Page 163 - RusRPTJun21

operations. Revenues increased 16% y/y. Adj EBITDA grew 21% y/y to RUB49,991mn (2-4% higher than estimates), as InterRAO posted a RUB1.1bn release of provisions. Finance income was elevated in 1Q20 due to the positive one-off, net income printed flat at RUB34,513mn, 2% above forecasts.
9.2.11 Metallurgy & mining corporate news
● Gold & Diamonds
Petropavlovsk has entered into a binding agreement with Stocken Board AG over the sale of a 29.9% stake in IRC for $10mn. This follows GBP's consent on the deal. Completion of the deal is subject to termination and release of the $204mn guarantee for the IRC loan by Petropavlovsk and consent from Eurobond holders or Board of Directors confirmation that no consent is required. While the news about the potential release of the $204mn guarantee (as of 2020-end) is positive for Petropavlovsk’s equity, we note that entering a binding agreement to sell the stake for $10mn, which is materially below its $90mn market value, diluted this positive effect on equity. Were the deal to go ahead, we would see a 7% upside risk to our 12-month Target Price, all else being equal. We note that Petropavlovsk received a 3.3% fee income for its guarantee in 2020, so cancelling the guarantee would result in a slight increase in the net interest cost.
Alrosa's April rough sales of USD 383mn were 9% above the historical average and broadly in line with our expectations of decent results. This can partially be explained by the absence of a De Beers cycle in April (see our Diamonds Watch - May 2021, of 6 May). Alrosa's management noted that demand for rough diamonds had remained sustainably robust, with midstream stocks at modest levels, while supply was under pressure due to the structural reduction in the world’s mining capacities. We note that the sales results in May (and in the coming months) might be modest, given the unfavourable situation with COVID-19 in India. However, a temporary decrease in polished supply might support polished prices amid robust downstream demand (see our Diamonds Watch - May 2021, of 6 May). Alrosa's stock is up 16% YTD to RUB 115/share and the only remaining positive short-term trigger we see is the 1Q21 IFRS results (due on 18 May).
163 RUSSIA Country Report June 2021 www.intellinews.com