Page 86 - RusRPTAug20

wholesale market proceeds for the year (or 0.4% for the quarter). In retail, the RUB2.8bn growth in non-settled bills (1 April- 1 June), was 0.6% of the annual proceeds (or 2.5%).
We expect FY20 EBITDA to decline marginally for all the gencos in Russia, except for RusHydro and OGK2. Combined EBITDA is set to go down 1% on our new forecasts – clearly a manageable hit to financials. Moreover, the write-offs of FY19 led to a low base last year, so we expect robust growth of GenCos profit in FY20, despite COVID-19. We forecast 31% jump in combined nominal net profit – RusHydro and Enel Russia leading the way.
The sector did not face any substantial financial or operational difficulties (no single power plant went into shutdown, working capital remains manageable, all commitments on FY19 dividends were met) and went through the crisis without large-scale government support measures. None of the companies we cover resorted to subsidised working capital funding, government-backed low interest rate facilities, or required an investment programme and/or dividend reduction, a solid sign that ‘crisis’ is probably the wrong word to describe the ongoing processes in utilities.
The government has postponed the introduction of a long-term framework for utility tariff regulation for the Russian Far East region from July 1 2020 to January 1 2021​, Sberbank CIB wrote on July 3. The idea behind the regulatory change is to provide owners of generation capacities in the region with longer-term tariff visibility. "​RusHydro​ [hydropower holding] has expected the new tariffs to envisage at least some compensation for prior losses and estimated maximum tariff growth at almost 10%," Sberbank CIB commented. The analysts believe that the news is somewhat negative for sentiment, though investors are not seen as having already priced in the tariff changes, as an official decision with details about them has yet to be released. "In addition, if the changes are in the end only postponed and not abandoned, the six-month difference should not produce any material impact on RusHydro," Sberbank CIB notes. To remind, RusHydro was ​helped by warm weather at the beginning of 2020​, achieved the biggest share price gain in the sector, and had its ​investment case re-rated upwards by analysts​. The company ​does not see downside risks to dividends​ from the coronavirus (COVID-19) pandemic (50% of IFRS net profit). Latest reports also suggested that the Finance Ministry might ​renew the push for the privatisation of the hydropower holding​, among other companies.
9.1.11 ​Metallurgy & mining sector news
The timing for a return to normal rough diamond trading activity is unclear​. Diamond miners said that rough trading depended heavily on the path that the downstream demand recovery takes and the stock levels in the downstream. The slump in downstream demand in all regions has altered the normal seasonal pattern in rough sales, implying a pick-up in rough demand in September. This time around, September is seen as a month of non-zero sales in a rather positive scenario of a synchronised downstream demand recovery Another scenario, which is no less probable than the first one, assumes no meaningful pick-up in rough buying in 2H20 and a 50% y/y decline in rough diamond sales in 2020. Anyway, as production exceeds sales, miners are set to accumulate significant rough stocks: Alrosa estimates its inventories by the end of 2020 at 29-30mnct, which is almost the same as its 2020 full-year
86​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com