OREANDA-NEWS. On July 08, 2009 The Russian government approved changes in the rules under which state banks subsidize 2/3 of the refinancing rate for car loans. The price limit was increased from RUB350,000 to RUB600,000, while the amount of the first payment was reduced from 30% to 15%, reported the press-centre of OTKRITIE Financial Corporation.

View: Given that most of the cars sold in Russia are in the price range of RUB400,000 - 600,000, we view this news as a positive catalyst for the local market, which dropped almost 50% in 1H09. In addition, such changes should improve sales of Sollers' brands - as a significant portion of its cars (UAZ, FIAT) cost less than RUB600,000.

Valuation: Sollers trades with EV/EBITDA 09 of 6.7x, two times cheaper than foreign car makers.

Action: We recommend BUYing into the stock on its weakness. Our target price is US16.0 per share.