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RenCap Emerging 

Including Mediclinic, DO & CO; removing Yandex We make three changes to our RenCap Emerging  portfolio: we add Mediclinic and DO & CO, and remove

 Yandex. We are positive on Mediclinic’s proposed takeover of Al Noor (not covered) and listing on the LSE.

We believe the acquisition would be earnings- and value-enhancing, increasing exposure to the fast-growing

UAE healthcare space. We believe DO & CO adds a low-risk exposure to growth in Turkey’s airline passenger

numbers, while also offering margin expansion through improving efficiency. We remove Yandex as our

conviction in the name has softened in recent weeks, though we still consider it a BUY.

Emerging  highlights our highest-conviction stock ideas in emerging markets. We monitor the portfolio and update it on a two-

monthly basis. Our goal is for Emerging  to outperform a benchmark of MSCI EMEA.

Figure 1: Emerging 

portfolio

Name Ticker Country Sector CP TP Rating Upsidepotential

MktCap,$mn

FF MktCap,$mn

3MADTV,$mn

BHP Billiton BLT LN S Africa Materials GBp714 GBp1,050 BUY 47% 62,347 60,459 171.7Sberbank SBER RX Russia Financials RUB102 RUB96 BUY -6% 31,356 14,948 159.4X5 FIVE LI Russia Cons. Staples $19.6 $30.0 BUY 53% 5,323 4,524 10.2Tiger Brands TBS SJ S Africa Cons. Staples ZAc31,172 ZAc39,000 BUY 25% 3,983 3,089 20.0NEPI NEPI LN S Africa Financials EUR10.1 EUR12.0 BUY 19% 3,304 2,809 10.0Mr Price MRP SJ S Africa Cons. Disc. ZAc19,200 ZAc26,900 BUY 40% 3,412 2,778 23.7Turkish Airlines THYAO TI Turkey Industrials TRY7.3 TRY10.6 BUY 46% 3,385 1,722 126.7AFK Sistema SSA LI Russia Telecoms $6.6 $10.0 BUY 53% 3,160 1,079 3.4Bashneft BANE RX Russia Energy RUB2,012 RUB2,600 BUY 29% 4,241 1,060 0.8Globaltrans GLTR LI Russia Industrials $4.7 $6.0 BUY 28% 840 714 1.9InterRAO IRAO RX Russia Utilities RUB1.1 RUB2.3 BUY 107% 1,673 495 1.0Juhayna Food JUFO EY Egypt Cons. Staples EGP7.7 EGP10.6 BUY 38% 926 454 0.5IDH Corp IDHC LN Egypt Healthcare $4.9 $6.9 BUY 41% 735 395 0.4

 All data as of 15 December 2015.

Source: Bloomberg, Renaissance Capital estimates

Figure 2: Additions

Name Ticker Country Sector CP TP RatingUpside

potentialMktCap,

$mnFF MktCap,

$mn3MADTV,

$mnMediclinic MDC SJ S Africa Healthcare ZAc11,582 ZAc14,000 BUY 21% 7,544 3,280 18.9DO & CO DOC AV Turkey Cons. Disc. EUR92.7 EUR96.6 BUY 4% 994 669 0.7

 All data as of 15 December 2015.

Source: Bloomberg, Renaissance Capital estimates

Figure 3: Deletions

Name Ticker Country Sector CP TP RatingUpside

potentialMktCap,

$mnFF MktCap,

$mn3MADTV,

$mn

 Yandex YNDX US Russia IT $15.1 $17.7 BUY 17% 4,838 4,658 55.4 All data as of 15 December 2015.Source: Bloomberg, Renaissance Capital estimates

Daniel Salter  +44 (203) 379-7824 DSalter@rencap.com

Vikram Lopez+44 (203) 367-7974VLopez@rencap.com

 Analyst team – see inside for details

RenCapEquity Strategy

17 December 2015Global

Important disclosures are found at the Disclosures Appendix. Communicated by Renaissance Securities (Cyprus) Limited, regulated by the Cyprus Securities & ExchangeCommission, which together with non-US affiliates operates outside of the USA under the brand name of Renaissance Capital.

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Renaissance Capital17 December 2015

RenCap α 

Figure 4: Emerging  – investment case

Name Ticker Country CP* TP RatingUpside

potentialCase

BHP Billiton BLT LN S Africa GBp714 GBp1,050 BUY 47% 

We like 1) BHP’s low-cost, long-life assets, which generate sector-leading margins, 2) amanagement team that delivers on productivity promises, 3) its low capital intensity with

capex/EBITDA below 50% on our forecasts, 4) attractive dividend yield of 8%, and 5)balance sheet and cash-flow flexibility. We see the recent issues around the burst dam atSamarco Iron Ore as already having affected the price and have incorporated this into ourforecasts.

