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(11%), Tatneft prefs (11%), Enel Russia (11%), NLMK (10%), VTB* (10%), LSR Group (10%) and Sberbank prefs (10%). Among ‘domestics’, both lines of MTS* (9.8% for ords, 9.4% for ADR), Detsky Mir (9.5%) and Etalon Group (9.3%) offer yields well above the Russia RUB sovereign bond (7.6%). Among ‘exporters’, we note MMK (9.5%) and Gazprom (8.4%), exceeding Russia $Sovereign bond yields (4.6%). For the full list of our selected stocks, please see the Dividends section of the VTB Capital Research portal.
The board of the leading Russian real estate developer PIK recommended a dividend of RUB22.7 per share for 2017 , making a total payout of RUB15bn ($234mn). The company previously reported robust results for the second quarter of 2018 and the management indicated upbeat results for the rest of the year. "Resuming the dividend payouts after a two-year pause indicates a stong balance and should support the investment case of the developer," BCS Global Markets said on July 23. "The [dividend] figure is above what we expected and represents almost 60% of operating cash flow and double the minimum payout set out in the dividend policy," Sberbank CIB commented. The implied dividend yield is at 6.7% and "puts PIK Group in second place among the companies we cover in the sector," Sberbank estimates. The bank believes that "given that the company placed a RUB4bn bond in late June, we view this as a signal that the current level of leverage (net debt/Ebitda of around 1.0x) is sufficiently comfortable going forward and will likely be sustained."
The board of one of the "big four" Russia's mobile operators Mobile TeleSystems (MTS) recommended paying RUB5.2bn ($83mn) in interim dividends for the fist half of 2018, or RUB2.6 per ordinary share (RUB5.2 per ADR). The company could thus pay RUB52bn ($0.8bn) in total dividends for 2018. Previously following the strong first-quarter financial results the analysts expected the dividend decision as the next important catalyst for MTS stock. For 2017, the board previously recommended a dividend payout of RUB23.4 per share (RUB46.8bn total), implying a dividend yield of approximately 8.2%. In July shareholders of MTS also approved a buyback of mobile major's shares worth RUB30bn ($0.5bn) over the next two years, which was met positively by the analysts.
PIK Group's BoD on July 30 recommended a dividend of R15bn, or R22.7 per share , for 2017. The figure is above what analysts expected and represents almost 60% of operating cash flow and double the minimum payout set out in the dividend policy. Given that the company placed a R4bn bond in late June, we view this as a signal that the current level of leverage (net debt/EBITDA of around 1.0) is sufficiently comfortable going forward and will likely be sustained. The implied yield to Friday's close of 6.7% puts PIK Group in second place among the companies we cover in the sector.
Severstal BoD on July 30 recommended a generous the second quarter of 2018 dividend of R45.94 per share, or $0.7 per GDR (at USD/RUB of 63). The record date to receive the dividend was proposed to be September 25. Our view: The per-share dividend implies a total payment of around $595mn, which is close to the high end of our projected range. At the current share price, this yields around 4.5%. NLMK and MMK have yet to announce their recommendations, but we think they are unlikely to surpass Severstal's generous payments. Severstal's total payout for the first half of 2018 should comprise $1.1bn.
51 RUSSIA Country Report August 2018 www.intellinews.com