Page 101 - RusRPTJul21

In the oil and gas space, this novelty applies to state-owned Gazprom, Rosneft, Gazprom Neft and Transneft.
Under our forecasts, the adjustments are inconsequential for 2021 dividends, as we do not generally project major write offs, and FX changes are minimal.
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Gazprom already has a dividend policy in place that envisages paying out 50% of net income adjusted for a number of paper items (FX gains or losses, including operational, impairments of PPE and investment in associates, paper income from associates) starting 2021. Hence, we do not expect tangible changes to the dividend approach. We forecast Gazprom’s 2021F DPS at RUB38.91, or a 14.3% DY (although current gas and oil futures curves suggest a much higher DY, at 15%).
Gazprom Neft’s dividend policy envisages a 50% of net income payout with the possibility of adjusting the bottom line for paper lines (FX gains/losses, impairments, revaluation of financial investments, non-cash income from associates). We note that the company has moved to a 50% payout already and has historically tended to adjust its earnings for paper items and one-offs, so we also would not expect any dramatic changes here. We forecast Gazprom Neft’s DPS with non-cash adjustments at RUB40.74 for 2021F, which is 9.6% DY (the stock might deliver 10.8% DY under the current futures curve).
Rosneft’s dividend policy currently ties dividends to unadjusted net income (at 50% payout), so the new directive warrants a change in the policy. If Rosneft amends its dividend policy accordingly, this might mean RUB47 DPS or a 8.5% DY for 2021F. Under the current elevated futures curve, the stock might pay a 9.8% DY with the new rules, we estimate.
Transneft has in recent years paid more than 50% of adjusted net income in dividends (except for DPS recommended for 2020, based on unadjusted bottom line), so we would expect no major deviations from this record. A change in the formal dividend policy is likely to take place to reflect the 50% required payout. We forecast Transneft to pay RUB12,804 DPS or 7.5% DY for 2021F (50% payout with adjustments).
Metal & Mining
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Alrosa’s AGM approved a FY20 dividend of RUB 9.54/share, Interfax reported yesterday, 17 June. The Russian diamond miner will allocate and pay out approximately 80% of its 2H20 FCF in FY20 dividends, or RUB 70.9bn (+47% YoY). The record date for the dividend is set for 4 July. The approved DPS implies a 7% dividend yield, we estimate. ALROSA’s shareholders also approved a new 13-seat Supervisory Board that is meant to be equivalent to a BoD. The new board includes two independent directors.
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101 RUSSIA Country Report July 2021 www.intellinews.com