A punt on the Russian consumer
Nov 20, 2009
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Russia "is not just about oil", Elena Shaftan, manager of the Jupiter Emerging European Opportunities Fund, tells The Sunday Telegraph. It contains 140 million people and a growing middle class aspiring to Western living standards.
For example, over the past decade, consumption of beer and fruit juices has leapt from almost zero to near-European levels. But there is still plenty of catching up to do as the long-term process of converging with the West continues.
That means opportunities in a range of consumer-orientated sectors. For example, Elliot Wilson in Barron's points out that while Europeans and Americans spend 8% of total disposable income on communications purchases, the Russian figure is just 4.2%.
That makes Vimpelcom (NYSE: VIP), the ex-Soviet area's biggest mobile carrier, worth a look, especially now that a legal spat involving a major shareholder and Norway's Telenor is over and it is set to complete a $5bn merger with Kyivstar, Ukraine's top mobile group. Renaissance Capital has a target of $31 on the stock, which is currently on $21.
Elsewhere, UK-listed food retailer Magnit (LI: MGNI) is also a promising long-term pick, says Mathias Wikberg of Profithunter. With "the best logistics operations of all Russian retailers", high margins and a healthy balance sheet, it should grow earnings by 40% a year over the next three years. It trades on a p/e of 16 times forecast 2010 earnings.
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