Cyan is moving to Russia: will new shares be of interest to investors
- Ksenia Kotchenko Forbes Editorial
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Photo by Alexey Zotov/TASS The owner of the real estate advertising platform Cian announced plans to change the place of registration of the parent company Cian PLC to Russian jurisdiction. What will happen to the company's market valuation and what is the likelihood of dividend payments?
The Cyan group, which owns the Russian online platform for real estate advertisements, announced a change in the place of legal registration. Instead of the Seychelles, the holding company Cian Technology Ltd (owns about 70% of the shares of Cian PLC) plans to move to Russia and list shares on the Moscow Exchange. The change of registration will not affect the activities, management structure and plans, the company assures.
Tsian explained the decision to move to the “current macroeconomic, geopolitical and regulatory situation,” as well as the blocking of assets, payments and delisting of the company that followed due to the “special operation”* of Russia in Ukraine New York Stock Exchange.
The New York Stock Exchange suspended trading in depositary receipts Tsian in February 2022, and in March 2023, decided to delist them. Receipts of the holding company Cian PLC continued to be traded on the Moscow Exchange. Based on the results of the re-registration, Cian Technology plans to offer shareholders an exchange of Cian PLC securities for new shares, but the terms of the transaction have not yet been disclosed.
Cian Technology consolidated the shares of the founders and other shareholders companies other than holders of American Depositary Shares (ADS). Previously, Cian Plc belonged to the Speedtime group (45.1%) and the Cypriot Bluemont International Ltd (9.4%), while management, company founders and members of the board of directors owned 16.2%. Free float shares accounted for 29.3%.
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Investor interest
During the IPO on the New York Stock Exchange, the company was valued at $1.1 billion, but after the listing of a new legal entity in Russia, the market will have to re-evaluate the company’s value. Now its capitalization is 72 billion rubles.
The placement price will depend on the level of quotes at the moment when Cian officially submits an offer to exchange receipts. PSB senior analyst Laura Kuznetsova expects increased investor interest in the company's shares: since the beginning of the year, Cian Plc securities have grown by more than 57%, on April 23 they cost 974.4 rubles on the Moscow Exchange.
“A slight correction may occur in the near future with the limit for reducing the quotes of the company's securities to 850 rubles. We believe that the offer price could be 850–900 rubles per share,” says Kuznetsova.
Analysts at the Go Invest broker believe that Cyan's capitalization should not change significantly, and the current assessment is close to fundamentally fair. “Growth on the horizon of the year may be insignificant,” predicts Go Invest.
However, Andrey Vanin, head of the financial market analytics and premium services department of the Gazprombank Investments service, believes that Qian’s securities are significantly overvalued by the market.
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Oversupply
Senior analyst at Pervaya Management Company Anton Tarasov predicts that in the near future some shareholders may sell them and take profits due to the strong growth of quotations since the beginning of the year and due to expectations of a potential “overhang” (as analysts call the potential volume of shares offered for sale . – Forbes), which can be implemented after the company moves to Russia.
Go Invest also does not expect a significant overhang of shares, since foreign holders will predominantly remain locked in. Kuznetsova argues that there is no risk of shares being offered for sale in the event of a listing on the Moscow Exchange, since it is assumed that existing receipts will be exchanged for new shares. “At the same time, we see investor interest in the company’s shares after the publication of news, which already creates a certain basis for the offer,” says the PSB analyst.
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Business and dividends
Experts note that a change in jurisdiction will give Qian a technical the ability to distribute dividends, but the likelihood of payments is in question.
Qian has been operating in the market since 2001 and ranks 13th in the world in the category of real estate listing sites, but for the first time since the beginning of its public history, the company received a net profit only in January – June 2023. Based on the results of nine months of the past year, revenue grew by 41% year on year ($85.2 million). Profit amounted to $14.6 million versus a loss of $0.2 million for the same period in 2022. On April 26, the company plans to disclose financial results for the full year 2023.
And even positive results for the year may not mean distribution of profits. “Historically, Cian has not paid dividends, and redomiciliation may not lead to the payment of missed dividends, which is expected from some companies like Rusagro,” analysts at Tsifra Broker note.
On the contrary, Kuznetsova believes that Tsian is capable of paying dividends, since the company's financial condition has improved over the past two years. According to her assessment, in combination with a reduction in risks due to sanctions after the company is registered in Russia, shares may become attractive.
* According to the requirement of Roskomnadzor, when preparing materials about a special operation in eastern Ukraine, all Russian media are required to use information only from official sources of the Russian Federation. We cannot publish materials in which the ongoing operation is called an “attack,” “invasion,” or “declaration of war,” unless this is a direct quote (Article 57 of the Federal Law on the Media). In case of violation of the requirement, the media may be fined in the amount of 5 million rubles, and the publication may also be blocked.
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Ksenia Kotchenko
Forbes editorial staff
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