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Search for income with Yandex

Investment from 3,100 USD

Expires: 15/02/2019

Expected
yearly returns
102%

Yandex is an international company providing a wide range of hi-tech services, including an Internet search engine (with a 56% market share in Russia), maps and satnav, taxi ordering service, food delivery service, funds transfers, advertising and e-commerce services, news aggregator, translator (which combines statistical and neural network translations), a web analysis system, and data protection.

Revenue distribution by sector:

  • 79.9% of revenue comes from placed advertising (products: Yandex search engine and location-based services).
  • 11.1% - food and taxi ordering services (products: Yandex Taxi and Yandex Food).
  • 4.5% - e-commerce services (products: Yandex Market).
  • 2.5% - advertising services (products: Yandex Real Estate, Auto.ru, Yandex Jobs).
  • 1.5% - media services (products: KinoPoisk, Yandex Music, Yandex Afisha, Yandex TV).
  • 0.7% - other services (products: Yandex Zen, Yandex Drive, and others).

The company was founded in 2000 and currently has 18 offices across 9 different countries, employing a total of 8,000 people. Among the company’s biggest shareholders are: Morgan Stanley (4.37%), Wellington Management Group (3.90%), BlackRock (1.74%), and Goldman Sachs (1.30%).

Growth factors:

  • Continued active development in the company’s key area of online search engines. Revenue in this area grew by 21.5% YoY in 2017 and by 19.4% YoY in the first quarter of 2018.
  • The launch of promising new business ventures (on markets on which the company already actively operates as well as new ones) and mergers / acquisitions with market leaders:
    • In February 2018, Yandex merged with Uber with the aim of expanding their market share across Russia, Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, and Moldova. In this new merger, 59.3% of the shares are owned by Yandex and 36.9% by Uber. The remaining shares were distributed among company employees. Yandex Taxi’s revenue grew by 111% YoY in 2017. After merging with Uber, the company posted a rise in revenue of 301% YoY for the first quarter of 2018.
    • Also in February 2018, the company launched Yandex Drive; a new car sharing service with good growth prospects thanks to the potential of integrating this with other company services.
    • In March 2018, the company launched Yandex Food; a food delivery service in the same vein as Foodfox (which was acquired by Yandex Taxi at the end of 2017) and UberEATS.
    • In April 2018, Yandex and Sberbank collaborated to create Yandex Market, with each company receiving a 45% share in the joint venture. The remaining 10% was put into an option fund for the Yandex Market team. This joint venture has 3 main areas of operation:
      1. Administrative, financial, and logistical services for retailers (Yandex Market will work on providing services to clients, as well as processing and delivering orders).
      2. International online trading.
      3. Further development of the price comparison service for consumers.
    • Implementation of other important projects, which will make Yandex services more convenient to use. In particular, one of the most important projects launched in 2017 was “Alice”; a voice-activated digital assistant that help clients deal with a variety of everyday tasks and to get the information they need via Yandex’s various services (Internet searches, satnav, ordering taxis and food etc.).
  • The company isn’t planning to pay out any dividends in the near future as it wants to actively reinvest all available funds into development (this will facilitate a rise in Yandex’s share price given that they have already proven their competence at managing development projects).
  • The company continues to demonstrate a high business margin; with a return on equity of 9.4%, return on assets of 6.3%, and a net profit to revenue ratio of 9.0%.
  • Low risks to financial stability: the ratio of total debt to assets is just 8.41%, the ratio of total debt to EBIDTA is a low 0.73, while the ratio of net debt to EBITDA is negative (-1.17) thanks to the company’s significant stock of liquid assets.

Investment period ends:
15/02/2019

Expected yield is calculated according to 90% capital protection and the price of the base asset at expiry, equal to 38 USD.

Technical Analysis:

Yandex’s share price is currently trading around the lower confines of the long term upwards channel (which starts from the 2nd half of 2015), has broken up the 200-day moving average, and is readying to exit the Ichimoku indicator cloud upwards. Significant technical levels (according to NASDAQ prices): 44.34; 41.15; 38.55; 35.69; 33.90; 32.01; 28.62; 26.12; 23.53; 21.47; 20.04; 17.90; 14.59; 10.40.

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