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    QIWI   US74735M1080


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QIWI : Russia sets pro-Kremlin single betting operator, Qiwi payment system hurt

08/26/2021 | 04:26pm EDT

Russia's President Vladimir Putin has signed an executive order naming Mobilnaya Karta as the Unified Interactive Bets Accounting Centre (ETSUP), making it the single operator of online betting.

Previously there had been two centres for processing betting payments competing for this status: the first backed by the First Bookmakers Self-Regulatory Organisation using the payments infrastructure of Mobilnaya Karta and the other backed by the Association of Russian Bookmakers with Qiwi's payments system, Sberbank CIB reminds.

Gambling sector moved to pro-Kremlin owners

The Bell wrote on August 26 that Mobilnaya Karta is owned by the shareholder of Liga Stavok betting operator, reportedly affiliated with billionaire senator and shareholder of Polyus Gold miner Suleiman Kerimov.

To remind, gambling is illegal in Russia, with casinos only allowed to operate in special zones in four Russian regions, namely Altai, Krasnodar, Primorsk and Kaliningrad, with only one gambling zone per region authorised. In 2020 the state targeted its share of online gambling as well.

As followed by bne IntelliNews, the Russian State Duma in December 2020 in the first reading approved a draft bill on creating a single gambling regulator and changing the system of taxation for online bookmakers. 

Previous reports suggested that online gambling reform was suggested by the head of the Russian boxing federation, Umar Kremlev. The supervisory council of the federation includes such high-power figures as head of Rosneft Igor Sechin, the head of the presidential security service Alexei Rubezhnoy, deputy head of domestic policy department of the presidential administration Timur Prokopenko and ex-Federal Tax Service official Denis Medvedev.

The Bell now affiliates Liga Stavok and Mobilnaya Karta shareholders and executives with Kremlev and state-controlled bank VTB. The arm of VTB will also finance the newly established ETSUP under Putin's latest order.

Telegram channels and financial market sources cited by The Bell claim that Liga Stavok will soon change shareholders with 51% to be controlled by Kremlev and 49% by VTB.

Qiwi hurt, but uncertainty removed

As public e-payment system Qiwi will effectively lose the betting revenue stream as of September 1 when the order goes into effect, the shares of the company tanked by 8% on the news.

The capitalisation of the company last year dropped as the Central Bank of Russia (CBR) limited the foreign operations of Qiwi Bank as part of the regulator's crackdown on online gambling. But the company performed well under uncertainty, with the decision on single betting operator anticipated as the main catalyst for its shares.

"This was the most probable outcome, and it is to large extent accounted for in our model. Yet the news might still be negative for sentiment, as it confirms the loss of a significant share of Qiwi revenue," BCS Global Markets commented on August 26 maintaining a Hold call on Qiwi's shares.

Sberbank CIB sees the news as an indicator that niche businesses can fall victim to changes in regulation, but notes that Qiwi had braced for the impact and previously guided for 10-20% decrease in net revenues in 2021 and a 15-30% decrease in adjusted net income. 

In the meantime, the company is looking into developing new niche products for self-employed individuals (scrap pickers, taxi drivers, web masters), as well as specific B2B payment solutions (for travel companies, for example), factoring and guarantees. 

"Smaller segments where Qiwi has tried to gain ground are yet to prove their potential and are quite hard to estimate at their potential mature-stage scale," Sberbank CIB analysts wrote.

VTB Capital (VTBC) maintained a Buy call on Qiwi's shares believing that the company's remaining cashflows will suffice to generate a quarterly dividend yield of around 2% in the coming quarters, assuming a 50% payout from adjusted net income.

While the perception of regulatory risks will likely continue to weigh on the stock, VTBC argues that the latest development removes the key uncertainty and the source of volatility. 

"Given Qiwi's relatively undemanding multiples and attractive dividend yields, this might open the way for a gradual re-rating of the stock from the current bottom, we think – especially if other segments of the business (primarily money remittances) continue to perform well," VTBC analysts wrote.

©2021 bne IntelliNews , source Magazine

Stocks mentioned in the article
ChangeLast1st jan.
QIWI PLC -2.32% 9.46 Delayed Quote.-5.92%
VTB BANK (PUBLIC JOINT-STOCK COMPANY) -3.59% 1.502 Delayed Quote.63.23%
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Sales 2021 21 442 M 301 M 301 M
Net income 2021 7 032 M 98,8 M 98,8 M
Net cash 2021 15 781 M 222 M 222 M
P/E ratio 2021 5,34x
Yield 2021 9,48%
Capitalization 42 809 M 605 M 601 M
EV / Sales 2021 1,26x
EV / Sales 2022 1,19x
Nbr of Employees 2 865
Free-Float 18,9%
Duration : Period :
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Mean consensus OUTPERFORM
Number of Analysts 7
Last Close Price 685,70 RUB
Average target price 951,01 RUB
Spread / Average Target 38,7%
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Andrey Protopopov Chief Executive Officer & Director
Elena Nikonova CFO & Deputy CFO-Financial Reporting
Sergey Aleksandrovich Solonin Executive Chairman
Kirill Ermakov Chief Technology Officer
Maria Shevchenko Chief Operating Officer
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