Page 80 - RPTRusFeb17

Aeroflot said it will pay a high dividend on its 2016 IFRS results — the company’s best ever results. While Aeroflot’s FY16 results are close to analysts and consensus forecast, 4Q16 was disappointing: the company earned RUB 17bn in EBITDAR on RUB 115bn of revenues, 5% below us and consensus on lower yields. 2016 net income, the focus of the 2016 results as the base of dividends, was at RUB 37bn. First Deputy Prime Minister Igor Shuvalov supports a 25% payout for SOEs, but management is insistent on a payout of at least 50%, which would translate into a 10% yield. 2016 was the best year in Aeroflot’s history. Revenues grew 19% y/y to RUB 496bn, in line with our expectations. Passenger revenues grew 21% during 2016 on 15% growth in RPK and 5% growth in ruble yields. EBITDAR of RUB 138bn (up 33% y/y) was 5% and 3% weaker than our and consensus estimates on weaker 4Q16 yields. The EBITDAR margin of 28% in 2016 was the highest in Aeroflot’s history and up 2.9pp y/y.
Gazprom’s Management Committee made a recommendation to the board of directors to keep dividends for 2016 at the 2015 level of RUB 7.89/share ( $0.14), with a total payment of RUB 186.8bn ($3.2bn), Interfax reports. The company aims to pay at least the same amount in dividends in 2018-19 as it paid in 2016, although the final decision will depend on future net income, free cash flow and the situation on the international financial and oil & gas markets, according to the company’s press release. The government has been pushing for all state-owned enterprises (SOE) to pay a mandatory 50%. A final decion is expected in April. The mentioned DPS implies a dividend yield of 5.9% and an estimated payout ratio of c.20%. Under a 25% payout, the company might deliver a dividend yield of 7.3%, on our numbers. . However, there is an upside risk to the RUB 7.89/share, we think, as last year Gazprom's management recommended a RUB 7.4/share dividend, while the BoD decided to increase it to RUB 7.89/share.
Russian utilities lost up to 20% of their market cap in the last two weeks of February, as investors reacted negatively to news that the Ministry of Energy is proposing a 25% payout ratio as the basis for dividend calculations in electricity grids. Investors are puzzled as to where companies will be spending their considerable free cash flow. Anlaysts believe the answer is simple – investment programmes.
The Board of Directors of O’Key has approved a dividend payment of $24.7mn. A n announcement about the record day is to follow. The approved amount of some RUB1.5bn makes this the eighth consecutive year of dividend distribution and is higher than VTBC’s 2016 net income forecast of RUB208mn. In the short term, the analysts do not expect any operational turnaround of the company to generate FCF, seeing 2017F net operating cash flow of RUB7.1bn vs. capital expenditures of RUB9.5bn. The bank reiterated its sell recommendation.
VTB plans to spend up to 90% of its 2016 net income on dividends. VTB's 2016 net income will reach approximately RUB50bn, suggesting a dividend payout of RUB45bn. However, the bulk of this amount will be paid on the preferred shares, not the commons. For the latter, VTB will maintain last year's level of RUB15bn, implying RUB0.0011 per share and a 1.7% dividend yield. The news is neutral for the common shares. VTB has a Tier 1 ratio above 14% and does not need additional capital.
Russia’s Magnitogorsk Iron and Steel Works may allocate 60% of its free
80 RUSSIA Country Report February 2017 www.intellinews.com