Page 109 - RusRPTMay21

8.3.2 Dividends dynamics
● Oil & gas
Rosneft's Board of Directors has recommended DPS of RUB 6.94 for 2020. The AGM is scheduled for 1 June, the AGM record date is 7 May. The dividend record date is set for 15 June. The announced dividend is fully in line with the company's dividend policy (50% of IFRS net income and our expectations (see our Rosneft – 4Q20 IFRS; positive net income for FY20 thanks to gain from acquisition of Taimyrneftegas , of 15 February). As a reminder, the company recorded a gain on transactions related to Vostok Oil back in 4Q20, which allowed the company to report positive net income for FY20, despite the sizeable FX losses. The announced DPS translates into a 1.3% dividend yield.
Gazprom’s Management Committee has recommended that the Board of Directors approve DPS of RUB12.55 for 2020, or RUB297.1bn ($3.9bn).
According to a company press release, this corresponds to 50% of the adjusted IFRS net income for 2020 (while the dividend policy prescribes a 40% payout for 2020). The company’s Deputy Chairman of the Management Committee, Famil Sadygov, said that management had judged the company as able to reach a 50% payout one year ahead of the schedule thanks to the favourable macro backdrop and strong operating results in 1Q21. He added that the company still planned to reach 2.0x net debt to EBITDA in 2021, despite the higher dividends.
On April 14 Interfax had reported, citing several unnamed sources, that Gazprom was considering DPS of RUB12 DPS for 2020. The actual management recommendation came 0.5% higher than that, which, although not significant, was positive. The recommendation compares favourably with our dividend expectations (RUB9.68/share) and those of the market (RUB10/share, as per the Interfax consensus of 13 April) based on a payout of 40% of adjusted net income. A RUB12.55/share dividend translates into a 5.3% dividend yield at the current share price (the latter increased 5.4% yesterday vs. the +3.2% for RTS O&G).
Note that this is the recommendation of the management to the BoD, and not the final BoD recommendation (which is normally issued in mid-May). Historically, the recommendation of Gazprom’s BoD has usually matched the initial recommendation of the Management Committee. However, in 2016, the BoD approved a dividend of RUB8.04/share after management announced its intention to pay RUB7.89/share. And in 2019, after issuing a dividend recommendation of RUB10.43/share in April, the Management Committee issued an updated dividend recommendation of RUB16.61/share in May (which the BoD eventually approved.) Both of these incidents, though, are from before Gazprom adopted its current dividend policy. So, we do not expect any changes to the current dividend recommendation, while
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