SEGAZHA GROUP: FINANCIAL RESULTS FOR 1H2022 We return to the coverage of Segezha. 1H2022 results show growth: – 1H revenue increased by 48% YoY to RUB 63.3 bn. High revenue was supported by the weak ruble exchange rate in March-April and high prices for paper and packaging in 1H – OIBDA for 1H increased by 34% y/y to 17.7 billion rubles. As we understand it, margins have been weighed down by rising manufacturing costs (PPI) in Russia, especially rising logistics costs. We see the main challenge for the company to maintain existing production volumes. In 1H2022, Segezha successfully redirected most of its paper, packaging and lumber volumes. We expect Segezha to increase its OIBDA by 2% YoY to RUB 29.8 bn in 2022, and to RUB 31.7 bn in 2023. Three projects were completed in 2022, some projects were either suspended or their deadlines were shifted. As with other Russian companies, we estimate Segezha as a cyclical company with stable production volumes, removing the premium in the multiplier for business growth expectations over a 5-year horizon. Our target price for the year horizon is RUB 7.3/share (+2.5% to the current price), HOLD.