moscow Exchange on January 14 and by 23% to $49.42 on the Nasdaq.

“Ozon’s quotes on the Nasdaq stayed above a $39.99 notch on the first day and now they are at $49. So, after the ultra-successful floatation, these stocks have been holding on to a rather high mark for six weeks. Technical factors are coming in force – the longer Ozon’s receipts trade in the $38–51 range, the more chances they have to get cemented in this corridor,” investment company Algo Capital senior risk manager Vitaly Manzhos told PRIME.

“Keeping in mind that the issuer is still a loss making firm, the dynamics of the stock are stronger than expected.”

Manzhos expects the stock to fluctuate in $38–51 and 2,800–3,800 ruble ranges in the next one to three months.

“Later the dynamics will be influenced by regular releases of quarterly financial results. If the company still generates losses, which is rather probable, it could become a serious obstacle for a further rise of Ozon’s quotes,” Manzhos said.

Bogdanov said that regardless of the losses, investors currently value Ozon at seven revenues, which is very high for the segment because U.S. giant Amazon is traded at three revenues. “Ozon’s stocks were purchased both by private and institutional investors. Among the large buyers, we can mention such funds and banks as Blackrock, BNP Paribas, Wells Fargo, Franklin, and Morgan Stanley,” the QBF analyst said.

Manzhos thinks Ozon’s receipts are mainly purchased by investors and speculators from Russia and the post-Soviet states that are aware of the company. “For foreign investors, it’s just another little-known Cyprus-registered firm of a big subsector of Internet stores, Internet Retail. The U.S. stock market has almost 40 similar firms, where Ozon is 15th or so by capitalization. The index funds buy Ozon’s receipts all the same,” he said.

“As to the local stock market, Ozon’s receipts are equal by popularity to the shares of such non-grocery retailers as electronics seller M.Video and children’s goods seller Detsky Mir.”

A local investor is still hungry for liquid stocks of domestic retailers, but now one can buy securities of such foreign companies as Amazon, Alibaba, and Walmart for rubles on the Moscow Exchange, Manzhos said.

“A hypothetical listing of Ozon’s archrival, Wildberries, would hardly become a threat for Ozon’s quotes either in Moscow or New York. The U.S. flagship market would hardly notice one more foreign firm,” he said.

If public, Wildberries would be valued higher than Ozon thanks to its profitability. “But, as the market proves, it is an overall favourable situation on the global markets that counts. If investors are optimistic and there is enough liquidity, they’ll acquire stocks of any worthy firm, in particular such as Wildberries,” Bogdanov said.

(73.5453 rubles – U.S. $1)

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