Page 86 - RUSRptAug18

Russian large diameter steel pipe maker TMK reported consolidated shipments of 1mn tonnes in the second quarter of 2018, up by 10% quarter-on-quarter and 12% year-on- year, with all divisions reporting growth in sales (Russian up by 10% y/y; American by 2% y/y, and European by 12% y/y). Previously in the first quarter TMK reported 6% quarter-on-quarter revenue growth to $1.27bn and 5% q/q Ebitda growth to $160mn, both beating consensus expectations by 5%. Higher revenues and earnings in the reporting quarter were attributed to the strong performance in the Russian division, supported by stronger prices and an improved seamless pipe product mix, thanks to seasonally higher consumption for oil and gas producers, Aton Equity commented on the first-quarter results on May 20. After the strong second-quarter update TMK reiterated its earlier outlook and expects further pipe demand strengthening in Russia and the US supported by high oil prices, unchanged large-diameter pipe demand in Russia, and an increase in its EU division’s output, coupled with a higher share of high-value-added products, Aton noted on July 18. "We regard our $665mn FY18 Ebitda forecast as achievable and expect TMK’s foreign divisions to be strong earnings drivers thanks to their better product mix," Aton commented while reiterating a Buy recommendation on the name with target price of $6. "TMK is trading at 5.8x 2018E Estimated Value /Ebitda, which is in line with the company’s 5Y average (5.6x), but suggests an enormous discount to its major peers: 60% to Tenaris (14.6x) and 80% to Vallourec (22.7x)," the analysts argued.
Russia only aluminium producer UC Rusal that was hit by US sanctions in April saw exports soar 59.1% in May to 420,000 tons, according to the Federal Customs Service (FCS), reports Vedomosti. In monetary terms, exports increased by 56.6% to $751.6mn. As compared to March 2018, shipments increased by 24.8% in physical terms and by 17.3% in monetary terms.
Severstal has reported solid the second quarter of 2018 earnings and trading update : despite slightly weaker top line, efficiency gains helped to beat EBITDA estimates by 2-3%. As financial leverage hits multi-year lows and a 5% DY yield was announced for the second quarter of 2018 , analysts think the stock might still offer the most solid 12-month DY in Russian steel sector. VTB raised its 12-month Target Price 6% to $17, which now implies an ETR of 24%: Buy reiterated. Record low leverage supports 5% DY. The company managed to beat our FCFE expectations, with $590mn reported, as capex increases slowly (37% of the 2018 guidance in the first half of 2018 ) and cash tax paid was below our estimates. On top of that, the company sold some $200mn of market securities, which reduced net debt to all-time lows of $136mn. This supported the rich dividend announcement of RUB 45.94/share (a quarterly DY of 5%). Outlook remains supportive.
Polymetal has reported a strong the second quarter of 2018 trading update , with a 16% y/y rise in gold equivalent production to 323koz, supported by structural throughput and grade improvements. Given ounces to be realized in the second half of 2018 at Kyzyl and Mayskoye, analysts think the company is well on track to meet its 2018 guidance with a minor upside risk. The data is supportive for the first half of 2018 earnings, as the 11% y/y rise in volumes and 6% y/y increase in gold prices are likely to more than offset cost inflation, leading to a y/y earnings rise even before the Kyzyl ramp-up. Gold eq. production was up 16% y/y to 323koz (does not include Kyzyl) as the successful recovery of output at Amursk POX after maintenance, strong heap leaching volumes at Svetloye and higher silver grades at Omolon more than
86 RUSSIA Country Report August 2018 www.intellinews.com