Page 121 - RUSRptSept18

FX-adjusted net income RUB 11.6bn (+91% y/y, +84% Q/q). The EBITDA margin advanced to 33%, from the 28% 1Q17-the first quarter of 2018 average. The BoD recommendation of RUB 45/sh implies a 7% NTM DY. While EBITDA was 7% above consensus, the stock has not reacted much, being under pressure of geopolitical factors. Fundamentally, we believe that the stock remains attractive, with a 38% ETR to our 12-month Target Price of $17.0 and trading at 6.1x 2018F EV/EBITDA, a 27% discount to Mosaic. Buy reiterated. Adapt and overcome. As we had expected, NPK + NPS gained a higher share of total revenues, from the the first quarter of 2018 figures, while sales volumes of MAP were weaker due to limited imports from Brazil. With wider premia for complex fertilisers, such a shift was especially beneficial this quarter. New capacities resulted in a 24% y/y increase in urea output, which, combined with a 16% y/y rise in prices, contributed to 53% higher EBITDA. They should had agree more. EBITDA was in line with our forecasts, and 7% above the consensus, with the growth of the EBITDA margin to a record 33%. The almost 7pp Q/q increase in EBITDA margin was due to a mixture of prices, volumes, FX-rate and additional margins earned on in-house production of ammonia. Cash generation remained strong, with RUB 16bn in operating cash flow, RUB 8bn of, which was used on capex, and RUB 6bn of, which is to be spent on dividends. Phosagro has announced it will continue to pay 50% of adjusted net income. We estimate the NTM dividend yield at 7% and have the same 7% for the second quarter of 2018 FCF yield. The company reported Net debt to EBITDA at a comfortable 2.1x. Analysts expect growth momentum to continue in the third quarter of 2018. The company believes Brazilian demand will catch up in the second half of 2018, and that the July acceleration in imports is supportive for that: 6mo18 imports of MAP were 32% lower y/y, while July volumes are up 105%, M/m. July-August prices are 26% higher y/y, while the ruble is 7% weaker.
9.2.12 Transport corporate news
Russian aviation group S7 Group presented the Moscow region authorities with the project for super-light turbo business jets , Vedomosti d aily reports. Controlled by Natalia and Vladislav Filevs, the project requires RUB13bn ($193mn) investment, with 10-meter long Victory jets able to transport up to five people including the pilot. S7 Group is Russia's second-largest air carrier after Aeroflot and the largest private carrier. It previously considered taking on other ambitious projects such as commercial space launch market. The business turbojet factory construction is planned for the next 2-3 years in the Moscow region, with 20-25 jets to be built annually. No other details were disclosed. Reportedly the final cost of the jet will be close to $3mn, according to Vedomosti. Market participants noted that business jets for VIP passengers should have the flight distance capacity of at least 6,000km, while Victory with its 2,000km is more likely to be used as "air taxi" or a private self-piloted jet. Similar project did not succeed in the US, the biggest market for private business jets. On the other hand, competing models such as Cessna Citation CJ1, HondaJet, Embraer Phenom 100 with up to eight passengers cost from $4mn to $5mn. In June S7 Group said intends to invest $300mn in acquiring and renovating 36 Soviet space rocket engines NK-33 and NK-43 from the state . The company is looking to reverse engineer the engines at a newly constructed plant in Southern city of Samara, to obtain engines capable of multiple space launches, analogous to those used by SpaceX of Elon Musk. Most recently S7 acquired floating spaceport "Sea Launch" from state space agency RosKosmos and plans to perform the first launch from platform in December 2019 using Ukrainian Zenith rockets. So far the company has invested $160mn in the project.
Russian rail operator Globaltrans reported solid IFRS results for the
121 RUSSIA Country Report September 2018 www.intellinews.com