Evropeyskaya Elektrotekhnica presented the growth prospects of its business to investors from Mainland China

Evropeyskaya Elektrotekhnica presented the growth prospects of its business to investors from Mainland China

June 21, 2019. Moscow — On June 18, PJSC Evropeyskaya Elektrotekhnica (hereinafter referred to as the “Company” or “Group”), one of the leaders in the Russian engineering market, presented its business growth prospects associated with the commercialization of breakthrough technological innovations for oil refining and the electric power sector to potential investors from Mainland China.

The Company held the presentation in Shanghai, in the People's Republic of China, during an event at the Astana International Financial Center (AIFC) for representatives of more than 30 Chinese investment funds and brokers. The meeting with investors and financial intermediaries was held with the support of the Shanghai Stock Exchange (SSE). SSE became one of the shareholders of the AIFC Exchange (AIX) in 2017 and promotes the development of the AIFC as a regional center for financial services of the Chinese Belt and Road Initiative.

PJSC Evropeyskaya Elektrotekhnica was represented at the event by:

• Vladimir Grubenko, Independent Member of the Board of Directors of PJSC Evropeyskaya Elektrotekhnica,

• Stanislav Martyushev, Director of Corporate Communications and Investor Relations of PJSC Evropeyskaya Elektrotekhnica.

As part of the Company's presentation, the Chinese investors were shown the operational and financial results of PJSC Evropeyskaya Elektrotekhnica in 2018–2019, current market positions and a strong financial condition in terms of business, factors of further growth of the Company, and financial indicators forecast for the period 2019–2022.

Vladimir Grubenko, Independent Member of the Board of Directors of PJSC Evropeyskaya Elektrotekhnica, commented on the event: “The open format for doing business which is inherent at Evropeyskaya Elektrotekhnica, compliance with the best practices of corporate governance, regular publication of consolidated financial statements in accordance with the International Financial Reporting Standards and audited by a reputable auditor company FBK Grant Thornton, the upwards trend of the Company's credit rating from the agency ACRA, the clear successes in the development of traditional and new business areas and the growth rate of the business value for all Company stakeholders are factors that are stimulating interest among investors in the Company in Russia. One can therefore expect that these markers of investment attractiveness will be equally attractive for new categories of the Company's financial partners — investors from China. For the Company, 10% of whose revenue currently comes from export contacts, this is more than just the logical progression, in addition to working with foreign customers to make use of foreign financial sources.”

Stanislav Martyushev, Director of Corporate Communications and Investor Relations of PJSC Evropeyskaya Elektrotekhnica, commented on this: “Our Company is in the active growth stage. In addition to increasing the scale of projects in the electrotechnical market, which is our typical market, it is also facilitated by the commercialization of our effective R&D program in the field of creating technological systems. Engineers and designers of ROG-Engineering, controlled by Evropeyskaya Elektrotekhnica Group of Companies, managed to implement technological solutions in metal (see slides 23–28), which are currently in high demand in Russia, in the countries of Central Asia, the Middle East, the Persian Gulf, North Africa, and Southeast Asia. Without exaggeration, we are now facing the emergence of a series of customers, and not just in Russia, who want to use these advanced solutions in small and medium refineries, oil depots, and bunker companies.

That is why we are now working on attracting additional financing volumes in order to provide investment support for our large-scale business plans.

Our Investor Relations (IR) program goes beyond the scope of the Russian financial market. In fact, the East has already become the epicenter for the next long-term technological stage in the world economy. Large investments follow economic activity. For our Company, this means new investment opportunities, and we are satisfied with the first step made with respect to Eastern investors.

We see productive activities being carried out by Eastern investors (mainly from the Gulf countries) in Russia in tandem with the Russian Direct Investment Fund (RDIF), but at the same time focus is mainly on direct investment. There is still little interest among portfolio investors in stock markets from Asian countries with regard to investment opportunities in Russia; they know relatively little about our securities issuers, about the favorable macro-situation in Russia, and about the positive changes taking place in our country's investment climate.

It is obvious that a targeted and long-term strategy of investment communications is needed for sustainable access to investment resources in the East. For example, there was an investment presentation in Chinese for the first time in the IR portfolio of our Company based on the results of this trip. In Shanghai, we managed to communicate with representatives of several Chinese investment funds, as well as with representatives of CICC, one of the largest investment banks in China. We hope that the continuation of IR work in the East and our Company's active growth prospects will make it possible to attract interest from among both portfolio investors and strategic investors from this vast region. We consider this debut trip to China as the beginning of targeted work with the investment community in a macro-region with the highest financial potential.

It's true that the “investment appetite” among Chinese investors on Russian stock assets has yet to be seriously established. But at the same time, we are confident that domestic companies that issue securities and are involved in regular IR activity in the East enjoy the favorable prospects of gaining access to Asian money, mostly due to the growing economic cooperation between our countries. We have a positive view of the process of opening up China's internal financial market, which is gradually carried out by financial authorities of the PRC for external players consisting of international investors and foreign companies.

