Page 50 - RUSRptAug18

Rosneft ROSN LI $7.3/GD 24% The highly likely approval of MET benefits for the Samotlor high
R watercut field in the coming months could become a strong trigger for the name: we estimate a +5-6% effect on annual EBITDA. The
dividend payout increase to 50% is an additional supportive factor.
MMK MAGN RUB41.5/ 24% RX GDR
MMK’s shares have fallen 20% from the 1Q17 high and it remains one of the cheapest steel names globally at 3.8x EV/EBITDA for 2017. Steel industry is recovering and the steel over bulks premium in China is expanding; MMK, which has the lowest integration into raw materials, is the key beneficiary.
Novatek NVTK LI $133/GD 17% The stock has been considerably oversold on the back of the crude R oil slump and has not yet recovered. Timely launch of Yamal LNG
along with the new strategy presentation in 2H17 are key drivers for a re-rating, in our view.
Globaltrans
GLTR LI
$8.7/GD 13% R
This year should be successful for the company, because the deficit of gondola cars on the rail network has led to rising tariffs, which have already achieved RUB1,500 per rail car per day. As a result, we see upside risk to our earnings estimates. Additionally, the company may pay interim dividends for 1H17, while the annual dividend yield is close to
8.3.2 Dividends dynamics
The financial year 2017 dividend season for the Russian corporates is over . With the payment flow kicking in, Russian public companies are distributing almost RUB 840bn throughout July (RUB 380bn might still be pending as we are in the middle of the month, on our estimates). Between now and YE18, they are to distribute RUB 1tn. The overall flow will total RUB 1.86tn for the whole year – RUB 240bn more than in 2017, more than half of, which comes from the increase in Sberbank’s number. Severstal and Nornickel offer the highest yields for the next 12 months.
The major dividend flow comes in July. The financial year 2017 dividend season for Russian corporates is over. By law, they have 25 working days to proceed with payments to retail investors and 10 working days for other types of investors. Almost RUB 840bn would be paid in July, drawing 45% of dividend flows in FY18. For the whole year, the Russian public companies are to offer RUB 1.86tn. Between now and YE18, they are to distribute RUB 1tn. We highlight that overall dividend payment is up more than +20% from 2017 driving an additional flow of RUB 240bn. The next significant dividend flow comes in October (when most of companies are to distribute its semi-annual dividends, followed by December (dividends for nine months).
Drivers of cash flow hike in 2018. The locomotive of the dividend growth was Sberbank, doubling its payments to RUB 270bn on the back of higher payout ratio (36% vs 25% in last year). The company became the biggest dividend payer leaving Gazprom behind with flat dividends at RUB 190bn. Nornickel dividend was close to Gazprom’s. Lukoil and Rosneft also were among top-5 payers. We also note contribution of X5 Retail Group, which announced its first dividends ever, and Evraz. Among contracting payments, we note Gazprom Neft and Tatneft. Alrosa also decreased its payments this year, losing its third position as a result.
Top payers in the year ahead. The Russian financial market is continuing to deliver high dividend yield, with the RTS next 12-month DY at 6.2% on our numbers. The double-digit DYs are offered by Rosseti prefs (19%), Severstal (13%), Nornickel (13%), Surgutneftegas prefs (12%), HMS (12%), Globaltrans
50 RUSSIA Country Report August 2018 www.intellinews.com