Page 121 - RusRPTJan22

On Friday 3 December, Petropavlovsk reported that it had completed the transaction to sell a 31.1% stake in IRC Limited to Stocken Board AG, selling 29.9% for a cash consideration of USD 10mn, as outlined earlier by the management team. The news is mostly priced in already, we believe, as the deal became binding in May. The claim by major shareholder UGC that the stake value was actually several times higher (we estimate the market value of the stake at USD 50-70mn) did not increase the sale price.
Alrosa’s Rough diamonds sales in November came in at $310mn, 5% above the historical average for the month (having been 10% below in September and 7% down in October). Management reiterated its positive view on the market, pointing out the low level of inventories through the value chain, and said that market participants saw strong demand for bridal jewellery (and expected this trend to continue into 2022). October-November rough sales totalled $603mn. So far, that lags 4Q21 estimate, though December sales have historically demonstrated better dynamics. As such, VTB does not rule out sales catching up. Nevertheless, VTB notes slight downside risks to our 4Q21 earnings estimates and reiterates its positive stance on the diamond market, with jewellery market statistics so far supporting our bullish case. Major triggers will come with US jewellers reporting Holiday sales in early January, followed by restocking demand kicking off through 1Q22.
● Fertilisers
Acron has published another record set of strong quarterly results: the 3Q21 IFRS numbers showed significant y/y growth and slightly exceeded our expectations.
In our view, the company will continue to be well positioned in the current market environment, and although gas prices have partly rolled back recently (but are still high), N-prices continue to be strong amid the tight supply-demand balance.
Hence, we expect Acron to show even stronger performances in 4Q21 and 1Q22, which, in our view, will reflect the N-prices spike in Sep-Nov 2021.
However, we are cautious on how this will drive the stock price, which has gained 121% YTD (in $terms), outperforming the market, all peers and even gas names.
Moreover, AKRN has seen much of this gain (39%) over the last month, which was supported by the 6-fold increase in ADTV (vs. the 12-mo avg). In our view, this could have been driven by the record RUB720/share dividend announcement (7% DY as of the date of the
121 RUSSIA Country Report January 2022 www.intellinews.com