Page 105 - RusRPTMar20

company to report solid FY19 results and note some upside risks to our 2H19F earnings estimates. VTBC unchanged 12-month Target Price of $38/GDR implies a 27% ETR; Buy reiterated.
Russian metals major ​Evraz​ reported 2H19 IFRS results, posting a 6% half-on-half and 11% year-on-year decline in revenues to $5.8bn, ​due to lower prices that offset improving sales. As reported by bn​e IntelliNews,​ Russian steel and metals majors were under pressure at the end of 2019 on a weak market. However, Evraz managed to beat expectations on free cash flow. Free cash flow for dividends was $891mn, materially higher than the estimate of BCS Global Markets $377mn, due to lower than expected capital expenditure and materially stronger than expected working capital release. Still, Ebitda declined by 25% h/h and 40% y/y to $1.1bn partially due to sharp decline in coal segment Ebitda. Adjusted net income was down 34% h/h and 59% y/y to $456mn, missing BCS GM estimate. As a result dividends came up materially stronger than BCS GM expected at $0.4/share ($581mn, total of 65% FCF) vs $0.26/share expected, resulting in impressive mark-to-market dividend yield of 8.2%. Evraz also narrowed its CapEx guidance range for 2020 to $900mn instead of c$1bn in 2020-2023.
9.2.13 ​Other sector corporate news
MD Medical Group has released 4Q19 operational modest results​. Core deliveries and IVF cycles declined 2% y/y and 5% y/y, respectively, translating into a 5% y/y blended annual increase. 4Q19 y/y revenue was up 3% y/y; FY19 revenue advanced 8% y/y to RUB16bn, slightly underperforming our forecast. We link the soft numbers to the still challenging sector conditions: with the number of births declining for a fourth consecutive year (down 8% y/y in 11mo19), pressured consumption, an incremental headwind from the allocation of state funded IVF quotas to 9mo19, and a modest pick-up in newly opened hospitals. On a LFL basis, the 2019 volumes were almost flat y/y across all services (0-5% y/y range), while new facilities yet do not bring sizable acceleration. MDMG holds a strategy day tomorrow and our focus is on the regional pipeline and its ramp-up and updates to the dividend distribution. We only factor in the extension of the Lapino and St Petersburg hospitals, seeing capex period completed next year and blended FCF at 18% in 2021-25F. Our 12-month Target Price of $7 and Buy recommendation, with an ETR of 31%, are intact, while 2020F EV/EBITDA of 5.4x is appealing for a leading private healthcare sector profile.
105​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com