Sales operations of Russia business placed under temporary control; buying opportunity at around ¥5,500, as DPS reset would be priced in

According to reports from the Nikkei and other media organizations, Russian President Vladimir Putin placed three of Japan Tobacco's Russian subsidiaries (all sales companies) under the temporary control of a Russian company on November 6. The same actions were taken against four manufacturing subsidiaries on the 5th, meaning that both the manufacturing and sales operations of JT's Russia business are now under temporary administration. JT's share price went limit down on the 6th, falling 19% to ¥6,269. However, we think that at around ¥5,500, JT's share price would be at a level that factors in both the deconsolidation of JT's Russia business and a reset of its DPS, and that investors would be more willing to buy the stock. Assuming the deconsolidation of the Russia business, a DPS of around ¥223 would equate to a dividend yield of roughly 4%. We estimate that deconsolidation of the Russian business would result in JT losing 11% of its sales, 25% of its adjusted operating profit, and