Sistema: 2Q21 IFRS: OIBDA growth tamed by SG&A hike. OVERWEIGHT maintained

Sistema reported 2Q21 results and conducted a conference call for investors. While growth in consolidated revenues was substantial (+16% YoY), the rise in consolidated OIBDA was less significant (+7% YoY), as substantial OIBDA growth in key underlying assets (MTS, Segezha, Medsi, Steppe, Binnopharm) was mitigated by an increase of the OIBDA loss at the Corporate Center due to growth in SG&A costs and proportional accounting for Ozon\'s net loss. Despite the spike in 1H21, the management intends to keep the Corporate Center\'s SG&A under control in the medium term (aiming at a range of RUB 10-15 bln p.a). We maintain our OVERWEIGHT recommendation on the stock amid its attractive valuation, which implies a current estimated Mcap/NAV discount of more than 40% compared with the estimated fair level of ~30%. The next key catalyst for the shares is the potential monetization of one of the IPO candidates (Medsi, Steppe, Binopharm) in 2022.