Page 162 - RusRPTMay21

The ‘cash pile’ was RUB3.57tn ($48.3bn) at the end of 2020, down 6% q/q in RUBterms, but up 1% q/q in $terms (due to the stronger RUB$q/q). Quarterly operating profit was below our expectations due to the 4% higher operating and commercial costs, while revenues were in line with us. Other income matched our forecast. However, due to the operating profit miss, the net loss for 4Q20 was 6% above our expectations. Given the company’s dividend policy of paying 7.1% of RAS net income in preferred share dividends, the results translate into RUB6.72 DPS for prefs (15.6% DY). This is 1.5% below our expectation of RUB6.82/share. To recap, dividends for ords are not formally tied to the financial results, but in the past several years the company has paid RUB0.65/ord, so we expect this practice to continue for 2020. Under our forecast of RUB$74.84 eop for 2021F, we expects DPS for prefs at RUB3.73, or an 8.7% DY.
Transneft’s 4Q20 results came slightly better than we had expected on revenues and EBITDA, while net income was almost in line with forecasts. The results imply a dividend of RUB9,934/share for 2020, which translates into a 6.6% dividend yield. Overall, we treat the results as largely neutral. The company is to hold a conference call on 31 March.
Outperformance on revenues and good cost economy. 4Q20 revenues of RUB246.1bn were up 9% q/q and 2% above our forecast, with the outperformance coming across several business lines (oil and product transportation, sales of oil and oil compounds). On the cost side, electricity expenses jumped 45% q/q, presumably driven by increasing throughput (in oil transportation, they rose 3%, higher than we expected, on the back of the greater average transportation distance). This was notably ahead of our forecast. Materials and maintenance expenses increased seasonally, and were 17% and 7% ahead of us. However, the company managed to contain staff cost growth to just 4% q/q, which is significantly less than the 11-13% observed historically. As a result, higher revenues and decent cost economy translated into a 41% EBITDA margin, on par with the last quarter. EBITDA grew 8.4% q/q to RUB100.7bn, or 3-4% above us and consensus.
Results imply 6.6% dividend yield for 2020. The lower than expected FX loss (RUB2.9bn vs. RUB4.7bn expected by us) was partially offset by a greater finance expense. The company also reflected a quite high effective income tax rate of 37% (vs. the standard rate of 20%). Thus, despite better EBITDA, net income came broadly in line with our expectations and 3% below consensus, at RUB23.2bn (down 39% q/q). The company’s dividend policy is tied to normalised net income, with a 50% payout. Assuming that the company decides to adjust the results for the PPE impairment recorded in 2Q20, the DPS for 2020 might be RUB9,934/share (a 6.6% dividend yield), which is below our forecast of RUB10,376/share.
162 RUSSIA Country Report May 2021 www.intellinews.com