Sberbank SBER RX Russia RUB102 RUB96 BUY -6% 

Our positive view on Sberbank is based on the assumption of asset quality turning thecorner until YE15 and profitability doubling YoY to 17.4% in 2016, leaving Sberbank wellpositioned to capture any growth opportunities in the Russian market as well as providinga positive dividend outlook, in our view. Trading on only 4.1x 2016E P/E, on ourestimates, at a 40% discount to its five-year historical average, we think Sberbank isundervalued. Our ongoing caveat is that Sberbank often does not trade on its merits butrather as a proxy for the Russian market and economy.

X5 FIVE LI Russia $19.6 $30.0 BUY 53% From 3Q15 we expect X5 to start seeing faster top-line growth than Magnit (BUY, TP$51.0, CP $39.8) and as the market gets more comfort that this is sustainable thediscount upon which its shares trade relative to Magnit should narrow, in our view.

Mediclinic MDC SJ S Africa ZAc11,582 ZAc14,000 BUY 21% We are positive on Mediclinic's proposed takeover of Al Noor and LSE Listing. We believethis would be earnings- and value-enhancing and expect a re-rating in the share post theLondon listing and potential FTSE100 inclusion

Tiger Brands TBS SJ S Africa ZAc31,172 ZAc39,000 BUY 25% We believe that Tiger Brands, given its current portfolio of strong brands and marketdominance, and with the correct management team in place at all levels of theorganisation would make it a formidable player in the FMCG space in SA.

NEPI NEPI LN S Africa EUR10.1 EUR12.0 BUY 19% 

NEPI offers exposure to the Romanian retail, office and industrial space. Blue-chiptenants, a significant development pipeline, low funding costs and high initial yields ondevelopments convert to high-teen distribution growth in EUR dividends, and NAVgrowth, in our view.

Mr Price MRP SJ S Africa ZAc19,200 ZAc26,900 BUY 40% 

We think the market has likely over-reacted to a weaker five-month sales update, with theshare price down 17% since then. We still see 15% HEPS growth in FY16E and a three-year HEPS CAGR of 18.1%. We also see its RoE at 58.5% in three years’ time. Webelieve this will be the highest in SA retail.

TurkishAirlines

THYAO TI Turkey TRY7.3 TRY10.6 BUY 46% 

The bulk of Turkish Airlines’ revenue is FX and international traffic driven providing anatural hedge against worsening macro. Turkish Airlines is short lira which helps itsmargins in a weakening lira environment. More stable yields and lowly hedged fuelpurchases are its other positives.

AFK Sistema SSA LI Russia $6.6 $10.0 BUY 53% 

We believe Sistema offers the best exposure to the telecom sector in Russia ( it owns53.5% of MTS) and other fast-growing assets. The Detsky Mir stake transaction, pulp &paper export exposure, SSTL resolution, RTI import substitution boon are positivecatalysts for the stock, in our view.

Bashneft BANE RX Russia RUB2,012 RUB2,600 BUY 29% 

We believe there is a significant disconnect between Bashneft's share price performance(down -55% since the start of 2014 vs -47% sector average) and operational deliveries(fastest volume growth over 10%, 10% dividend yield and 20% FCF yield). We viewpotential market concerns over recent ownership changes as exaggerated and expectthis to be addressed during the strategy update later this year.

Globaltrans GLTR LI Russia $4.7 $6.0 BUY 28% 

We think Globaltrans’ valuation discounts the status quo in the Russian rail industry, whilewe think, finally, there are conditions leading to a large net reduction of railcars in thesystem, clearing the system of excess supply and a slow restoration of prices. We viewGlobaltrans as the prime beneficiary of these changes.

DO & CO DOC AV Turkey EUR92.7 EUR96.6 BUY 4%

DO & CO continues to grow organically and through winning more tenders. We view thecompany as an oil price and yield riskless play on growth in airline passenger numbers,especially those of THYAO. We believe improved efficiency will drive margin expansionand we project 20%+ EPS growth over the next few years.

InterRAO IRAO RX Russia RUB1.1 RUB2.3 BUY 107%

We think InterRAO is one of the highest profitability growth stories in Russia, transformingthe company from RUB23bn EBITDA in 2014 to what we forecast to be RUB90bnEBITDA in 2016. Coupled with deteriorating capex (should moderate to RUB12bn by2017), FCF in 2015 should stand at 40%, and 70% in 2017, on our numbers. Even ifshareholders receive only 25% pay-out, that will still translate into one of the highestdividend yields on the street.

