01 April 2020
Renaissance Capital holds online press briefing on COVID-19 implications for the Russian online players Yandex & Mail.ru

Renaissance Capital, a leading investment bank in emerging and frontier markets, today held an online press briefing ‘Quantifying the COVID-19 implications for the Russian online players (Yandex & Mail.ru) and identifying where upsides outweigh downsides’ for top Russian and international media, hosted by Kirill Panarin, Consumer & Technology Research Analyst.

During the briefing, Kirill discussed the outlook for the online advertisement market in Russia, a sizeable chunk of business for both Yandex and Mail. He noted that in a time of economic slowdown, the online industry has a good opportunity to win market share from TV advertising (with its higher tickets and lower efficiency), so in Russia online advertising is likely to expand from its current level of 50% of the market. Although we are seeing a decrease in advertising budgets in travel and entertainment, many online services’ rising spending on advertising should partially recoup this contraction.

On taxis, Kirill said: “Demand performance will depend on how long and strict the quarantine measures will be. In China, some service providers reported a halving in demand. The good news is that as soon as the lockdown is over, we should see a gradual recovery over a relatively short period, with many people abstaining from using public transport for a while.”

Kirill also emphasised that Mail’s gaming business should serve as a safety net in the current environment. Staying at home leads people to increase their game consumption: in China, gaming time has increased 20-70% for the most popular games, and South Korea has seen 35% growth in game downloads. Importantly, c. 70% of Mail’s revenue from gaming is generated outside Russia, which removes the negative pressure of FX volatility on the top line.

Kirill mentioned that, given the high volatility in the market and material uncertainty around future COVID-19 developments, Yandex and Mail shares might have not yet have reached their bottom. However, in the short term, Mail is better positioned in terms of stock performance, with its lower share of the advertisement business and strong support from gaming.