Page 73 - RusRPTSept20

income parameter, the lowest possible under the company’s dividend policy. "Therefore, while the resulting 5% [dividend] yield may look miserly, there is upside should FCF [free cash flow] come in higher than that (a distinct possibility), BCS GM notes, while affirming the Buy recommendation for the name with target prices of $15 for ordinary and $14 for preferred shares.
● Banks
The Supervisory Board of Sberbank on August 24 reconfirmed record high 50% dividend payout for 2019 with DPS RUB18.7/sh, equal for ordinary and preferrence shares. Sberbank will distribute record RUB422bn as dividends for 2019. Besides, Sberbank will present new dividend policy in 2021-23 strategy, we expect to hear later this year. Reconfirmed record 50% dividend payout for 2019 proves Sberbank’s strong fundamentals with CET1R of 14.78% as of 2Q20 IFRS, providing strong dividend yields of 8.1% and 8.7% for ordinary and preference shares accordingly. We believe such strong dividend is not in the price yet and supports our short-term trade idea.
Russia's second-largest bank, state-controlled VTB, is being allowed by the government to cut its dividends for 2019 to 10% of net profit versus the previously pledged 50% of net profit, Kommersant daily reported on August 5 citing a respective government decree. Before the outbreak of the coronavirus (COVID-19) VTB had reiterated a 50% dividend payout despite pressures on capital. The shares of VTB dropped by about 5% on the Moscow Exchange on the news of potentially lower dividends. VTB's IFRS profit in 2019 stood at RUB200bn ($580mn). So far in 2020, the bank in 1Q20 managed to keep provisions in check and maintained a ROE of over 10%, but saw its profits plunge in April.
● Retail
The Detsky Mir BoD has recommended paying out the remaining undistributed profit for 4Q19 of R1.8 bln as a dividend. This implies R2.5 per share and a 2.1% dividend yield. The record date should be September 29. We had previously mentioned the possibility of such a distribution in our recent trade idea as a short-term catalyst for the stock.
● Metal & Mining
The board of directors of Russian gold producer Polymetal International has suggested paying US $0.40 per share, or around $187.5mn, in dividends for January–June, the company said in a statement on August 25. The interim dividend represents 50% of the group’s underlying net earnings for the first half of 2020. In the first half of 2020, the group has paid dividends totaling $0.62 per share, the company said. The company paid $0.42 per share, or around $197mn, in final dividends for 2019 and $0.20 per share, or around $94mn, in special dividends for 2019. The company also paid $0.20 per share in dividends for January–June 2019.The company says that its free- float stands at 71.1%.
● TMT
Headhunter announced payment of previously delayed dividend on August 24. It concerns the interim dividend ($0.5/share) announced earlier this year with record date on 27 March. The payment was delayed amid COVID-19 uncertainty, but yesterday the company announced the dividend will be paid by 10 September inclusive. HeadHunter attributes this decision to it seeing improvement in business sentiment and recoveries in key operating and financial metrics, as well as to the extension of maturity of its loan from VTB.
73 RUSSIA Country Report September 2020 www.intellinews.com