Page 126 - RusRPTJan22

instruments and the company’s FX loss.
Sistema’s corporate-center net financial liabilities were up 26% y/y and 2% q/q to RUB208.6bn, mainly due to the company’s ongoing active investments (e.g. investments in pharma, the final payment to MTS for a stake in OZON and other projects). Given its current balance sheet and LTV ratio, Sistema continues to see additional capacity to increase leverage if it decides to support new investments. Management did not provide a specific timeline for the potential monetization of Sistema’s key non-public assets.
Investment-wise, the company is focusing on six key sectors: pharma, e-commerce, healthcare, real estate, agriculture and forestry. Sistema is also interested in the tech-driven niches and sectors with strong market fundamentals (e.g. fisheries, to which the company plans to keep increasing its exposure).
Binnopharm Group aims to grow up to twice as fast as the market. The company sees the Russian pharmaceutical market as very fragmented, with the five largest players holding just 20% of the market combined, which leads Binnopharm Group to believe there is substantial scope for consolidation. In 4Q21, Binnopharm Group expects to see a slowdown in revenue growth due to the tougher comps of last year that resulted from the high growth in antibiotic sales. Profitability-wise, 4Q21 should be strong thanks to cost optimization.
Medsi is actively investing in new facilities and plans to open 17 new ones in Moscow and Russian regions within the next two months, which Sistema sees as a good base from which Medsi’s revenue growth can accelerate in 2022.
Management is expected to suggest an expansion in the company’s buyback program next year. The BoD could discuss expanding the current program in the beginning of 2022. Sistema’s current buyback size is RUB7bn, and the program is valid until 17 September 2022. The company also plans to stick to its dividend policy and distribute RUB4bn in dividends in 2022 (1.7% yield at yesterday’s close). On top of this base payment, Sistema could additionally distribute 10% of its absolute FY21 EBITDA growth if this growth exceeds 5% y/y and Sistema’s ND/EBITDA is no more than 3.0x. We note that Sistema’s adjusted EBITDA was up 5.7% y/y for 9M21, while LTM ND/EBITDA was around 3.0x, on our estimates.
126 RUSSIA Country Report January 2022 www.intellinews.com