JuhaynaFood

JUFO EY Egypt EGP7.7 EGP10.6 BUY 38%

The recent operational turnaround has yielded improved margins and the JV with Arla willbe a significant revenue driver going forward. In light of returning political stability, FDI ispicking up and, given the valuation discount to GCC peers, we wouldn’t rule out thecompany becoming a potential acquisition target. The stock trades at a ~20% discount toits global peers, on our estimates.

IDH Corp IDHC LN Egypt $4.9 $6.9 BUY 41%

IDH Corp has high visibility of 20% EBITDA CAGR (2014-2018E) given that 1) brandloyalty and market leadership drives footfall, 2) economies of scale defends high margins,3) small-ticket ($5), high-volume (22mn/year) growth does not rely on rising per capitaspend. Trades at too steep a discount to GCC healthcare, in our view.

*As at 15 December 2015.Source: Bloomberg, Renaissance Capital estimates

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Renaissance Capital17 December 2015

RenCap α 

Here we highlight our most recent research report for each Emerging  name

mentioned in this report (click link to access each report): 

Figure 5: Recent research

Ticker Report date Analyst Report titleBLT LN 23 November 2015 Johann Pretorius Global: Metals & Mining - Efficiency: Survival of the fittestSBER RX 24 September 2015 Armen Gasparyan Russian equities - Take a look inside FIVE LI 22 October 2015 Dave Ferguson  X5 – Capital Markets Day: BUY  the successful turnaround story  MDC SJ 07 December 2015 Robyn Collins Mediclinic: Expect re-rating on London listing, upgrade to BUY  TBS SJ 20 November 2015 Robyn Collins South Africa: Tiger Brands- Positive catalysts coming through NEPI LN 20 November 2015 Ahmed Motara South African real estate: No man’s land a place to avoid  MRP SJ 25 November 2015 Zaheer Joosub South Africa: Mr Price Group Limited - Concerns overdone in 1H16 - BUY  THYAO TI 09 November 2015 Alex Kazbegi Turkish Airlines and TAV: Positive 3Q15 results  BANE RX 13 October 2015 Ildar Davletshin Bashneft strategy update: Shareholder value in focus  SSA LI 24 September 2015 Alex Kazbegi Russian equities - Take a look inside GLTR LI 30 September 2015 Alex Kazbegi Russian Rail: Price repair imminent  DOC AV 20 November 2015 Alex Kazbegi Turkey: DO & CO - Solid performance IRAO RX 27 November 2015 Vladimir Sklyar Russia: InterRAO - Outlook turns stronger  JUFO EY 09 November 2015 Omair Ansari Egypt: Juhayna Food Industries - Analyst day takeaways IDHC LN 16 October 2015 Seki Mutukwa Integrated Diagnostics Holdings Corp: Mega lab site visit feedback  

Source: Renaissance Capital

Research

http://research.rencap.com/eng/download.asp?id=21278http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21305http://research.rencap.com/eng/download.asp?id=21305http://research.rencap.com/eng/download.asp?id=21305http://research.rencap.com/eng/download.asp?id=21269http://research.rencap.com/eng/download.asp?id=21269http://research.rencap.com/eng/download.asp?id=21268http://research.rencap.com/eng/download.asp?id=21268http://research.rencap.com/eng/download.asp?id=21284http://research.rencap.com/eng/download.asp?id=21284http://research.rencap.com/eng/download.asp?id=21284http://research.rencap.com/eng/download.asp?id=21221http://research.rencap.com/eng/download.asp?id=21221http://research.rencap.com/eng/download.asp?id=21136http://research.rencap.com/eng/download.asp?id=21136http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21110http://research.rencap.com/eng/download.asp?id=21110http://research.rencap.com/eng/download.asp?id=21270http://research.rencap.com/eng/download.asp?id=21270http://research.rencap.com/eng/download.asp?id=21293http://research.rencap.com/eng/download.asp?id=21293http://research.rencap.com/eng/download.asp?id=21220http://research.rencap.com/eng/download.asp?id=21220http://research.rencap.com/eng/download.asp?id=21145http://research.rencap.com/eng/download.asp?id=21145http://research.rencap.com/eng/download.asp?id=21145http://research.rencap.com/eng/download.asp?id=21220http://research.rencap.com/eng/download.asp?id=21293http://research.rencap.com/eng/download.asp?id=21270http://research.rencap.com/eng/download.asp?id=21110http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21136http://research.rencap.com/eng/download.asp?id=21221http://research.rencap.com/eng/download.asp?id=21284http://research.rencap.com/eng/download.asp?id=21268http://research.rencap.com/eng/download.asp?id=21269http://research.rencap.com/eng/download.asp?id=21305http://research.rencap.com/eng/download.asp?id=21174http://research.rencap.com/eng/download.asp?id=21098http://research.rencap.com/eng/download.asp?id=21278

