Page 161 - RusRPTJun21

On Friday 30 April, the GEH gencos (OGK2, TGK1 and Mosenergo) reported their 1Q21 RAS results.
· Mosenergo. Due to the 12% y/y growth in electricity generation and 35% y/y increase in heat sendout (amid the colder weather), along with the recovery in RSV prices, revenues were up 30% y/y and EBITDA gained 35% y/y, while finance expenses moderated and the dynamics of other income/expenses led to net income growing 69% y/y.
· TGK1. The results were supported by the 11% y/y rise in production, 21% y/y growth in heat generation, the recovery in RSV prices and the increase in export operations. As a result, there was y/y growth in revenues (18%), EBITDA (17%) and net income (20%).
· OGK2. Electricity generation increased 1% y/y vs. the 8% y/y improvement in heat sendout, while Krasnoyarskaya GRES-2 was no longer part of the company in 1Q21 vs. 1Q20, which also benefited from the positive effect from the sale. Thus, revenues increased 7% y/y, but EBITDA declined 11% y/y and net income slid 12% y/y.
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The robust operating results, driven by the colder weather and lower water inflows in the country, provided major support for all three of GEH’s gencos. That, coupled with the revival in RSV prices, could well support the companies’ electricity and heat profits, despite the end of DPM capacity payments for certain units at TGK1 and Mosenergo. OGK2’s profits were on a downward trend, as we had expected, due to the sale of Krasnoyarskaya GRES-2, but the negative effect was partly offset by the electricity market performance.
On Friday 30 April, FSK and Rosseti released their 1Q21 RAS results.
FSK’s numbers were on an upward trend, supported by tariff growth and the move to the payment for actually consumed capacity, along with the increase in grid connection revenues driven by consumers' applications. This led to YoY growth in revenues (7%), operating profit (14%) and net income (1%) to RUB 10.5bn.
Rosseti recorded a 27% YoY slide in revenues and a RUB 11.2bn net loss (vs. the RUB 79.3bn net loss in 1Q20), with the RAS results not being consolidated and reflecting the dividends from subsidiaries and their share price performance.
The results are supportive for sentiment on FSK, but not market moving, as the key share price driver in the short term is the dividend recommendation for FY20. With the net income slide in 2020, unless the dividends are kept flat (not our base case, although management has reiterated this on a number of occasions in previous years) we expect them to moderate YoY and provide a yield below 8.6% (the level for 2019 to the current share price).
On Friday 30 April, System Operator released the preliminary results of the 2027 DPM2 auction and the 2027-29 auction with localised turbines. As concerns the traditional 2027 DPM2 auction, we highlight the following.
161 RUSSIA Country Report June 2021 www.intellinews.com