Page 208 - RusRPTMay21

· Strict cost-control. Globaltrans has a successful record of keeping expenses under control. For the last 5 years, COGS CAGR was just 3%, below the level of inflation (4%). At the same time, sales grew at a 5% CAGR. 2H20 was not different: faced with a difficult market, the company implemented a cost-cutting programme that saved some RUB 500mn – 3% of opex.
· Leverage. The company ended 2020 with a net debt/EBITDA ratio of 1.01x, +0.4x YoY. According to its dividend policy, it must pay not less than 30% of attributable FCF when leverage is at 1-2x. We expect the company to pay 100% for 2021F, as management has indicated this is a comfortable level.
· Dividends. Globaltrans is to pay RUB 13bn of dividends for 2020, which is 99% of its FCF. We see this as a positive development, as it means the company is no longer increasing debt to keep the payments high. To remind investors, 2018-2019 dividends were 150% of FCF.
· The ex-date for 2H20 dividends of RUB 5bn (11% annual. yield) is 28 April. The company targets 1H21 dividends at RUB 3bn (7% yield), which is in line with us.
Global Ports out performs. The Association of Sea Ports released its March operating results for container sea terminals yesterday, 12 April. Global Ports’ Russian segment saw its total container turnover increase 1% y/y to 138,500 TEUs after reporting drops of 13.8% y/y in January and 5.2% y/y in February. Global Ports’ Russian segment (FCT, Petrolesport, ULCT and VSC) saw its total container turnover increase 1% y/y to 138,500 TEUs in March. Exports were down 7% y/y to 66,100 TEUs, while imports were up 11.3% y/y to 61,400 TEUs during the month. Transit was up 7.7% y/y to 7,600 TEUs. ULCT experienced the most significant drop among GLPR’s ports (-42.4% y/y), and Petrolesport (-13.6% y/y) and PCT (-8.1% y/y) also reported negative dynamics. Global Ports saw its March throughput at St. Petersburg’s Bolshoy Port drop 8.6% y/y vs. a decline of c. 8.8% y/y for the market in total. In contrast, VSC showed positive dynamics, as its TEU turnover was up 11.5% y/y. Global Ports reported two negative monthly results in a row (-13.8% y/y in January and -5.2% y/y in February) after having outperformed the market since mid-2019. As a result, Global Ports’ container turnover dropped 5.9% y/y to 370,900 TEUs in 1Q21. Total turnover for Russian ports was up 5.2% y/y to 493,200 TEUs in March, while exports (+2.1% y/y to 205,000 TEUs) and imports (+8.5% y/y to 211,100 TEUs) were also up during the month. Container turnover for the Russian container market was up 1.5% y/y to 1,336,400 TEUs in 1Q21.
208 RUSSIA Country Report May 2021 www.intellinews.com