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Renaissance Capital17 December 2015

RenCap α 

Analysts certification

This research report has been prepared by the research analyst(s), whose name(s) appear(s) on the front page of this document, to provide background information about theissuer or issuers (collectively, the “Issuer”) and the securities and markets that are the  subject matter of this report. Each research analyst hereby certifies that with respect tothe Issuer and such securities and markets, this document has been produced independently of the Issuer and all the views expressed in this document accurately reflect his or

her personal views about the Issuer and any and all of such securities and markets. Each research analyst and/or persons conn ected with any research analyst may haveinteracted with sales and trading personnel, or similar , for the purpose of gathering, synthesizing and interpreting market information. If the date of this report is not current, theviews and contents may not reflect the research analysts’ current thinking. 

Each research analyst also certifies that no part of his or her compensation was, or will be, directly or indirectly related to the specific ratings, forecasts, estimates, opinions orviews in this research report. Research analysts’ compensation is determined based upon activities and services intended to benefit the investor clients of RenaissanceSecurities (Cyprus) Limited and any of its affiliates (“Renaissance Capital”). Like all of Renaissance Capital’s employees, r esearch analysts receive compensation that isimpacted by overall Renaissance Capital profitability, which includes revenues from other business units within Renaissance Capital.

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A complete set of disclosure statements associated with the issuers discussed in this Report is available using the ‘Stock Finder’ or ‘Bond Finder’ for individualissuers on the Renaissance Capital Research Portal at: http://research.rencap.com/eng/default.asp

Investment ratings

Investment ratings may be determined by the following standard ranges: Buy (expected total return of 15% or more); Hold (expected total return of 0-15%); and Sell (expectednegative total return). Standard ranges do not always apply to emerging markets securities and ratings may be assigned on the basis of the research analyst’s knowledge of thesecurities.

Investment ratings are a function of the research analyst’s expectation of total return on equity (forecast price appreciation and dividend yield within the next 12 months, un lessstated otherwise in the report). Investment ratings are determined at the time of initiation of coverage of an issuer of equi ty securities or a change in target price of any of theissuer’s equity securities. At other times, the expected total returns may fall outside of the range used at the time of setting a rating because of price movement and/or volatility.Such interim deviations will be permitted but will be subject to review by Renaissance Capital’s Research Management. 

Where the relevant issuer has a significant material event with further information pending or to be announced, it may be necessary to temporarily place the investment rating

Under Review. This does not revise the previously published rating, but indicates that the analyst is actively reviewing the investment rating or waiting for sufficient informationto re-evaluate the analyst’s expectation of total return on equity.

Where coverage of the relevant issuer is due to be maintained by a new analyst, on a temporary basis the relevant issuer will be rated as Coverage in Transition. Previouslypublished investment ratings should not be relied upon as they may not reflect the new analysts’ current expectations of total return. While rated as Coverage in Transition,Renaissance Capital may not always be able to keep you informed of events or provide background information relating to the issuer.

If issuing of research is restricted due to legal, regulatory or contractual obligations publishing investment ratings will be Restricted. Previously published investment ratingsshould not be relied upon as they may no longer reflect the analysts’ current expectations of total return. While restricted, the analyst may not always be able to keep youinformed of events or provide background information relating to the issuer.

Where Renaissance Capital has neither reviewed nor revised its investment ratings on the relevant issuer for a period of 180 calendar days, coverage shall be discontinued.

Where Renaissance Capital has not provided coverage of an issuer for a period of 365 calendar days, coverage shall be discontinued.

Where Renaissance Capital has not expressed a commitment to provide continuous coverage and/or an expectation of total return, to keep you informed, analysts may preparereports covering significant events or background information without an investment rating (Not Covered).

Your decision to buy or sell a secur ity should be based upon your personal investment objectives and should be made only after evaluating the security’s expected performanceand risk.

Renaissance Capital reserves the right to update or amend its investment ratings in any way and at any time it determines. 