I would like to express my sincere gratitude to our colleagues from the AIFC for the opportunity to present our equity story to large Chinese investment funds, investment banks and brokers from Mainland China."

FOR REFERENCE:

The Astana International Financial Centre (AIFC) was established on the initiative of the first President of the Republic of Kazakhstan Nursultan Nazarbayev. The constitutional law on creation of the AIFC was signed on December 7, 2015. The purpose of the AIFC is to create a leading center of financial services rendered on an international level. The objectives of the AIFC include providing assistance to attract investments in the economy of Kazakhstan, creating an appealing investment environment in the sphere of financial services, developing the securities market in the Republic of Kazakhstan and ensuring its integration with global capital markets.

The Shanghai Stock Exchange (SSE) is the largest trading platform in Mainland China and one of the leading Asian stock exchanges. It was founded in 1990. This non-profit organization is managed by the Securities Commission of the People's Republic of China. According to the World Federation of Exchanges, the market capitalization of 1,450 companies listed on the SSE (all companies are from China) was CNY 27 trillion (about USD 3.9 trillion) at the end of 2018.

There are two types of shares traded on the stock exchange: A-shares are traded for yuan, and B-shares were created in the mid-1990s for non-residents only and denominated in US dollars. Foreigners can trade B-shares without restrictions, and up until October 2014, A-shares could only be bought by large foreign institutional investors licensed by a qualified foreign institutional investor, and only within the quota allocated to them. Since October 2014, the Chinese government has allowed foreign investors to trade shares of more than 500 major companies on the Shanghai Stock Exchange through Hong Kong Stock Exchange brokers.

In June 2019, a mechanism of cross-trading was launched between the London Stock Exchange (LSE) and the Shanghai Stock Exchange (SSE). As part of the mechanism, companies listed in Shanghai can issue Global Depositary Receipts (GDRs) on the LSE, while British companies can place Chinese Depositary Receipts (CDRs) on the SSE. The launch of the program was another significant step in opening the Chinese capital market.

Sources: https://www.world-exchanges.org/our-work/statistics, https://en.wikipedia.org/wiki/Shanghai_Stock_Exchange, https://aifc.kz/ru/news/mfca-otkryvaet-pered-kitajskimi-investorami-novye-vozmoznosti 

About Evropeyskaya Elektrotekhnica Group of Companies

• Evropeyskaya Elektrotekhnica Group of Companies (MOEX: EELT) offers comprehensive solutions in the field of engineering and technological systems for industrial, construction and infrastructural purposes: low and medium voltage distribution equipment, low current systems, lighting systems, industrial electric heating systems and equipment for the Oil&Gas and petrochemical industries.

• As a Russian joint-stock company with high corporate governance standards and financial sustainability, the Company's Mission is to improve people's quality of life with its entrepreneurial vigour and engineering competencies.

• The Company was founded in 2004 and unites a distribution center, engineering departments, an electrical laboratory and specialized production facilities. The company is one of the largest electrical equipment distributors in the Russian Federation and an industrial partner of leading companies on the international engineering market.

• The Company's logistics capabilities include delivery (including non-standard and oversize load) to customers throughout Russia, including hard-to-reach Northern areas, as well as to Central Asia, North Africa and the Middle East.

• The Company has its own production of the following equipment:

• Complete transformer substations;

• Medium voltage units;

• Low voltage panels of up to 6,300A (including metro solutions);

• Electric lighting systems;

• Industrial electric heating systems;

• Cabling and wiring products.

• Areas of application of the Company's competences:

• Oil&Gas industry;

• Electric power sector;

• Peaceful atom,

• Steel and mining industry;

• Engineering;

• Transport infrastructure, water supply and sanitation.

• Evropeyskaya Elektrotekhnica's customers include major Russian companies: Rosneft, Gazprom, NOVATEK, LUKOIL, Sibur and Nizhnekamskneftekhim. Supplies were successfully implemented for the following projects: Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, the Domodedovo, Sheremetyevo, and Pulkovo Airports, etc.

• New areas of Company activity starting from 2018 include development and production of the following:

• Modular equipment for the Oil&Gas and petrochemical industries (Company subsidiary ROG-Engineering, Ufa, Republic of Bashkortostan, Russian Federation);

• Industrial specialized solutions for metro substations (currently being consolidated into the Group's structure: Metrotonnel, Moscow, Russian Federation);

• Industrial electric heating systems.

• Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS):

The personnel headcount is around 350 people. Since September 2017, common shares of PJSC Evropeyskaya Elektrotekhnica are traded on the Moscow Exchange with trading code EELT.

In June 2018, the company was named Import Substitution Leader at the Leader of Competitive Sales annual national awards, in which 450 domestic suppliers from various industries took part.

Contacts:

PJSC Evropeyskaya Elektrotekhnica

Tel.: +7 (800) 600-71-18

Mailing address: 1 Lyotchika Babushkina Street, Building 3, Moscow, 129344

For more information, please contact:

Stanislav Martyushev

Director for Corporate Communications and Investor Relations

PJSC Evropeyskaya Elektrotekhnica

Tel. +7 (495) 660-71-18 ext. 164

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