OREANDA-NEWS. July 02, 2010. The government has decided against a sharp hike in the excise tax on spirits, according to a report in Vedomosti. Previously, the Finance Ministry proposed an increase in the excise tax from RUB210/liter of pure spirits to RUB330 in 2011, to RUB490 in 2012, and to RUB650 in 2013, reported the press-centre of OTKRITIE Financial Corporation.                    

View: We did not expect the government to implement a sharp increase because the decision would negatively impact local vodka producers, and potentially increase the share of vodka from the grey market.

Valuation and Action: CEDC currently trades on a 2010 EV/EBITDA of 9.2x, which reflects a 50% discount to EM peers, while Synergy trades at 7.0x, implying a 62% discount to EM peers.