Disclosures appendix

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Renaissance Capital research team

Head of Research & Turkish Product Michael Harris +44 (203) 379-7982 MHarris2@rencap.com

Deputy Head of Research David Ferguson +7 (495) 641-4189 DFerguson@rencap.com

Head of Nigerian Research  Adesoji Solanke +234 (1) 448-5300 x5384  ASolanke@rencap.com

Head of South African Research Johann Pretorius +27 (11) 750-1450 JPretorius2@rencap.com

Name Telephone number Coverage Name Telephone number Coverage

Macro  Oil and gas 

Charles Robertson +44 (203) 379-7835 Global Ildar Davletshin +7 (495) 725-5244 EMEA

Yvonne Mhango +27 (11) 750-1488 Sub-Saharan Africa Temilade Esho +234 (1) 448-5300 x5363 Sub-Saharan Africa

Oleg Kouzmin +7 (495) 258-7770 x4506 Russia/CIS Evgeny Stroinov +7 (495) 258-7770 x4046 Russia/CIS

Equity Strategy Metals and mining 

Daniel Salter +44 (203) 379-7824 Global Johann Pretorius +27 (11) 750-1450 South Africa

Michael Harris +44 (203) 379-7982 Turkey Steven Friedman +27 (11) 750-1481 South Africa

Charles Robertson +44 (203) 379-7835 Global Kabelo Moshesha +27 (11) 750-1472 South Africa

Vikram Lopez +44 (203) 379-7974 x8974 Global Vladimir Sklyar +7 (495) 258-7770 x4624 Russia/CIS

 Anastasia Burkhanova +7 (495) 258-7770 x4594 Russia/CIS

Financials 

 Armen Gasparyan +7 (495) 783-5673 Russia, CEE Diversified/Industrials  

Ilan Stermer +27 (11) 750-1482 South Africa Seki Mutukwa +44 (203) 379-7736 Sub-Saharan Africa/MENA

Francois Du Toit +27 (21) 855-2896 South Africa Adesoji Solanke +234 (1) 448-5300 x5384 Sub-Saharan Africa Telecoms/Transportation  

Olamipo Ogunsanya +234 (1) 448-5300 x5368 Sub-Saharan Africa Alexander Kazbegi +41 (78) 883-4527 Global

Seki Mutukwa +44 (203) 379-7736 Sub-Saharan Africa/MENA Artem Yamschikov +7 (495) 258-7770 x7511 Russia/CIS

Omair Ansari +234 (1) 448-5329 CEE Amine Wafy +971 (4) 409-2052 MENA

Consumer/Retail/Agriculture   Media/Technology/Real estate 

David Ferguson +7 (495) 641-4189 Russia/CIS, Africa David Ferguson +7 (495) 641-4189 Russia/CIS, Africa

Kirill Panarin +7 (495) 258-7770 x4009 Russia/CIS, Africa Kirill Panarin +7 (495) 258-7770 x4009 Russia/CIS, Africa

Zaheer Joosub +27 (11) 750-1427 South Africa Ahmed Motara +27 (11) 750-1458 South Africa

Omair Ansari +234 (1) 448-5329 Sub-Saharan Africa/CEE Seki Mutukwa +44 (203) 379-7736 Sub-Saharan Africa/MENA

Olaloye Oyawoye +234 (1) 448-5300 x5377 Sub-Saharan Africa/CEE

Robyn Collins +27 (11) 750-1480 South Africa Fertilisers 

Vladimir Sklyar +7 (495) 258-7770 x4624 Russia/CIS/MENA/Pakistan

Tobacco  Anastasia Burkhanova +7 (495) 258-7770 x4594 Russia/CIS/MENA/Pakistan

Mohamed Zein +971 (4) 409-2032 MENA

Utilities Vladimir Sklyar +7 (495) 258-7770 x4624 Russia/CIS/SSA/Pakistan

Renaissance Capital research is available via the following platforms:  Renaissance research portal: research.rencap.com Bloomberg: RENA  Capital IQ: www.capitaliq.com 

Thomson Reuters: thomsonreuters.com/financial  Factset: www.factset.com 

http://research.rencap.com/eng/default.asphttp://research.rencap.com/eng/default.asphttp://research.rencap.com/eng/default.asphttp://www.capitaliq.com/http://www.capitaliq.com/http://www.capitaliq.com/http://thomsonreuters.com/financialhttp://thomsonreuters.com/financialhttp://thomsonreuters.com/financialhttp://www.factset.com/http://www.factset.com/http://www.factset.com/http://www.factset.com/http://www.factset.com/http://thomsonreuters.com/financialhttp://www.capitaliq.com/http://research.rencap.com/eng/default.asp

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