Page 87 - RusRPTDec20
P. 87
in the ruble by year-end, a net loss seems highly likely, implying zero dividend). Management demurred, stating the question cannot be answered as it is ‘commercially sensitive’. BCS Take: The 2020 dividend will be low even if the ruble rallies to c70 Rb/USD by year-end, but a large bounce-back is likely in 2021 once the FOREX tailwind has passed.
Buyback to be extended to YE2021: This is an important point, as the current program – geared to maximize purchases in times of market stress – has lowered the downside risk in ROSN in a volatile 2020.
The tax changes should be net-net neutral at the EBITDA line, with breaks for the Priobskoye and Vankor fields offsetting the loss of direct tax breaks for highly-depleted fields and high-viscosity oil and tweaks to the Excess Profits Tax (EPT) system, management stated. This is largely in line with our estimates, which showed Rosneft emerging from the tax changes with the least damage among its oil-producing peers.
CapEx in 2021 could rise to Rb1trn vs. Rb800-850bn in 2020, presumably if the company fully greenlights the Vostok Oil project, which management indicated should happen in the very near future. Historically, Rosneft has tended to actually spend less than its initial CapEx budgets each year. Note that the Vankor tax breaks are explicitly earmarked for CapEx on Vostok Oil infrastructure.
● Banks
Sberbank’s Supervisory Board met on November 10 and said 50% dividend police will stay. Among other questions, the board approved the 2023 Development Strategy, which will be disclosed at the Strategy Day on 30 November. In addition, the dividend policy was updated –dividend payout was kept as 50% of IFRS net profit, adjusted for interest payments on equity instruments other than shares, with CET1R of 12.5% remaining as the threshold.
● Retail
The Detsky Mir BoD has recommended a 9mo20 dividend of RUB3.75bn (RUB5.08/share), which was all RAS net income for the period and represents a 4.3% yield. The record day is set on 28 December. The distribution was in-line with the company's dividend distribution practice, and is 43% of the amount that the company is to deliver on a next twelve months horizon, per our estimates. We keep our annual dividend forecast of RUB8.8bn, as we expect FCF of RUB7.6bn and net debt/EBITDA at 1.2x as of YE20F. This would result in a 10% annual dividend yield.
X5 Retail Group has announced amendments to its dividend policy, switching to semi-annual payments after the nine-month and annual results. Along with the announcement, it raised its short-term distribution
87 RUSSIA Country Report December 2020 www.intellinews.com
