Page 76 - RusRPTJan22

Transneft’s BoD has approved paying out dividends twice per year starting with the 6M22 dividend, the company announced on Friday, 10 December. The BoD also said it supports the plan to conduct a stock split, which is planned for 2022. We view the announcements positively. Using the latest macro forecasts from our economic team, we estimate an FY22 dividend for Transneft of RUB 14,500/pref, implying a 9.7% yield, which could imply a 1H22 dividend of c. RUB 7,000/pref for 1H22. We currently estimate Transneft’s 1H22 net income to be down c. 8% HoH. Regarding the split, we view this as a positive development, as we think it should attract more retail investors to Transneft and therefore liquidity, and semi-annual dividends could attract more institutional investors.
● Metal & Mining
Evraz’s Board of Directors announced an interim dividend of USc 20/share. The record date was set for 24 December. The amount comes below our estimates, yielding only 3%. However, according to our calculations, this does not reflect cash generation that came lower than we expected, but rather the fixed nature of interim dividends (USc 20/share was also paid for 1Q21). As such, this does not affect the total 2H21 dividend yield.
RUAL's BoD recommends not paying interim dividends for 9M21. The Board of Directors of RUSAL recommended its shareholders vote against declaring and paying interim dividends related to 9M21, Interfax reported yesterday, 20 December. The RUSAL shareholders will hold an Extraordinary General Meeting (EGM) on 10 January 2022. Sual Partners, who holds a 25.7% stake in RUSAL, raised the topic of Interim dividends and put it on the forthcoming EGM agenda, according to Interfax. Sual Partners already requested interim dividends based on the 1H21, results but the majority of RUSAL shareholders voted against it (RUSAL to not pay out 1H21 interim dividend, cash to be used to deleverage further, 13 September). At the end of 1H21, RUSAL reported net debt of $4.1bn (-26% from the end of 2020). Although aluminum prices are at an all-time high ($2,710/t, 3M, LME), 12-month and 24-month aluminum LME contracts are trading with visible backwardation, supporting the Board’s prudent decision to continue to deleverage instead of paying dividends.
HMS's Board of Directors has recommended distributing a 9mo21 dividend of USD 0.15/GDR (RUB 2.14/share), which implies a yield of 3.6%. The dividends are to be paid on 29 December 2021, while the record date is 23 December 2021. The dividend is broadly in line with our expectations (USD 0.16/GDR). HMS plans to distribute RUB 251mn in total as 9mo21 dividends (we expected RUB 270mn). We also project that, on the top of the interim dividend, HMS will pay a FY21 dividend of about USD 0.21/GDR (implying a yield of 5.2% ) in the summer. We continue to see dividend distributions as one of the key pillars behind HMS's investment story, although the recent increase in interest rates has reduced the relative attractiveness of such distributions, we think.
Rusal’s BoD did not make a decision on dividend payment. Interfax reported, citing the company’s report. No decision was made due to the lack of required reporting – since mid-2020, UC Rusal has been reporting under
76 RUSSIA Country Report January 2022 www.intellinews.com