Page 114 - RusRPTSept20

9.2.13 Other sector corporate news
Sibur starts construction of Amur GCC – important project for Sibur as
feedstock to be delivered from Gazprom’s GPP which is being constructed now.
Sibur has started to construct the Amur gas chemical complex (GCC), RBC reports. The company estimates its investments into the project at USD 10- 11bn, with completion expected in 2024-25. The complex is to produce polyethylene and polypropylene (capacities of 2.3mnt/a and 0.4mnt/a, respectively).
Sibur had to choose between two configurations for its Amur GCC complex and has decided to use the extended configuration, after the government agreed to pass a law on negative excise on liquefied petroleum gas (LPG), which is used as the petrochemical feedstock (see our Morning Comment of 8 July). We believe that launching construction is an important step for Sibur.
Gazprom is to supply 3.45mnt/a of feedstock to the Amur GCC, including 2.4mnt/a of ethane fraction and 1.05mnt/a of LPG, according to Gazprom’s quarterly report from its gas processing plant (Amur GPP, with 42bcm throughput capacity, EUR 20bn (USD 23.7bn) capex as per Gazprom’s estimates), which is being constructed nearby.
However, the launch of the construction of the Amur GCC in its extended configuration, as well as Gazprom’s supply amounts to the facility, have been disclosed previously. For this reason, we treat this news as not market-moving for Gazprom.
Russian phosphate fertiliser major Phosagro reported 2Q20 IFRS results, with revenues growth of 3% year on year to RUB60bn, and Ebitda of $281mn beating the consensus expectations by 11%, making a strong margin of 34%.
As reported by bne IntelliNews, prior to the publication of the results the company surprised with a recommendation on 2Q20 interim dividend. Overall Phosagro and Russian fertiliser majors are seen as gaining as a result of the coronavirus (COVID-19) crisis, due to the ruble depreciation, cheaper costs and other factors.
"Despite the strong Ebitda line, reported FCF [free cash flow] was weak, as expected, at just $28mn, for a 0.6% yield. It was pressured by a $69mn working capital buildup (versus a $142mn release in 1Q20)," Sberbank CIB wrote on August 31.
BCS Global Markets on August 31 commented that the results were "decent" and beating the consensus expectations, while estimating that announced interim dividends make a payout ratio of 62% of profit. BCS GM maintained the Buy recommendation on the name with target price of $16.
Sberbank CIB also noted that the 62% payout will be above the 50% level stipulated by the dividend policy, while seeing the market outlook for 3Q20 is generally positive, supported by stable demand from India and Brazil alongside the upcoming seasonal increase in demand in Europe and Africa.
"We still see PhosAgro generating up to $1.15bn in Ebitda this year, which is
114 RUSSIA Country Report September 2020 www.intellinews.com