Page 100 - bne IntelliNews Russia Country report May 2017

energy declining by 4.8% y/y to 3.55bn kwH, out of which exports to the main destination of Finland were down by 1.5% to 1.5bn kwH. "The [Inter RAO] stock remains our top pick in Russian utilities with a strong balance sheet and our forecast for robust profitability expansion in the next 18 months," Renaissance Capital said on May 30, seeing the January-March results in line with expectations. Inter RAO management expects 2017 Ebitda to be at least at the level of 2016, while net income will be favourably affected by debt repayment and dividends could be maintained on at least a 25% payout of IFRS net income, the analysts wrote after the holding's conference call.
OGK-2 1Q17 earnings expectedly surge and Mosenergo sees higher electricity production volumes . OGK-2’s top line increased 19% y/y, mostly due to DPM-units being launched in mid-2016 at Novocherkasskaya GRES and Troitskaya GRES. Electricity production was up 7% y/y, while the share of DPM electricity output was 19.3% (vs. 14.7% in 1Q16). Driven by the same factors, EBITDA and net income surged 85% y/y and 89% y/y, respectively. Separately, Mosenergo has released its operating results, with power production growing 8% y/y in 1Q17 (1.3bn kWh for the period).
Mosenergo’s 1Q17 IFRS results were strong and are on track to meet FY17 forecasts . Mosenergo has reported strong 1Q17 IFRS results, with EBITDA up 32% y/y to RUB18.1bn and net income up 38% y/y to RUB11.4bn. The results were driven by higher DPM payments for CHP 21 and CHP 27, which were the first to start DPMs and the first to see an uplift in prices (in the middle of last year). The genco has also stated that some DPMs saw an adjustment of Krsv starting from January 2017. The numbers mean that the genco is generally on track to meet 2017 forecasts of RUB39bn in EBITDA and net income of RUB15bn. In terms of the company’s investment case, bankers note the lack of medium-term visibility on Mosenergo’s investment plans and cash flow distribution.
9.2.10 Metallurgy & mining corporate news
Russian aluminum major Rusal reported net profits of $434mn in the first quarter of 2017 , jumping from $149mn for the same quarter of last year, the company said on May 12. Higher profit was attributed to both higher output and growing aluminum prices. However, in quarter-on-quarter terms, the net profit was below $645mn seen in the fourth quarter of 2016, also boosted by higher prices. For 2016 overall, Rusal’s bottom line came in at $1.18bn. The higher global demand for aluminum was attributed by Rusal to “lower weight of transportation vehicles, cutting emissions and new opportunities for using aluminum in construction”. The company estimated the demand for its main produce at 15mn tonnes in the first quarter, up by 5.5% y/y. Total global output of aluminum for the period is estimated at 14.9mn tonnes, up by 7.8% y/y. “The results were mostly in line with our forecasts and the Interfax consensus,” Gazprombank commented on the first-quarter Rusal numbers on May 12.
Russia’s largest gold producer Polyus Gold will sell 10% to a consortium of Chinese investors led by Fosun International for $887mn. Other companies participating in the deal include Zhaojin Mining and Hainan Mining. The deal has been in the works since 2016, and previous reports claimed that China’s Zhaojin Mining Industry, Zijin Mining Group and Fosun International were interested in acquiring a stake of at least 25% in Polyus, which would cost at least $2bn. China is the world’s top consumer, producer and importer of
100 RUSSIA Country Report May 2017 www.intellinews.com