Page 110 - RusRPTJun21

• According to statements by Prime Minister Mikhail Mishustin, the Russian government is considering a progressive net income tax scale, not just changes to dividend and interest taxation. According to Mr. Mishustin, companies paid out RUB4.3trln in passive income (dividends, royalties and interest) in 2019, with nearly RUB1.3trln sent to low-tax jurisdictions such as the Netherlands, Cyprus, Malta and Luxembourg. The oil and gas sector led the way, sending abroad nearly 27% of its total income, followed by the Metals & Mining sector and banks. Mr. Mishustin also singled out retail and logistics.
• On our estimate, majority stakeholders could receive nearly RUB922bn this year, with RUB240bn going to owners of oil-and-gas companies and nearly RUB560bn going to owners of publicly traded metals-and-mining companies, most of which have offshore headquarters for the holdings that control them. The introduction of a progressive net income tax scale could make companies less generous, in our view. However, we think that the endgame here lies in pushing majority owners to take a more active role in national infrastructure projects, leaving minority shareholders unaffected.
● Oil & gas
Gazprom Neft s Board of Directors has recommended that the company pay out a final dividend for 2020 of RUB 10/share. This brings the full-year dividend to RUB 15/share (including the interim dividend of RUB 5/share). The AGM is scheduled for 11 June, the AGM record date is 18 May. The dividend record date is set for 25 June.
Surgutneftegas board of directors has recommended dividends of RUB0.7/ord and RUB7.62/pref, Interfax reported on 19 May. The dividends are in line with expectations and imply yields of 1.9% for ords and 14.4% for prefs. The record date is set for 20 July. The recommended dividends are in line with expectations. Although we think Surgut prefs are worth holding until they go ex-div, we do not anticipate a meaningful FY21 dividend, as we expect the ruble to strengthen. We see risk of the upside in our DCF-derived TP not materializing.
Transneft’s BoD has recommended a dividend of RUB9,224.28/pref (6.5% yield), the company announced, 24 May. The record date will be 20 days after the AGM approves the dividend, and the AGM is currently scheduled for 30 June, according to the company’s website, which would make the dividend record date 20 July. Analysts’ preliminary dividend calculation was RUB9,151/pref, while management guided for RUB9,250/pref during the FY20 results call. We view yesterday’s announcement as neutral, as it is in line with management’s guidance. Transneft adjusts its net income for dividend purposes, but the payout is equal to 50% of unadjusted IFRS net income.
● Banks ● Retail
110 RUSSIA Country Report June 2021 www.intellinews.com